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Hulu's owners weigh board shuffle

Two of the most influential executives in Hollywood may be stepping off the Hulu board, which would give the chief executive of the popular online video website, Jason Kilar, more latitude to run the business.

News Corp. Chief Operating Officer Chase Carey and Walt Disney Co. Chief Executive Robert A. Iger might give up their board seats, people familiar with the matter confirm. Discussions about reducing the size of the board were first reported by The Wall Street Journal.

Hulu has long been a source of tension for the media companies that own it. The service was launched in 2008 to provide a legitimate alternative to pirated videos. But as Hulu has grown more popular, it has caused other headaches. Its media owners -- News Corp., Disney and NBC Universal -- worry that the abundance of free videos on Hulu is eroding the long-term value of the TV shows. 

The Hulu board restructuring would give Kilar more freedom in operating the fast-growing service, people with knowledge of the situation say. The board, which has had as many as 12 members, has become bogged down over facets of the site's operation, including clashes over how much to charge for the recently launched subscription service, Hulu Plus.

Already this year, the size of the board has shrunk to nine members, with three each from News Corp., Disney and investor Providence Equity Partners. In late January, as part of an agreement with federal regulators to pave the way for its takeover of NBC Universal, Comcast Corp. gave up its three seats on the board.

If Iger and Carey leave the board, each of their companies would still be represented by two senior executives. News Corp. would be represented by Jim Gianopulos, co-chairman of Fox Filmed Entertainment, and Jonathan Miller, chief digital officer. Disney would have Anne Sweeney, president of the Disney/ABC Television Group, and Kevin Mayer, executive vice president of corporate strategy.

One insider described board sessions as drawn-out discussions of how to reconcile Hulu's success in meeting consumer demand to watch popular shows whenever they like with concerns about jeopardizing existing business models that provide the companies billions in revenue a year.

The frustration was evidenced in a blog posting by Kilar last month, in which he laid out his view of the forces reshaping television -- which run counter to the economic model Hulu's owners are trying to protect. Kilar said traditional TV is not convenient to viewers; that it has too many commercials, pushing viewers to record and watch shows on digital video recorders (which allow ad-skipping); that it is not flexible enough for viewers who want to watch shows on their schedule -- not at a time dictated to them.

"The above trends are a reality and we believe the wise move is to find ways to exploit these new trends and leverage them to build great businesses," Kilar wrote. "History has shown that incumbents tend to fight trends that challenge established ways and, in the process, lose focus on what matters most: customers. Hulu is not burdened by that legacy."

Hulu declined Thursday to comment on possible changes. 

-- Dawn C. Chmielewski and Meg James

 

 
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