Hulu’s sales team is “actively subverting” the ad sales of its parent companies that are also trying to sell ads for their shows on Hulu, according to a source at one of the parent companies.According to our source, Hulu’s ad sales team is “cutting rates,” so its ad prices are cheaper. Hulu is also building different, more innovative, ad products than its parent companies like FOX, NBC, and ABC.
Basically, Hulu is selling better ads at cheaper rates. It’s “hollowing out ad sales” for the networks. The bigger companies are finding it harder to sell Hulu ads at higher rates.
This news is significant because Hulu needs the long-term support of its parent companies to survive. If Hulu were to lose its exclusive access to FOX, NBC, and ABC TV shows, the whole operation would fall apart.
Another executive familiar with Hulu’s business said it’s not fair to compare what ads Hulu sells to what its parents sell. By contract, Hulu isn’t allowed to sell ads for a specific television show. It can only sell to demographics or genres. Meanwhile, the networks are selling their shows, so they can demand a premium.
This source says, “By design, the networks should be able to charge a higher CPM at the outset because they can bundle and sell the premium brands.” In other words, Hulu’s innovative ad designs aren’t meant to undercut the networks. They’re the only advantage Hulu has over the networks for selling ads.
But the bottom line is, two years after it launched, Hulu and its network parents are still trying to figure out their awkward relationship — one that we have long believed will doom the company to failure.
We asked our first source if it was a matter of the left hand not knowing what the right hand is doing. His reply, “The left hand is trying to chop off the right hand.”
We reached out to Hulu, but the company refused to comment.
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