Hulu CEO Kilar Plans to Depart Web TV Company by April

Jason Kilar, chief executive officer of Hulu LLC, said he is leaving the online video service, two months after receiving a multimillion dollar payout.

Kilar, 41, will step down by April and is working with Hulu’s board on a transition, according to a statement yesterday on the company’s website. Chief Technology Officer Rich Tom will also exit. Kilar declined to comment beyond the announcement, said Elisa Schreiber, a spokeswoman.

The executive received about $40 million from the sale of Hulu stock back to the company in October, people told Bloomberg at the time. Hulu also repurchased a 10 percent stake held by Providence Equity Partners Inc. for $200 million, a deal that valued the company at about $2 billion. The moves left ownership of Los Angeles-based Hulu fully in the hands of Walt Disney Co. (DIS), News Corp. (NWSA) and Comcast Corp. (CMCSA)’s NBC Universal.

“The loss of Jason is a negative for all the media companies involved,” Rich Greenfield, an analyst at BTIG LLC in New York, wrote in an e-mail. “Consumers lost one of the few executives who really understood how to put the consumer experience and user interface ahead of the business model.”

The resignation comes as Hulu seeks to expand its original and exclusive programming, after extending contracts for ABC and Fox shows. Kilar asked Hulu’s owners last month to contribute $200 million for original series, the Wall Street Journal reported Dec. 20.

Online Commercials

Kilar, who helped create Hulu in 2007, at times clashed with the website’s owners over business strategy and the number of commercials that appeared in TV episodes online. In February 2011, he suggested online video commercials offer more value than traditional TV ads.

Formed by NBC and Fox, Hulu allowed viewers to watch shows online with fewer commercials. Disney became an investor in April 2009. The $8-a-month Hulu Plus subscription service, started in 2010, provides access to a bigger library of shows and the ability to watch programs on mobile devices, Web- connected TV sets and video-game consoles.

“I believe Hulu will now transition into more of a pay service, with more content behind a pay wall,” Laura Martin, an analyst at Needham & Co., said yesterday in an interview.

Greenfield predicts News Corp. will buy out its partners in Hulu. With new long-term TV deals from NBC and ABC, Fox could focus on creating original programming for the service, he wrote in a Jan. 3 report.

Joint Ventures

“Media joint ventures are hard, especially when you are trying to innovate and go beyond traditional ways of doing business,” Greenfield said in an e-mail.

Comcast Corp. is barred from an operational or board role due to an agreement with federal regulators related to approval of its NBC Universal acquisition in January 2011.

Hulu said last month 2012 revenue climbed 65 percent to about $695 million as subscribers more than doubled to 3 million.

The company remains behind Netflix Inc. (NFLX)’s more than 30 million worldwide subscribers, and faces emerging competition from the new Redbox Instant service offered by Verizon Communications Inc. (VZ) and Coinstar Inc. (CSTR), as well as Amazon.com.

The U.S. online video advertising market grew 47 percent to $2.93 billion in 2012, according to researcher eMarketer. This year advertisers are expected to spend $4.14 billion on U.S. online video ads, eMarketer said.

Online viewing in the U.S. continues to grow. More than 30 percent of the U.S. population watched TV online in 2012, up from 27 percent a year earlier and 22 percent in 2010, eMarketer said.

“Jason has been an integral part of the Hulu story, transforming it from an interesting idea into an innovative business model that continues to evolve,” Bob Iger, Disney’s chairman and CEO, said in an e-mailed statement.

The company is “incredibly well-positioned for the road ahead,” News Corp. Chairman and CEO Rupert Murdoch said in a separate statement.

To contact the reporter on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net; Rob Golum at rgolum@bloomberg.net

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