Hulu CEO Jason Kilar Fights Murdoch and Iger Over Strategy

The video streaming site is growing, but not bringing in enough revenue quickly enough to suit Disney, News Corp and NBCUniversal

Last Updated: April 12, 2011 @ 2:52 PM

According to a report in today's L.A. Times, Hulu CEO Jason Kilar is feuding with his corporate media parents Rupert Murdoch and Bob Iger over the direction the company will take.

How's that for a site that's recently announced that it expects to generate $500 million in revenue this year and 5.9 billion minutes watched per month?

Write Meg Jame and Dawn Chmielewski: "Hulu's media owners — the corporate parents of ABC,  Fox and NBC  — are tussling with the site's entrepreneurial managers over opposing visions for the venture. The companies originally crafted the service as a way to control online distribution of their content. But by offering popular shows such as "Glee" and "Modern Family" online at no charge, the media companies fear they may be encouraging consumers to drop cable and satellite TV services, one of their chief sources of revenue."

So Kilar wants to grow faster. And his media owners want to clip his wings.

The site’s media owners have proposed delaying the availability of latest episodes for streaming in a bid to protect TV ad revenue. And they want to squeeze in more ads into programming, which Kilar opposes.

The tug-of-war mirrors recent moves by pay channels to restrict Netflix streaming of their freshest TV programming.

Also read: Stream Works: Hollywood Searches for a Netflix Alternative 

“Hulu is getting the same kind of pullback,” longtime home entertainment analyst Tom Adams recently told TheWrap. “And it has one-tenth the revenue as Netflix.”

This gives Hulu less room to maneuver than Netflix, which has been using its subscription revenue to get streaming rights to a wide array of content. Hulu, with less than 1 million subscribers of its Hulu Plus service to Netflix’s 20 million subscribers, is largely dependent on its media owners for access to programming. 

And the problem for Disney, News Corp. and NBCUniversal is that the billions they make in TV ad revenue dwarfs the amount of money they get from Hulu and online advertising in general.

The rapid decline of the DVD sales markets has made Disney, News Corp. and NBCUniversal even more anxious about Hulu revenue. Networks such as the CW, stream their episodes with greater ad-load than Hulu, and, according to the report, Hulu’s owners want it to increase the amount of ads as well.

Kilar is said to be resisting. He further irked Disney CEO Iger and News Corp. President Chase Carey, the paper reports, by publicly issuing a “Jerry Maguire”-style manifesto, caling on his colleagues to stop being greedy.

In Hollywood?

The danger in some of these proposals is that they might drive viewers to other online alternatives that give content creators even less control, not to mention revenue, than Hulu. Viewers may chafe at being forced to wait weeks before watching their favorites shows and seek them elsewhere, be it YouTube or BitTorrent.

This is exactly what NBCUniversal and News Corp. were trying to avoid when they formed Hulu four years ago. 

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