GigaOM » Peter Chernin

From ClownCo to Video Star: Hulu beyond Jason Kilar

Om Malik — Fri, 04 Jan 2013 23:37:32 +0000

In 2007, when I first heard about Hulu, it was not-so-lovingly labelled ClownCo by Google insiders and many of my colleagues in the technology blogging world. I mocked the company and even created a NewCo wreck watch countdown clock before the ClownCo went down in flames. Along came Jason Kilar and boy did he make me eat crow — a well charred crow on top of that. And he did it the old fashioned way: he treated the most convoluted of corporate structures like a startup that was liberally funded by Providence Equity Partners.

Kilar had spent a lot of time next to Amazon’s maverick CEO Jeff Bezos and he learned well from the master of disruption. Like Bezos, he focused on playing the long game and ignored the naysayers.

He used his rolodex to hire the right people. He went to China and acquired a piece of technology to roll out Hulu to the masses at a breakneck speed. Most importantly, the team at Hulu built a simple, elegant and easy to use a minimalistic service: which no one expected. It was so good and I was so wrong. And glad I was, for when I was recovering from my illness in 2008, Hulu became a constant bedside companion.

There are some in Silicon Valley who ask me why I am a fan of Kilar. Here is why:

Hollywood is about profit maximization even at the expense of paying public.
Silicon Valley is about building a great consumer experience and build profits in the long term. Google and Amazon are two perfect examples.

Jason was able to marry both those constituencies. Don’t believe me? Just look at the site’s financial performance: at the end of 2012 it had three million Hulu plus subscribers and about $695 million in revenue. The number of paying subscribers for Hulu Japan tripled in comparison to 2011.

With so much good news, it perhaps was the right time for Kilar to announce that he is going to be leaving the company sometime during the first quarter of 2013. It is not as big a shock for his departure has been rumored for a while, especially since the company’s big media owners recently completed a buyout of co-owner Providence Equity. Hulu’s co-owners including Comcast’s NBCUniversal, Disney and News Corp., have been plotting the future without Kilar.

Herding cats

Hulu CEO Jason Kilar with former CTO Eric Feng

Many of my sources have told me that Kilar was more like a UN peacemaker and trying to organize board meetings with the media-doyens was a nightmare. A Fast Company profile last year pointed out that Kilar had skills to manage up. But things went progressively south after the exit of Peter Chernin, the News Corp. COO who was the heavy on the board and who loved the concept of Hulu. That Kilar survived and helped turn Hulu into a business that 3-million people want to pay for is a testimony to his (and his team’s) skills.

My initial skepticism of this big consortium came from years of observing such beasts of burden trample over saplings of innovation, mostly because the new way threatened their established business practices. At the turn of the century, a Silicon Valley company called @Home Networks had a bold idea: send broadband via cables owned by cable networks. The idea was backed by the likes of John Doerr and soon all big cable companies such as Tele-Communications Inc. (later acquired by AT&T, which was in turn gulped by Comcast) became investors in @Home Networks.

While @Home suffered from adult management, it was the cable companies which essentially killed the pioneer. Once they learned that they could buffer their profits by selling broadband, they proceeded to kill the baby they had helped birth.

Show must go on

Having seen that movie before, I knew that Hulu would have similar problems. With Jason gone and private equity investors having locked in their profits, get ready for the egotistical media companies get their evil way with Hulu.

Kilar will leave Hulu at an interesting juncture. The rise of multiscreen households has turned the video business on its head. The relevance of the older media distribution channels is on the wane and we are transitioning to broadband and web. Think about it this way: world’s biggest live event didn’t happen on ESPN, Fox or NBC. Instead it was YouTube that hosted the Felix Baumgartner’s space jump. South Korean pop star Psy has had a billion views on YouTube. I bet you the top 100 artists have not received that kind of attention on MTV.

The fact is that we are looking at a world where Netflix and Amazon Prime along with YouTube are the cynosure of attention when it comes to video. Hulu has it for now, but its big media owners have their legacy businesses to protect. They need to make the TV station owners happy. They need to fleece the cable customers by selling them packages no one wants.

Hulu was their bridge to the future — but large media companies suffer from a weird kind of astigmatism. They are businesses set up to serve other businesses — movie theaters, cable companies, satellite companies, DVD sellers and now on-demand video providers. That is why they can’t put viewers first, even if they want to.

Too bad, Kilar isn’t going to be there to look out for viewing public.

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Peter Chernin joins Twitter board. Why?

Om Malik — Fri, 16 Nov 2012 05:24:51 +0000

Peter Chernin, who once was an aspirant to the throne at News Corp., is joining the board of Twitter, the San Francisco-based social sharing platform that sees its future as an old fashioned advertising-driven media company. Chernin is a vital bridge to that old media world that has a traditional and predictable view of advertising, audiences and attention. A source intimate with Twitter said that Chernin brings a lot of cred with the Madison Avenue crowd.

Chernin, as you might remember, is the guy who was responsible for optimizing the online video revolution, by helping coalesce a coalition called Hulu. He is replacing Flipboard founder and CEO Mike McCue, who left the board a few months ago. He announced his decision in a tweet – his first tweet in two years since he has been on the network.

@twitter I've been a long-time user of twitter for news and information. Happy to be joining board of this very exciting company.—
Peter Chernin (@PeterChernin) November 16, 2012

Call me crazy, but I like to see board members actually use the social product to understand the social dynamic which is part of a company’s allure. Otherwise, you think of it as no differently than a TV network – which Twitter isn’t.

I did ask Chernin (on Twitter of course) what he had learned about Twitter in his two years of being on the network and what made him decide that it was time to join the board. So far, no response. I have a feeling, it might be a a while before I get a response.

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Yahoo! Here are board members you should get

Om Malik — Sat, 07 Jan 2012 00:28:42 +0000

So looks like Yahoo is going to undertake a board overhaul. Good. What took them so long? The Wall Street Journal says that activist investor Dan Loeb has been asking for the heads of chairman Roy Bostock and board members Arthur Kern, Vyomesh Josh and Sue James. He reportedly wants co-founder Jerry Yang out as well.

Damn straight — get them (the board) out of there. The Journal reports that Yahoo has hired executive recruitment firm Heidrick & Struggles to help find new board members. Here is my unsolicited advice — from a post I wrote in September 2011.

Here are the kind of people I am thinking Yang should be calling — Paul Maritz of VMWare, Sheryl Sandberg of Facebook, Verizon ~~CEO~~ Chairman Ivan Seidenberg and Paul Jacobs of Qualcomm. They can bring insights into cloud, social and mobile landscapes. To get a better grip on Silicon Valley and early stage innovation, Bill Gurley of Benchmark Capital and Reid Hoffman of Greylock Capital are two names that come to mind.

Mickey Drexler of J.Crew or American Express CEO Ken Chenauth and Ford CEO Alan Mullaly. They would bring vital insight into retail, money and transportation in the era of “connectedness.” And to top it off, Yang should get former News Corp. president Peter Chernin, who started his own entertainment company, to sign on as the chairman of the board.

Okay, perhaps I am being too optimistic about Sandberg, who likely will have her hands full with Facebook this year.. But this a good short list to start with, especially if new CEO Scott Thompson wants to make innovation his focus.

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