WarnerMedia CEO laments not taking Hulu global

AT&T Chief Executive Officer Jason Kilar is pictured in an undated photograph supplied by the company. (Photo: AT&T/Handout, Graphic: The Desk)

Jason Kilar, the ex-Hulu executive who is now in charge of AT&T’s WarnerMedia decision, said this week he regretted not pushing harder for Hulu to expand around the world during his time with the streaming service.

The executive made the remark this week during an investor conference hosted by MoffettNathanson, an analytic firm focused on the media industry.

Hulu began in 2007 as a pact between three broadcasters — the Walt Disney Company (ABC), NBC Universal (now part of Comcast) and the television arm of News Corporation (now Fox Corporation) — as the media companies were experimenting with offering their television shows and movies direct to consumers through the Internet.

At that time, households were still primarily consuming TV shows and movies through traditional means — specifically, cable and satellite — while video consumption was largely done on Flash-based websites like YouTube and DailyMotion.

Aside from Hulu, Netflix was the only other company seriously experimenting with offering a streaming television service at that time, though even that company was still largely focused on its DVD-by-mail offering.

Given the state of the industry at the time, Kilar said it was probably a hard sell to Hulu’s board of directors to ramp up their streaming efforts in a way that would allow the company to go global.

“This is ultimately a global business,” Kilar said during the conference this week. “I think it was very hard for the board members of Hulu…to feel that this new, small thing called Hulu was going to disrupt their existing businesses across the globe”

But it was only a matter of time: Netflix eventually shifted its focus away from its DVD-by-mail business and went all-in on streaming. The company still operates its mail delivery service, but it pours billions of dollars annually into producing high-quality, original programs tailor-made for a streaming audience.

Over the year, Hulu has grown too, but that growth has been stymied largely by its operation as a joint venture between competing broadcasters with their own business strategies and agendas.

Thigns have improved in recent years as Hulu has slowly become swallowed up by Disney: The family-friendly media company acquired the assets of 21st Century Fox, including its 33 percent stake in Hulu, in 2017. Less than one month after the Fox deal closed, AT&T sold its 10 percent stake in Hulu to Disney as well, leaving Comcast holding less than one-third of the company.

Two years ago, Comcast said it would eventually sell Disney its 33 percent stake in Hulu. That transaction is set to happen sometime after early 2024; in the meantime, Comcast has abdicated its control of Hulu to Disney, which has started offering a subscription to the streamers as part of a bundle with its other two services, Disney Plus and ESPN Plus.

But by the time Disney acquired the streamer, it was already a little too late: Netflix and Amazon were making significant headway in the global streaming market. Comcast, ViacomCBS and Discovery Communications have also signaled their intention to take their own streaming products global over time.

The mistake of not pressing harder to take Hulu global is a mistake Kilar is not willing to make a second time: After joining AT&T WarnerMedia last year, the company announced plans to consolidate its HBO streaming services into a single package, HBO Max, and the intention to roll it out in international markets over the next few years.

Next month, AT&T will launch HBO Max in more than three dozen Latin American countries, and is expected to offer country-specific variants of HBO in nearly two dozen European countries by the end of the year.

“The cost for distribution is diminimus,” Kilar said on Thursday. “All of the investment is in the upfront, fixed costs of the stories that we get to tell. Once you do that, it’s far to your advantage to amortize those costs across the globe.”

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