

Hulu readies for IPO... still not making a profit. - cristinacordova
http://www.nytimes.com/2010/08/16/technology/16hulu.html?src=tptw

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ajg1977
I find it hard to see why anyone would view Hulu as a worthwhile investment,
at least other then something to ride up post IPO and then get out quick. Its
entire value derives from the content it offers - content that it will never
own, and will forever remain beholden to the content providers for.

"Pssst! Wanna buy part of our company and share in the profits? But only a
little bit of the profits of course, because you'll be using our content and
have to license it from us. And we'll gradually squeeze your profitability
down to a negligible amount over the years, because it's our content and
that's what we've done in every market. And when the cable companies get
pissed that people are switching to Hulu, we'll likely start blackouts/delays
to keep them happy and devalue your service. Whaddya say?"

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yurylifshits
Leading content providers (News Corp, NBC, ABC/Disney) have stakes in Hulu.
Therefore their incentives are aligned and it is unlikely that Hulu will be
cut from the content. Quite the opposite, it can be given an exclusive content
access (earlier, better quality, behind the scenes).

Your argument can be applied in the same way to other companies: Netflix
(movies), Amazon (books). Being a distributor (and thus depending on
producers) is not necessary a business killer.

Cable companies can not directly discriminate Hulu traffic due to net
neutrality principle. And in the future most of the traffic will go through
wireless carriers.

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lftl
> Leading content providers (News Corp, NBC, ABC/Disney) have stakes in Hulu.

It's also part of the problem from an investor perspective. Hulu is pretty
much never "profitable" but that completely ignores the fact that its major
stakeholders get a huge chunk of its revenue since it's their content. I can't
find the article now, but one stated the content providers receive upwards of
60% of Hulu's revenu. So Hulu doesn't make a "profit" but basically everyone
that owns a stake in it is getting a good return on investment. That conflict
of interest with the other major stakeholders would give me major pause about
buying into Hulu.

EDIT: I think this is the article I recall reading
[http://www.businessinsider.com/henry-blodget-hulu-turns-
prof...](http://www.businessinsider.com/henry-blodget-hulu-turns-profitable-
we-eat-crow-2010-4)

And the numbers there are different (and probably a bit better) than what I
stated above, but the general point stands that you're buying stock in a
company where the major stakeholders are getting a return regardless of
whether Hulu turns a profit or not.

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shadowflit
"But a revision to comScore’s methodology sent Hulu’s viewership numbers
plummeting, to 24 million in June from 43.5 million in May"

Is that a revision to methodology, or just an expected drop in users during
the lull between seasons? I know I haven't been on Hulu since the season
finales of my shows...

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_delirium
Are there any recent successful tech IPOs where the company wasn't turning a
profit at the time? Tesla's the only one that comes to mind, but it's a
somewhat unusual case. Everyone else I can think of in the past few years was
turning a profit when they went public (e.g. VMWare in 2007, Rackspace in
2008, Skype filed just recently). On the other hand, it's possible YouTube
could've gone public even while bleeding money if Google hadn't bought them,
so perhaps Hulu's similar.

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joshu
This line struck me as odd: "These people were granted anonymity because the
discussions are still private."

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jedc
I think after the whole Judy Miller and similar scandals the NYTimes has a
policy of always disclosing the reason why anonymous sources are anonymous,
even if those reasons are a bit pedantic.

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Towle_
Old Media: "Newsflash! Certain categories of so-called 'New Media' remain
unproven as business models!"

What are you trying to say, NYT? ;)

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gscott
They are going to do an IPO with content that they don't even control well
enough to provide what they say you will get when you pay...

I like Hulu a great deal but I have had a Plus account for 2 days now and
nothing that I wanted to watch (older shows where they say they offer all of
the seasons to Plus members) have the seasons as promised.

An easy one is Heroes, on hulu.com/plus they say you get all 4 seasons of
Heroes but go to <http://www.hulu.com/heroes> wiht your plus account and only
the last 5 episodes of season 4 is there. Not that I want to watch this series
but it should be there with my super-duper new plus account that I am logged
into now with and it shows on my profile that I have paid.

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drtse4
Sometimes it feels like it's 1999 all over again...

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Dilpil
Call me cynical, but it perhaps the equity owners want to cash out before the
company kills itself with subscription services.

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gojomo
Hulu's special content relationship with old-line broadcasters is a blessing
and a curse. That's powered Hulu's success so far... but might also cap Hulu's
upside, because of the conditions content-providers impose, and the chance
providers will defect to run their own web services. (The duration and details
of current deals should be an interesting part of the IPO prospectus.)

