Netflix not buying Hulu, pigs still not flying

Deals No disrespect to the Wall Street Journal, but is it really news that Netflix is not among those vying to buy Hulu, as the paper reported this morning? I understand the need for a hook and a headline to sell a story, but did anyone Netflix really would be in the running?

Presumably, the idea was that since Netflix is in the video streaming business and Hulu is in the video streaming business they might somehow be compatible businesses, and thus Netflix management might conceivably have been interested in trying to combine them. That’s like saying NASCAR drivers and Teamsters are in the same business because they both drive vehicles for a living.

In fairness to the Journal, the  idea of combing Netflix and Hulu has been around awhile. Farhad Manjoo tried to make the case for a “HuFlix” combi in an article for Fast Company as far back as last October. It’s a common fallacy, in fact, born of an excessive focus on technological means at the expense of business ends.

Hulu is in the ad-supported catch-up TV business. Netflix is in the subscription service business. For that matter, iTunes is in the pay-per-view and electronic sell-through business. All three rely on IP streaming technology, but that’s about as far as the similarities go. Each operates in a different window, under different business models and different consumer propositions. From the consumer’s point of view (the one that really matters) none is a substitute for either of the others, and combining any two of them, by itself, would produce no meaningful synergies or economies of scale for the owner.

Yes, Hulu has the Hulu Plus subscription service. But that’s largely a windowing and authentication device, not a monetization device. Content on Hulu Plus still carries advertising because that’s Hulu’s core business.

If Hulu is ultimately sold (as opposed to spun-off) it’s most likely to be (or at least should be) to someone with a strategic interest and business reason to be in the ad-supported, current-season TV streaming business. That ain’t Netflix.

The real news in the Journal article, to me, was that DirecTV is among those making it through to the second round of Hulu-snooping. The sat-caster’s name hadn’t surfaced in previous reports, but it remains my pick for the most convivial (to the sellers) and strategically compatible buyer.