Dear Bob. You want to do something big? Bring back the old Hulu

It's time to bring Peacock, Paramount+ and others together through a new streaming JV, and give Netflix (and YouTube) a real run

Hey Bob! Welcome back. We don’t know each other, but I had an idea for you. Word is, you wouldn’t come back to run Disney just to do the same job - you must be planning something big, like buying Netflix or Roblox or Roku or Aaron Judge.

Well, I have an idea that isn’t as good as those. But it may be able to help you with a lot of your short and long term challenges.

Bring back Hulu.

I realize many of you are saying, “Mike, Hulu still exists. I just watched the new seasons of “The Handmaid’s Tale” (which is hilarious as always -man those writers!)

No, I mean the old Hulu. The joint venture designed to help all the big media companies manage the many threats posed by the internet.

Call it a Hulu Reboot.

Here’s what I’m thinking:

• Everyone is losing money on streaming, right?

• It’s sort of universally understood that none of the big media companies, aside from Disney, is going to be able to achieve the scale or the profitability from their current streaming services unless they all buy each other, e.g. Paramount and NBCU merge, someone buys Warner Discovery etc.

• BUT- those kinds or mergers are complicated as hell, as you have linear businesses that are declining, and broadcast networks that legally can’t be owned by the same company, etc.

• Yet Hulu is just sitting there. It has user base, and advertisers. And you need to make a call on it soon.

Lightshed has an excellent breakdown on all the Hulu possibilities facing you Bob. “Disney could try to turn around and sell Hulu to Comcast, but Hulu’s actual worth is unclear if Disney wants to keep the Hulu original programming created by Disney for Disney+… What is Hulu even worth without the majority of its programming?”

Here’s my idea.

What if instead of either buying Hulu from Comcast, or selling it to Comcast, you bring the five families of TV back to the table: Disney, Warner Discovery, Comcast, Fox, Paramount, maybe TelevisaUnivision, etc. and divvy up Hulu - again.

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If you recall, Hulu was founded as a joint venture between News Corp., NBCUniversal and Disney as a way to protect these companies shows from being pirated on YouTube and other platforms, while helping these firms carefully tiptoe into a streaming-first future (while making some money along the way). I could it serve a very similar purpose again, albeit for a different set of threats (cord cutting, Netflix, recession, etc.).

So that’s why I propose rejoining forces, and letting everyone buy-in once again - but with Disney maintaining a controlling stake.

Ok, I realize that is maybe more radical than you were looking for Bob. Well, you could start with just laying out an advertising-focused plan for your frenemies - as in, hey guys, wanna let Hulu be your ad company?

Theoretically, all these media companies could benefit from being able to come to the market with:

• One sales staff

• One ad tech platform

• A standard buying platform

• One set of ad types that are both CTV friendly, and scalable

• One identifier!

• One data platform, one clean room, etc. etc.

Such a Hulu ad sales roll up could help the other media titans save big on staffing, tech and logistics, while bringing brands serious scale - maybe enough scale to create a must-buy ad-supported streamer alongside Netflix and YouTube. InsiderIntelligence predicts that CTV advertising will be a $44 billion market in the US. What if Disney could grab 20 to 30% of it?

“If you look at the [TV ad buying] system today, it’s an absolute mess,’ said former Viacom executive Andrew. Rosen, who write the smart industry newsletter Parqor. “There is a growing disconnect between what advertisers want and what media companies are offering.”

For all of its frequency flaws, Hulu/Disney has spent years in investing in Hulu’s back end, its self-serve buying tools, it’s custom ad products. It could clean a lot of the industry’s problems up.

“If you think of Hulu as the second best in this space compared to YouTube, and it has scale, a lot of media companies would be better off with Hulu than building or handing things off,” Rosen added.

So anyway, that’s a great place to start Bob. But I’d go even bigger than a Hulu ad network. As in, no more Peacock, Paramount+, AMC+ maybe even no more Vix. If I were you, I’d propose folding them all into Hulu.

(I’d throw HBO Max in here, but it’s hard to imagine Warner giving up on that service. Maybe the company would be willing to push whatever is left of TNT and TBS onto New Hulu).

This rebooted Hulu could not only take a single, sizable brand to advertisers (one with a real subscriber base), it could emerge as a must-subscribe ‘bundle’ of sorts for consumers when their wallets are being tested. Instead of pouring billions into Paramount+ or Peacock, those media giants could instead pool resources and help build up Hulu’s already deep library.

In addition, instead of having to manage direct-to-consumer businesses that are not TV companies’ strength (something Warner Discovery CEO David Zaslav has already hinted at), those big media giants could make churn someone else’s problem. Rosen noted that companies like Paramount boast of having millions of email addresses and credit cards from customers, “yet seem to do very little with them.”

So instead of fighting that battle individually, these companies could take the Hulu of today, layer in Premiere League rights, all episodes of The Office, theatrical releases, all the Good Wife and Taylor Sheridan shows, Showtime’s IP - well, you’d have Yellowstone and Yellowjackets. And you’d make Netflix more than a bit nervous.

Plus, Bob, then you could make a much cleaner distinction between Disney+ and Hulu. Keep the non-family stuff off Disney+, and maybe even ditch the ad plan.

New Hulu could be a killer.

Of course, there are loads of reasons why this wouldn’t work. For starters:

• “Ego,” said Rosen. Ok, fair point.

• Also, NBCU, Paramount and Univision, just to name a few, have already invested millions in proprietary data and tech platforms that would be rendered irrelevant if Hulu became the new ad platform of choice.

• Lastly, to poke holes in my own argument, if a Paramount or Univision bails on having its own streaming service, what is its future? Since, as you mentioned recently Bob, that linear TV is “marching toward a distinct precipice”?

I don’t have all the answers. But going it alone sure doesn’t seem like it’s going to work like it did in the old days. Anyway, I’m sure you’ve got a lot on your plate, but I just thought I’d share. Let me know if I can help.

Also, I sent you another email with the subject “POTENTIAL, GROOMABLE SUCCESSOR.” Please let me know if you got it.

Thanks.

-Mike

PS The Last Jedi Sucked.