Kilar to quit as CEO of Hulu by March

January 5, 2013 - 10:32 AM

LOS ANGELES (AP) — Jason Kilar will step down by the end of March as the chief executive of Hulu, the online video service owned by the parents of ABC, NBC and Fox.

Kilar, 41, broke the news to staff in an email, which he posted on the Hulu blog on Friday. While he didn't state a reason, the video site has been losing money despite posting nearly $700 million in revenue last year. But it's growing fast, and added 200,000 paying subscribers in the last seven days alone, Kilar said. Last month, the company said it had more than 3 million subscribers.

The company's CEO since its founding in 2007, Kilar has at times clashed with Hulu's owners over strategy. Spawned in part as a bid to offset Internet piracy, Hulu got its start showing reruns of ABC, NBC and Fox shows free on the Web with minimal advertising, and added a $10-per-month subscription tier in June 2010 that expanded the back catalog.

The price of a subscription to Hulu Plus was cut to $8 a few months later, but a paid plan is necessary for viewers who wish to watch shows on tablets, phones, or Internet-connected TV sets. It's unclear if Kilar's resignation signals a change in strategy, but it could be a good opportunity for the companies to implement changes.

Two people familiar with the matter said the move was not surprising, partly because Kilar is flush with cash after being paid about $40 million for his stake in the company in a sale that coincided with Providence Equity Partners selling its 10 percent stake for $200 million late last year. The people spoke on condition of anonymity because they were not authorized to speak publicly.

Providence's exit came after the owners decided not to sell Hulu in 2011 following months of entertaining outside offers.

Kilar said in the blog that Richard Tom, senior vice president and chief technology officer, will leave at about the same time. As an entrepreneur who previously helped Amazon get into the video streaming business, Kilar could re-emerge as the head of a new fledgling business. Prior to joining Hulu, Tom spent eight years at Microsoft, where he led a team that created a business application platform for its Office Live online software.

"We are fortunate to have collectively built a culture that matters, a brand that matters, a business that matters," Kilar said in his memo. "It is impossible to state in words how much this team means to me, how much Hulu means to me."

Hulu's parent companies, The Walt Disney Co. and News Corp., lauded Kilar's accomplishments.

"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," said Disney CEO Bob Iger in a statement. "We are proud of his achievements, we appreciate what he's built, and we share his confidence in his team's ability to drive Hulu forward from here."

News Corp. CEO Rupert Murdoch added, "Jason and his team have done a great job building Hulu into one of the leading online video services available today and it's incredibly well positioned for the road ahead. We are grateful for Jason's leadership and wish him the best on his next venture."

NBC parent Comcast Corp. is required to be a silent partner in Hulu as part of the government signing off on its purchase of NBCUniversal in January 2011.