Sad but Fair: Comedy Central Ditches Hulu

(MoneyWatch)  Well, there goes watching "The Daily Show with Jon Stewart" on Hulu.

Viacom, in its infinite wisdom -- and I mean that sincerely -- has decided to pull its Comedy Central programming off Hulu. It's a big move. Why? Because it means that Hulu has failed the money test.

If Hulu can't support "The Daily Show" using its current model -- which favors user experience over advertising -- then what show can it support? The "Daily Show" and sister show "The Colbert Report" are staples on the site's "Most Popular" list. Moreover, unlike scripted dramas on Hulu, they are relatively cheap to produce and therefore in a position to make money even in a weak commercial environment. (I don't even want to think about the Hulu-nomics of a show like "Lost" which is expensive to produce.)

While one could speculate about whether Viacom's expectations for Hulu were too high, I've no doubt that other content producers--even those whose programming also appears on the broadcast nets of Hulu partners NBC Universal, ABC/Disney and Fox--have the same concerns. Specifically, they have to be wondering if by being part of Hulu, they are helping to finance their own demise by popularizing a viewing behavior that is not commercially sustainable.

That, of course, is not what Hulu's head of content and distribution, Andy Forssell, told the New York Times. Forsell said, with an apparently straight face: "In the past 21 months, we've had very strong results for both Hulu and Comedy Central, in terms of the views and revenue we've generated." But this begs some obvious questions.

1. Can Hulu really speak for Comedy Central when it has no vested interest in cable's prospects?

2. What does "strong results" mean? The bar for what are considered "strong results" are much lower within the cloistered confines of Hulu, where gains in traffic and ad dollars are enough to keep going. But what Comedy Central, which finances the production of the content, considers "strong results" may be something else entirely. The network is no doubt seeing the slow drift of viewers over to Hulu, where they watch its programming but probably see less than 20 percent of the commercials, access programming when they want to, and don't pay a dime for any of it. If that continues, there wouldn't be a "Daily Show"--let alone a Comedy Central, or a Hulu, to broadcast it on.

I'll be sad when I won't be able to go to Hulu for my daily Jon Stewart fix (though "The Daily Show" will be available on the kludgy Comedy Central site). On the other hand, I've known that a moment like Viacom's pullout is entirely necessary. Hulu has to be more aggressive about making money, either by adding more commercials, or, as News Corp. has suggested, by moving to a paid model. Otherwise, it's toast.

Previous coverage of Hulu at BNET Media:

• Hulu: You Absolutely Need to Start Charging Users. Or, Why News Corp. Is Right
• Is There a Fight Brewing Over Hulu's Business Model?
• Seven (Often Stupid) Reasons Hulu Doesn't Have More Ads
• News Corp. Touts Paid Model for Hulu Again, But Where Are the Other Networks?