5 Reasons Chernin's Exit Puts Hulu in Danger

What News Corp. and NBC Universal's Joint Venture Risks Now

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News Corp. Chief Operating Officer Peter Chernin's decision to semi-retire into a movie-producing career leaves web TV start-up Hulu without its most powerful ally in Hollywood.

The timing could be worse, but not much.

The Business Insider

Hulu is now the fourth-most-popular video destination on the web. That makes it just successful enough to draw serious fire from competition.

Search giant Google is slowly turning web-video leader YouTube into a premium content site. CBS recently relaunched TV.com as a Hulu clone. While TV.com still streams fewer videos than Hulu, it already sees more unique visitors each month.

In losing Peter, who sat on Hulu's board, Hulu loses:

An advocate for Hulu's open strategy in closed Hollywood. When, back in 2007, Hulu CEO Jason Kilar said Hulu videos had to be embeddable, Peter was the first board member to back the plan, and NBC boss Jeff Zucker soon followed.

With Chernin's departure, Hulu may eventually lose its exclusive access to Fox and NBC content.

A powerful executive committed to protecting Hulu's exclusive access to NBC and Fox content. Hulu's main competitive advantage against CBS's TV.com and YouTube is its exclusive access to NBC and Fox content. That license expires sometime in the next 16 months. Peter staked his reputation on making Hulu work. His replacement might decide News Corp. can find better revenue-sharing terms elsewhere -- on TV.com or maybe on its own at Fox.com. NBC also already streams its shows at NBC.com, so Jeff Zucker might not put up a huge fight.

Its best chance at landing Disney and CBS content. When Hulu launched and outsiders doubted whether Disney and CBS would ever bring their shows to the site, Peter told The New York Times:

"These are all friends of mine. They all have their own strategies. They have every right to sit back and see how this works and if it is in their best interests. I'm optimistic that others will join us, but even if nothing else changes, I already think this has more premium video than anywhere else."

That sort of swagger is gone now.

A News Corp. exec comfortable with Hulu cannibalizing DVD sales. Part of the reason News Corp.'s filmed-entertainment division saw revenue plummet 72% this past quarter is that DVD sales are getting crushed. A small but growing reason people aren't buying DVDs is that they can see old movies and reruns on Hulu. Killing Hulu won't restore DVD sales, of course, but we wouldn't put it past most Hollywood execs to give it a try. Peter knew better. "You can't protect old business models artificially," he told Wired before Hulu launched.

An old-media executive who understands new media's user-first mentality. When NBC and News Corp. launched, Peter told the Times, "I think there's a snarky desire to say this is big dumb media and this is a big dumb joint venture. If there is a product that's attractive to consumers, we'll be just fine."

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Nicholas Carlson writes for Business Insider.
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