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Rift widens between Hulu CEO and backers

In a blog post, Hulu CEO Jason Kilar says TV burdens viewers with too many ads and predicts TV's profit margins will slip. Apparently this hasn't been well-received among Hulu's backers.

Hulu CEO Jason Kilar.
Greg Sandoval/CNET

For weeks, news outlets have speculated about the tension that appears to be growing between Hulu's management and the major media companies that back the Web video portal.

The rift is at least big enough to prompt Hulu CEO Jason Kilar to write a blog post that appears to takes his argument with his bosses at NBC Universal, Disney, and News Corp., to the public. In his note, Kilar said things that he must have known would anger many at the three media companies who each own a minority stake in Hulu.

Kilar, a former Amazon exec, was critical of how TV advertises to viewers and predicted that prices and profit margins for TV would come down. He was dismissive of how TV entities charge Web distributors to stream content over the Internet.

"Traditional TV has too many ads," Killar declared in his post. "Consumers are increasingly moving to on-demand viewing, in part because of the lighter ad load." Later Kilar said: "Over the past 4 years, studios and networks have not always insisted on per-user per-month economics in their digital licensing agreements, which has resulted in a regretted under-pricing of their content to digital distribution."

With this last statement, Kilar appears to be taking a shot at Netflix. In recent months, some big Hollywood studio execs have complained that Netflix wasn't paying enough for content. Kilar seems to be saying that if the studios and TV networks aren't happy with their Netflix money, they should charge differently. Kilar says throughout his treatise that TV should charge on a per-user per-month basis instead of a fixed rate.

Kilar's statements come as ABC and News Corp. are considering whether to remove some of their content from Hulu's free service, according to a report in The Wall Street Journal. While much of what he said in his blog post will be welcome news for consumers, his statements appear to have turned up the heat in the halls of Hulu's parent companies.

According to a report in The Financial Times, an anonymous source said that Hulu's backers are furious with Kilar.

"If I were given billions of dollars worth of programming, I too could probably build a business," the source told the FT. "But I know that in order to build a long-term, viable business I would have to do so in a way that works for everybody." Another source told the FT that they thought Kilar was out of touch with how mainstream viewers watch TV and called Kilar an "elitist."