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Public Interest Groups Hammer Comcast Over Reports of Hulu's Change in Streaming Model

Public interest groups were quick to jump on reports that
Hulu was going start requiring a cable TV subscription to access its content (the
cable industry's "authentication" model for putting its programming
online), though they differed over what that move meant.

Free Press said it called into question whether Comcast was
living up to its NBCU deal conditions (NBC is a co-owner of Hulu), and asked
for an investigation by the FCC and Justice, which approved the Comcast/NBCU

By contrast, Public Knowledge apparently did not think
moving the content behind a pay wall violated any of the deal conditions. In
fact, it said the FCC specifically did not adopt such a condition, even though
it was recommended by some.

Comcast says it has no role in Hulu management decisions, which was a condition in the deal.

"The Federal Communications Commission (FCC) was asked
to include as a condition of Comcast's takeover of NBCU that subscription to a
pay-TV service not be required for access to Hulu," said Public Knowledge
President Gigi Sohn. "It is a shame the Commission declined to do

Free Press saw it differently. "This sudden move to big
cable's preferred business model raises serious questions about whether Comcast
is violating the conditions of its merger with NBCUniversal," said the
group, "a deal that gave the company a large ownership stake in Hulu." As
a condition for approval of the merger, the cable giant agreed to relinquish
any right "to influence, control or participate in the governance or
management of Hulu."

"Where there's smoke, there's fire," said Free
Press Policy Director Matt Wood, "or at least a compelling reason to
investigate. Under the terms of its acquisition of NBCUniversal, Comcast is
forbidden from influencing Hulu's operations. Today's announcement looks an
awful lot like an example of such influence."

Comcast said it was clearly not.

"Comcast and NBCUniversal have no governance rights and no board seat at Hulu. This is consistent with the FCC Order and the DOJ Consent Decree on the Comcast/NBCUniversal transaction. We have not been involved with the management of Hulu or in any buyout discussions with Hulu. Any hypothetical claims of violations of the FCC Order and the DOJ consent decree with regard to Hulu are a fiction."

The reactions were based on a New York Post article filed earlier Monday that noted Hulu was
moving to a model where subscribers of existing pay TV providers would have
access to more content than those who didn't.

This shift, however, has been going on for some time. Last
summer Fox announced a major shift in the online windowing of its network
content and said it was looking to cut TV Everywhere deals with operators that
would give their subscribers next day access to network content. The Hulu Plus
subscribers would also get next day access. But everyone else would have to
wait for eight days for free access.

Last year, Disney also announced that it was working on
similar deals with operators for access to ABC programming.

As previously reported, the move to TV Everywhere models and
uncertainty over existing online business models were a key reason why Hulu was
not sold last summer.

Since deciding not to sell the company, the owners have been
shifting towards a model that would provide more content to those who
subscribed to the Hulu Plus online service or were authenticated subscribers of
a pay TV service that had cut a deal with the networks for access to the

Those points were highlighted in a January 12 B&C article filed from CES.

During a panel session at CES, Jonathan Miller, chairman and
CEO of News Digital Media and chief digital officer of News Corp. described the
growing importance of authenticated access or TV Everywhere deals in their
content distribution strategies.

As part of that discussion, he noted that their larger
relationships with operators affected both their decision not to sell their
stake in Hulu and windowing of online content.

During CES, News Corp. highlighted the new strategy by
announcing a deal with Microsoft that would allow authenticated subscribers of
pay TV providers who had TV Everywhere deals with Fox to access network content
online the next day.

This was designed, Miller explain to "both support an
existing model [with the authenticated deals for Fox and Fox News] and to create
new distribution channels" for the other properties, B&C reported at the time.

The article also noted: "Miller stressed that the existing
relationship with operators like Comcast `is the master of the financial
wellbeing of all U.S. based media,' hence the growing important of licensing
broadcast and cable content through TV Everywhere deals."