Disney Says Hulu Getting Low On Cash

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With all the rumors lately about Disney possibly cutting a deal with Hulu, various sources at Disney are talking to many on Wall Street about Hulu's financial situation saying the company is getting low on cash. While Providence Equity Partners, who put $100M into Hulu two years ago, is saying Hulu is not having any finance problems, I tend to believe Disney. No company who is ever running low on cash says they are and their investors always tell you things are fine.

While $100M sounds like a lot of money, for a site the site of Hulu it's not unreasonable for them to have gone through the vast majority of that capital in the past 24 months. What investment NBC and FOX also put into Hulu is not known, but with Hulu's advertising revenue not yet covering their costs and their traffic skyrocketing, Hulu is clearly burning a lot of cash. Hulu served over 300M streams in February and according to comScore, attracted 34.7 million viewers in the same month. Depending on who you ask, most agree that Hulu is only filling about 50% of its ad inventory which has not been helped by the downtown of online advertising in the current economy.

If Hulu truly is ruining low on cash as Disney says, then it puts Disney in the drivers seat with their negotiations with Hulu and probably gives them some leverage they may not have had a year ago. Whether or not this was Disney's tactic from day one is not known but it will be very interesting to hear more about the deal if it happens as I'm sure many details will be leaked. While those at the Cable Show are saying not to expect a deal in the next few days, the consensus amongst many is that a deal is expected to be announced shortly.

  • http://www.buydrm.com Christopher Levy

    Hulu was always destined to fail. The ad-supported only model just isn’t viable. If they were smart they would start looking at _selling_ the content and maybe they will be around in 2 years. my 2 cents.

  • http://profile.typepad.com/6p01116885d308970c jhm212

    Chris, you can’t be serious. Hulu will become one of the most visited and valuable video assets on the planet. YouTube continues to work every day to become more Hulu-like as they know UGC clips have seen their best days. Has the ad-supported model failed TV, hardly. Hulu doesn’t replace TV, it supplements TV. Until you can go to the TV and watch your favorite shows new and old, any time you chose, Hulu will have a huge growing audience. Additionally, the mobile internet and mobile video doubled from last year and will double again every year for several years. The GenY clan love mobile video and love Hulu. The last thing the world needs is another iTunes store to buy download video when I get the best variety streamed from Hulu anytime I want it. Ad budgets are tight today but the print media is beginning to die more quickly….ad dollars will begin ramping more strongly to online initiatives over the next two years. Look at what’s underway at Adobe with FL3, F10 for devices and Air to get a peek at whats coming. I’m just hoping that your comment was NOT your best thinking…my 2 bits!

  • Dennis

    I would like to see hard proof which Online Video Platforms there make money and which CDN’s

  • Keith

    Did I miss the source for the Disney comments? Who at Disney told whom that Hulu is running out of money? No links, no sources named…

  • http://www.BusinessOfVideo.com Dan Rayburn

    Keith, why would I reveal who the source was? I’m not going to get that person in trouble and call them out by name.

  • luke bailey

    few days ago an article surfaced that hulu was going to start collecting market research with all their blank ad spaces using interactive questions…presuming its 1-2 questions per fill and once u fill a bubble u get back to watching ur show…not only will everyone who uses the site actually answer it, but theyll have some very valuable data that they can straight up sell or better yet, use to justify their site and attract more cautious advertisers

  • http://hmmconvenient.blogspot.com HmmConvenient

    @Luke:
    I got prompted for that yesterday on Hulu, had too choose between two types of Listerine (which did I prefer). It was a massive fail as BOTH were for children and I let the countdown expire without actually making a choice.
    It is worth noting there was no way to skip without choosing A or B.

  • http://art-equals-smart.blogspot.com/ 10-K

    You can watch Hulu without logging in (except R-rated). Shouldn’t they require login to track demographics and target ads? And I wouldn’t object to some more demo info in my profile. I hate ads unless its for something I’m interested in–then I love ads. If my favorite band did a show yesterday and I missed it because I never saw an ad, I’d kick myself.

  • FW

    Interesting Blog Post Dan! Have you heard anymore on this?

  • http://www.buydrm.com Christopher Levy

    JHM212, you said a lot of words but zero tangible facts. Here’s some more data about these types of business models:
    http://www.internetevolution.com/author.asp?section_id=715&doc_id=175123&
    Where do you think Hulu got their model from? What does anything Adobe is doing have to do with non-viable ad-supported models?

  • http://profile.typepad.com/6p01116885d308970c jhm212

    Chris, yes a lot of words and all tangible facts, but what did I expect, you think Hulu got it’s model from YouTube. I’m not going to explain to you what Adobe means to video or what their major push to devices mean, but if your mom is going to let you play on the internet, tell her I said you better do your homework first!!