News Corp. and Walt Disney Co. are reportedly in discussion with one another that could ultimately lead to one company buying out the other’s interest in video streaming service Hulu. At present, each entity owns about a third of Hulu meaning whoever walks away with the other’s ownership would end up with a controlling interest in the service according to two people familiar with the situation as reported by Bloomberg.
The issue boils down to how each company thinks Hulu should be operated. News Corp. believes a subscription-based service is the best course of action while Disney prefers an ad-supported business model. Comcast owns the remaining third but due to regulatory restrictions imposed when they purchased NBCUniversal, they aren’t allowed to have any say-so as far as daily operations go.
At current, Hulu operates somewhat in the middle ground, offering a free version in addition to a premium subscription service. Paid subscribers are still subjected to commercial interruption, however.
Compared to similar services like Netflix which boasted just over 27 million streaming subscribers at the end of 2012, Hulu managed just three million paid users during the same time period. It’s more than double what they had during the previous year but compared to Netflix, they still have a ton of ground to make up.
If neither company is able to reach an agreement with the other, it’s entirely possible that both could sell their interests to a third party that may want to take the company in an entirely different direction.