Hulu's second non-sale in two years is the buzz of the week in the media/entertainment community. Through the murky and convoluted explanations for why the sale went sour (again) a few issues emerge that speak to the larger digital malaise that continues to affect the business. On the face of it, Disney, Fox and (a silenced due to conflict of interest issues) Comcast are acting like Miss Hulu's overprotective father who won't let his daughter get married. Despite the legitimate and substantial dowries offered by her various suitors, Dad won't agree to let her completely move out, and is demanding the right to keep custody of some of the eventual kids, Maybe. Or to change his mind about which kids get to stay with him or live with Miss Hulu. Dad even wants the ability to bring kids back to live with him after he's previously granted Miss Hulu custody. Or he wants to move those kids in with maybe a different relative if he likes their house better than Miss Hulu's
So Dad is clearly afraid of something. I think he's afraid of losing control, and of not being part of the big party that's going to be going on at Hulu's house after she gets married. His only leverage is the kids (aka the content broadcast on Hulu). So yes, this is a custody fight masquerading as a M&A deal. It's not enough that Dad is a powerful generator of kids/content in his own right. He wants to continue to control the revenue stream from that content despite selling off his daughter/digital network.
So why doesn't he just keep Miss Hulu at home? Why does he keep trying to marry her off?
Sorry for the fractured analogy here, but this is where the real complexity lies. Despite Miss Hulu's successful business model, that model threatens the old guard at her media company owners. Miss Hulu's former CEO Jason Kilar got into some trouble a few years back when he blogged with pride about Hulu's digital data-driven monetization model, and how much more effective it was at targeting consumers than traditional broadcast TV. My thought at the time was: "Why aren't they embracing this lifeboat to the new age instead of calling Kilar on the carpet?"
Change is a bitch, and when you're entrenched in an old model, it's hard to change, particularly when ABC, NBC and FOX are generating the kind of volume they're generating. It may be getting more difficult to make a profit the old way, but there's still enough juice in the old model for the networks to grumble about the little digital upstart and wield some influence -- ergo: sell her off! But then the bean counters look at what they're going to lose if they sell her, and the hedge that Miss Hulu provides against the decline of the old and the rise of the new. And so they throw these crazy conditions into the deal that no buyer would agree to.
And here we are.
The story is not over... Third time's a charm. I'm still tuned to this channel.