http://news.investors.com/111715-781178-hulu-partnership-could-spark-doj-probe.htm?ven=djcp&src=aurlabo
<http://news.investors.com/111715-781178-hulu-partnership-could-spark-doj-probe.htm?ven=djcp&src=aurlabo>
Would Anti-Netflix Hulu Alliance Invite DOJ Probe?
Federal regulators could launch a probe if Comcast, 21st Century Fox and Walt
Disney bring in Time Warner as a fourth partner in Hulu, especially if the
media quartet becomes much more selective in licensing content to Web video
streamer Netflix.
So says Paul Gallant, an analyst at Guggenheim Partners.
Gallant notes that the Department of Justice in 2012 reportedly launched an
antitrust investigation
<http://www.wsj.com/articles/SB10001424052702303444204577462951166384624?>
involving nascent over-the-top (OTT) online video services and the broadband
policies of cable TV companies.
Even though Hulu is much smaller than Netflix, plans involving Hulu could
raise alarm, says Gallant.
"It may well be the case that media company executives have not privately
discussed restricting the sale of content to OTTs," said Gallant in a
research <http://research.investors.com/> report. "But given the growing
public discussion around this issue — highlighted by Time Warner's comments
and its possible Hulu move — it would not surprise us if the DOJ began an
investigation for any indication of coordination regarding OTT."
One wild card is whether the media companies go ahead and license content to
a formidable new entrant, such as Apple. A Web TV service from Apple has long
been speculated, though another analyst on Tuesday cast some doubt
<http://news.investors.com/technology/111715-781149-apple-web-tv-service-questioned.htm>.
Time Warner reportedly is in talks to be the fourth partner
<http://www.wsj.com/articles/hulu-in-talks-to-sell-stake-to-time-warner-1447362212>
in money-losing Hulu.
Disney, 21st Century Fox and cable TV firm Comcast, which controls
NBCUniversal, are co-owners of Hulu.
Comcast is barred from taking part in Hulu's management
<http://news.investors.com/management.aspx> until 2018, under conditions that
regulators set on its 2011 acquisition of NBCU.
Disney disclosed higher Hulu losses in its Q3 earnings.
Programming Fees At Risk
While Netflix's subscribers continue to grow, pay-TV companies have been
losing customers, putting the programming fees that media giants garner from
Comcast and others at risk.
Some analysts have cautioned that pulling content from Netflix might not be
the best strategic move
<http://news.investors.com/technology/110215-778641-media-stocks-report-earnings-netflix-licensing-commentary-ibd-rkrause.htm?>,
since Netflix pays for the content. Media firms' subscription
video-on-demand revenue is much smaller than pay-TV revenue.
Time Warner and Fox have been the most open about rethinking their SVOD
(subscription video on demand) licensing plans. Viacom has cut back on
content provided to Neflix. CBS, Disney and Comcast all licensed new shows to
Netflix in Q3.
Media companies might not have a united front. Disney's three-year movie deal
with Netflix kicks in during 2016. CBS Chief Executive Leslie Moonves
<http://www.hollywoodreporter.com/news/cbs-netflix-not-antichrist-ratings-839239>,
at an investor conference Nov. 11, said, "Netflix is not the Antichrist."
Amid speculation that he's about to use his stakes in Discovery, Starz,
Lionsgate and Liberty Media to roll up smaller content providers, Liberty
Chairman John Malone last week said that his biggest recent mistake
<http://www.multichannel.com/news/ott/malone-s-biggest-mistake-not-buying-netflix/395297>
was not launching a hostile takeover of Netflix when its shares plummeted in
2011 following a price hike.