Hulu at a fork in the road
[Hollywood's own online video service has been no match for its rivals. Now its owners are under pressure to pony up more money to expand the service.]
As Amazon.com (AMZN) and Netflix (NFLX) battle it out for dominance in online video, owners of the much smaller Hulu, Hollywood's own online video service, are under pressure to decide which direction to go.
Jason Kilar, the chief executive of Hulu, has asked the site's owners -- Walt Disney (DIS), Comcast (CMCSA) and News Corp. (NWSA) -- for about $200 million to fund more program purchases and an overseas expansion, according to people familiar with the situation. That is roughly twice the amount they contributed this year, one person said.
The request to sink more money into the unprofitable, 5-year-old venture has put the spotlight on differences between Disney and News Corp. -- the two voting partners -- over Hulu's business model, which involves both a free service and a fledgling subscription offering. (For regulatory reasons, Comcast, the majority owner of NBCUniversal, can't vote its stake.)
It isn't known how News Corp. and Disney will respond, but the request could prompt the owners to clarify the strategic vision for Hulu before increasing their bets on it.
News Corp., the parent of the FOX broadcast network, wants Hulu to evolve into solely a subscription service, whereas Disney, owner of the ABC network, favors the free, ad-supported approach.
A Hulu spokeswoman said, "We do not comment on continuing discussions regarding decisions that have yet to be made."
read more: Hulu is at a crossroads