Broadcast Execs Worry About Viability, Debate Charging For Hulu

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With tongue firmly implanted in cheek, Fox marketing executive Joe Earley suggested that Hulu junkies may need some sort of rehab. The millions who use the site are so addicted to its low commercial load that looking for more revenues -- by either increasing the number of ads or getting people to pay per episode -- may be difficult.

"You've given them the heroin, they're used to it," he said at a Promax/BDA event Wednesday.

Not unlike other executives, Earley suggested that if shows continue to be available free on Hulu.com, the commercial load should match the live network feed. Or, the site could offer a commercial-free option for a fee.

There are fears that Hulu is slowly starting to contribute to on-air ratings declines, particularly among college students who access it on their laptops in dorm rooms or libraries. One caveat: revenues from Hulu aren't coming even close to making up for any lost ad dollars from the traditional TV feed.

By running so few ads on Hulu, Earley, executive vice president of marketing and communications at Fox, said: "We're actually training people to use the very thing that is ultimately a threat."

Still, there is hardly a guarantee that more commercials or a pay-per-view model would help derive more Hulu dollars. John Miller, CMO of the NBC Universal Television Group, said revenues NBCU gets from iTunes sales of shows aren't material.

Full episodes cost $1.99 to download. Miller divulged how Apple and NBC split that fee, saying Apple takes 30%."It's just not a ton of money," he noted.

Miller joined Earley on a panel discussion at the annual Promax/BDA event in New York.

Both executives expressed concerns about the long-term viability of broadcast TV in its current form, with only revenues from advertising. "The sustainability of broadcast right now is under some question unless the economy comes roaring back," Miller said.

Looking ahead, he did say "television will be there." Cable networks with dual revenue streams (advertising and subscription fees) and premium channels such as HBO are likely to thrive, Miller said. (NBCU has top-tier cable channels, such as USA and Bravo.)

NBC's efforts to tinker with the broadcast model most notably include running a Jay Leno-fronted show five nights a week. The network is also using sort of a movie-blockbuster model, where a popular show can lead to sales of DVDs and other ancillary revenues.

Miller cited two NBCU cable networks, Bravo and Oxygen, as starting to build successful multi-tiered businesses by selling clothing and other products related to shows.

Miller suggested that over time, broadcast TV will not have the revenues to continue to produce such high-quality shows. Meanwhile, cable networks, with ad dollars and subscription fees to call on, are heading in the opposite direction. "The difference between a broadcast show and a cable show is less and less."

With Hulu growing, Miller said NBC.com is increasingly aimed at what he called a "super fan." NBC.com is focusing on adding extra features, such as exclusive Webisodes, behind-the-scenes footage and interactive opportunities.

Earley said Fox.com is employing a similar strategy. He also said that Fox is trying to use Hulu's traffic as a marketing platform to direct people back to watch favored series on the network.

Hulu is partly owned by Fox parent News Corp., NBCU and Disney.

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Source: Media Daily News

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