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CEO may depart as big changes in store for Hulu

updated 02:45 pm EDT, Mon August 20, 2012

Memo hints at management buyout, content changes

Content streaming site Hulu may be about to undergo significant changes over the next few months as an internal realignment looms that could see current CEO Jason Kilar departing. Variety has obtained an internal memo from the site detailing the possible reorganization within the streaming site. The coming changes could see not only the departure of Kilar, but also a significant weakening of the popular television portal.

The shifts at Hulu stem in large part from the expected departure of one of its investors. Providence Equity Partners has a clause regarding its stake that will allow the private equity firm to cash out its shares in September. As Providence's stake in the service has doubled in value following Hulu's recent $2 billion valuation. Providence's partners in Hulu -- News Corp., Comcast, and Disney -- would likely purchase the private equity firm's share of the service; that likelihood is the factor that has the streaming service in a state of flux.

A management buyout would also allow any Hulu executive with a certain number of vested shares to also cash out. For Kilar, that could mean a payday of around $100 million. For that reason, the leaked memo says that outlining a "transition plan for new CEO" is one of the company's foremost concerns at the moment.

Providence's departure would also see Hulu's managers exerting control over Hulu in a manner much more in line with what traditional broadcasters would like to see from the formerly upstart streaming service. Fox, for instance, wants more advertisements squeezed into commercial breaks. Hulu would also likely lose its exclusivity for current-season content, which the networks would then license to other third-party sites, diluting Hulu's competitive advantage.

The changes would also see Hulu's network partners granted the ability to hold back certain content from the site, which would eliminate Hulu's content parity while bringing networks' individual sites the a competitive edge. Additionally, Hulu's "super-distribution" rights, which allowed the site to syndicate content to third-party sites like Yahoo and AOL, would revert back to networks.

The internal dealings draw into question the ultimate viability of Hulu, as its network investors remain intent on reserving power over content to themselves. Last year, Hulu generated $420 million in revenues, but the networks have long been distrustful of the site, as it disrupts their traditional broadcast model.

by MacNN Staff



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