Is the decision by Providence Equity Partners to pull its 10 percent stake out of Hulu a signal that the media conglomerates who own the most of the streaming service wish to curtail is growth?
That’s the hypothesis of a Bernstein Research report released Friday. Led by senior analyst Todd Juenger, Bernstein said that Providence Equity’s retreat “only underscores our suspicion that the controlling shareholders are increasingly motivated to cut off Hulu’s growth.”
This follows a report Bernstein issued two weeks ago, in which it questioned the longterm commitment of the Walt Disney Company (s DIS), News Corp. (s NEWS) and Comcast/NBC Universal (s CMCSA) to Hulu, given their strong desire to uphold the traditional multi-channel TV model
How can these companies support the growth of an over-the-top content business, Bernstein wondered, when they’re vested in models like TV Everywhere in which consumers can’t watch video unless they have a cable, satellite or telco TV subscription?
NBCUniversal no longer has board seats to control Hulu following its acquisition by Comcast. However, Bernstein speculates that the decision by Providence Equity to pull out an investment valued at around $200 million may signal that Disney and News Corp. are seeking to gain greater control of Hulu.
Neither Hulu or Providence have commented regarding the transaction.
So if Hulu represents a strategic conflict, whey didn’t the conglomerates sell it last year when they had the chance?
“I think the fact that Hulu’s parents are concerned about the strategic conflict Hulu presents for them is exactly why they didn’t sell the asset last year,” Juenger told paidContent. “In somebody else’s hands, Hulu could pursue a direction that would be arguably harmful to the networks.
“With Hulu now completely in their control, they can take whatever direction for Hulu they believe best serves their comprehensive long-term interest, which in our view likely includes decreasing the role Hulu plays in on-demand availability of in-season broadcast content relative to TV Everywhere or enhanced ad-supported VOD services provided by the MVPDs,” he added. “This better positions the networks to argue for higher and higher affiliate fees, while allowing them to continue receiving ad revenue and, eventually, even C3 audience credit for the audience.”