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What Was Fox’ Hulu Blackout Really All About?

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Fox (s NWS) escalated its fight with Cablevision (s CV) over retrans fees earlier today by blocking Cablevision customers from accessing Fox content on Hulu as well as, only to reinstate access a few hours later. The whole episode was clearly meant as a show of force — a warning shot, if you will. But this wasn’t just about getting a few extra bucks from Cablevision.

Fox had to know that blocking access to Hulu would raise more than a few eyebrows at the FCC, and cause public interest groups to ring the alarm bells about possible consequences of media concentration. Which is actually quite convenient when one of your biggest competitors is about to enter a huge merger.

Peter Kafka was spot on today when he noticed that blocking access to Hulu is not actually that big of a deal in the current retrans fight between Cablevision and Fox. The network’s biggest pressure point are the football games scheduled for this weekend, which aren’t accessible via Hulu or Hulu only features Fox shows, which hit the site the day after they broadcast, and are usually available for a few weeks at a time.

“That means Cablevision subs can’t see Sunday night’s episode of The Simpsons on Monday, but that’s not the same kind of impact,” wrote Kafka, and I have to agree, even though Glee fans would probably have been pretty upset about missing the next episode of their favorite show.

However, the bigger issue seems to be that Fox showed how much Hulu has to follow the lead of its corporate parents. We can be certain that the incident will have an impact on the ongoing legislative and regulatory review of the Comcast (s CMCSK) NBCU (s GE) merger. After all, it’s safe to assume that NBC has the same kind of power to block subscribers of a certain ISP from accessing Hulu — only, that power is even more questionable if you’re about to go down the aisle with the country’s biggest ISPs. What will stop Comcast (s CMCSA), regulators might ask, from arbitrarily stopping subscribers of competing broadband services from accessing NBC content on Hulu?

I’m not saying that this is something that Comcast is considering, but the mere fact that a blackout like this can be pulled off by one of Hulu’s corporate parents could be enough for some to question whether a merged Comcast NBCU should own any part of Hulu at all. Senator Herb Kohl (D-Wis.), who is chairing the Senate Judiciary Antitrust Subcommittee, already called for NBC to divest its 32 percent stake in Hulu earlier this year. It doesn’t take much to predict that this demand will get a lot more support in the coming days.

Sure, Fox would love to get a few extra millions from Cablevision. But News Corp. surely wouldn’t mind getting more control over a web video platform that could soon be valued a whopping $2 billion, either.

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16 Responses to “What Was Fox’ Hulu Blackout Really All About?”

  1. I don’t think Fox’s stake in Hulu has anything to do with their ability to black out Hulu content. Hulu can only serve content it has permission to serve, and if the content provider says “our content can’t go to such and such IP addresses” they’d pretty much have to comply. They already do this by blocking IP addresses outside the U.S.

    Which is not to say that we should allow Fox to continue to own a stake in Hulu. There’s way too much vertical integration in the media.

    • “Which is not to say that we should allow Fox to continue to own a stake in Hulu. There’s way too much vertical integration in the media.”


      Who are you that you allow Fox to own its property?

      Analogy: We should not allow you to decide who lives in the house you own. I’ll make the decision who lives there and decide how much rent you receive. Currently since you own the house and decide who lives there (you), there is too much vertical integration. We all have rights to access your property. Society will be better off…

  2. Remember when Ma Bell owned telephone communications? Now the field is open and they are history. The networks are going to have to adapt or die because they no longer have a monopoly on broadcasting.

  3. Whats the big deal if NBC or FOX decide to control who has access to their content? If they want to allow fewer people to access their content and give up that additional add revenue, that is their choice. It is their property. Americans are not born with an inalienable right to watch all tv shows on hulu…

  4. this brings in a whole new angle when it comes to net neutrality. the debate usually is about whether ISP’s can block certain sites. but should sites be allowed to block certain ISP’s?

    the end result is a non-neutral net.

  5. Aidan Black

    If NBCU are forced to sell their share of Hulu, what is to stop them from just pulling their content and making it available exclusively on

    I am very concerned about the impact of the Comcast/NBCU merger – I think we are going to see the market become increasingly fragmented over the next few years, with every content creator demanding a cut. You may be able to cut the cable, but you will end up paying just as much every month in $10 subscriptions if you want access to the same content.

    • That’s a good question, but Kohl and others have also been demanding for NBComcast to license their content to multiple players, as opposed to just their own web properties. That means they could be forced to sell their Hulu stake and license content to Hulu.

  6. I wouldn’t be surprised if there was another consideration that actually points to the weakness of Hulu’s ad-supported revenue model relative to the larger fees derived through cable subscription fees. They really do seem to be worrying that when people unsubscribe from cable, they might discover waiting a day to see a show on Hulu isn’t that big a deal. Another cord cut and less revenue per person for Fox.

    That doesn’t bode well for Hulu, particularly as a partially Fox-owned entity.