Markets

Comedy Central and Hulu Making Up, to the Benefit of Both

By Catharine Taylor

Updated on: January 4, 2011 / 2:02 PM EST / MoneyWatch

By many accounts, Hulu and Comedy Central are in the process of kissing and making up, which means that Hulu will presumably soon again host clips from The Daily Show and The Colbert Report. Before the two companies' break-up ten months ago, the two shows were among the most popular on the site.

This outcome represents a reality check for both parties. For Hulu, it's that -- especially in the era of Netflix (NFLX) -- premium content is something you don't give up lightly, especially content that is served up, hot and fresh, four days a week, as is the case with The Daily Show and The Colbert Report.

For Comedy Central, it's that monetizing popular content isn't as easy as you think. If you go to the Comedy Central site, or get your Daily Show fix on one of the many sites that posts its content nearly every day -- like Gawker -- you'll find that the clips themselves don't carry what is known in the business as a pre-roll, which is one of those (yes, annoying) ads that run before the content airs. But annoying also means intrusive, which should have been an easy sell for advertisers.

Instead, that same content often runs without making any money for Comedy Central at all, instead benefiting whichever site posted it. On the Comedy Central site, it's true that video often runs on advertising-laden pages, but it doesn't take a rocket scientist to figure out that when users go there, their focus is on the box playing the video, and not all of the flashing stuff around it. From a revenue perspective -- as opposed to the anti-commercial perspective of viewers -- pre-roll is the way to go. In retrospect, this all makes the original spat between Hulu and Comedy Central, which was about distribution fees, seem short-sighted, especially since there didn't seem to be much of a game plan to recoup the money elsewhere.

Either way, it's better for everyone that these shows return to Hulu. Lessons learned all around.

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