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  1.    #1  
    Hi all,

    FYI.

    Take care,

    jay

    Cable's Decline An Incentive For Yahoo, Hulu Deal
    By REUTERS, August 24, 2010, Filed at 3:39 a.m. ET

    August 24, 2010

    NEW YORK (Hollywood Reporter) - Just as Yahoo weighs Wall Street advice to buy a significant stake in online video site Hulu, a research firm reported the first-ever subscriber decline for the U.S. TV multichannel industry.

    Monday's figures -- showing the worst combined subscriber performance of cable, satellite TV and telecom video providers since SNL Kagan started tracking data in the 1980s -- suggest the timing is right for the Web titan to make a major bet on consumers canceling their pay TV subscriptions in favor of Web TV offers.

    Cable suffered its worst video loss, shedding 711,000 video subscribers in the second quarter, as six of the eight biggest cable firms reported their most dismal three-month period. Overall, cable, satellite TV and telecom providers shed 216,000 video customers in Q2 compared with a 378,000 gain in the same period a year earlier.

    SNL Kagan estimates that almost 3 million U.S. households will use Hulu and other Web TV options as their primary video solution by the end of the year, up from 1.5 million in 2009. For 2011, the company expects that figure to hit 4.3 million. (There are about 115 million TV households in the States.)

    "We particularly see continued declines for the cable industry," SNL Kagan analyst Ian Olgeirson told The Hollywood Reporter.

    Seasonal factors were key to the weak Q2, according to Sanford C. Bernstein analyst Craig Moffet, who predicted that multichannel TV operators will grow subscribers for the full year despite the second-quarter weakness. "Now, if we were to see weakness persist through the fourth quarter, then Houston, we'd have a problem," he said.

    The second quarter is always the weakest for TV providers, but the report also highlighted economic factors -- such as high unemployment and the weak housing market -- as well as the one-time effect of cancellations by those who had signed up for a TV service a year earlier amid deep discounts tied to the nation's digital TV transition.

    With media giants planning more Web TV offers that require a cable or satellite TV subscription -- part of their TV Everywhere initiative -- "this will cramp some of the flow" to Internet-only, but there still is "plenty of content" available online that will tempt more people to stop paying cable or other TV bills, Olgeirson added.

    Given that such attitudes play into Web video sites' hands, many on the Street argue that the acquisition of a major stake in Hulu by Yahoo would be pricey (given a reported $2 billion target valuation in a possible IPO this year) but could help super-charge Yahoo's efforts to provide more content.

    Similarly, Janco Partners analyst Martin Pyykkonen said Yahoo is the most natural buyer as the firm "should be more of a content play, because they have really lost the search game."

    Analyst Jordan Rohan said as much in a Friday report that kicked off the debate.

    "While an investment in Hulu doesn't solve Yahoo's long-term relevancy problems single-handedly, it could reinforce Yahoo's position as a core entertainment destination," he said.

    "On a revenue per thousand streams basis, we estimate Hulu generates $14, six times higher than Google-owned YouTube. Perhaps more importantly, Hulu brings with it a clear must-buy status among brand advertisers, something that we believe Yahoo is at risk of losing over time."

    Asked why he only urged Yahoo to buy a stake in rather than all of Hulu, Rohan told The Hollywood Reporter that the price would be high and that "the existing studio partners should be expected to keep some skin in the game." Other experts reiterated that keeping the current entertainment giants around as shareholders would ensure they have a say in Hulu's future and an incentive to make their content available.

    But digital media analyst Dan Rayburn at Frost & Sullivan argued tech players are not what Hulu needs. "Hulu ... would not benefit from having a tech company control them as Hulu is not lacking technology features of their service, they lack content," he said.

    Whoever owns Hulu down the line may have to shell out money on content deals, Pyykkonen said. "Netflix put a line in the sand with its Epix deal, which had a pretty significant price tag," he said in reference to the nearly $1 billion content deal announced this month.

    As Starz's deal -- covering Sony and Disney films -- with Netflix ends next year, Hulu could look to add movies to its TV-heavy content offers. "They have to be in the movie business somehow," Pyykkonen said.

    Some experts Monday also mentioned that other potential Web or tech giants could benefit from owning a major stake in Hulu, including Microsoft, AOL or maybe even a cable operator given SNL Kagan's expectations for weaker basic cable-user momentum.

    "Given that Microsoft is cooperating with Yahoo in search, maybe those two companies would consider investing together," Rohan said. AOL, while focused on growing its content offers, has concentrated on below-$100 million deals. Yahoo and the other companies mentioned declined to comment.

    Meanwhile, Rohan said, "Google wouldn't be an effective bidder due to its ownership of YouTube and the antitrust scrutiny already on the search behemoth."

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  2. #2  
    it's interesting that they assume this to be totally because of internet sites like Hulu, with no mention of the people (like me) that are just happy with the HD broadcasts over the air for local channels. Yes, I watch Hulu, but I shut off cable and went to OTA broadcast only because I don't want to pay for TV that I don't watch.

    I'm glad for sites like Hulu, but if they all disappeared i wouldn't go back to cable. heck, cable TV was originally invented to deliver broadcast tv to places that couldn't get a signal (I lived in a place like that once). The switch to digital OTA broadcasts makes the cable company irrelevant for broadcast stations, and the internet allows cable-only channels to bypass cable companies to deliver content directly to consumers.

    But step one was the switch to digital...
  3. #3  
    I decided a month ago to try and get by without DirecTV and simply use over-the-air and Internet broadcasts. So far it's really worked well. I'm streaming everything to my TV using my xbox360 as an extender and both MediaCenter (for local broadcasts and to act as my DVR) and PlayOn (to stream Hulu and other websites) to give me everything I need. It's really been interesting.

    Yep I don't get NBC locally because of signal issues, but everything I had my DVR set up to record is available in Hulu. Well.. except "Justified" (great new show). If I go this route for a year I will have saved almost $1000. That's crazy money for television if you think about it!

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