Peter Chernin

Don’t overestimate his Hulu play — or underestimate the value of his latest flurry of investments

If 2012 was all about raising capital at the Chernin Group, 2013 could be the year for spending that money.

(From the pages of the April 9 issue of Variety.)

Peter Chernin’s eponymous media-holding company looked to be on the verge of cracking open its piggy bank last week, making a $500 million bid for Hulu, the streaming video service he played a pioneering role in launching in 2007, while still chief operating officer of News Corp. Chernin is also leading a $30 million investment round that’s about to close for Fullscreen, a YouTube-centric venture that is just one of several stakes he’s taken in a sector in which he’s played no small role in flooding with financing. (Reuters broke the story on Hulu, while AllThingsD did same on Fullscreen).

The unlikely prospect of him regaining Hulu will get all the attention, but Fullscreen shouldn’t be ignored.

Chernin is activating the hundreds of millions of dollars his company secured last year in a pair of deals with Providence Equity Partners — one of the original owners of Hulu — and Qatar Holding Co. With the ambition and innovation Chernin can bring to empire-building, every step he makes holds the promise of moving toward an entity the size of the conglomerates that came before it — but with very different DNA.

See Also: Chernin Group Eyes High-Growth Trends

Which isn’t to say he’s removed himself from Hollywood — far from it. Chernin has a big theatrical release coming April 19 with the Tom Cruise starrer “Oblivion.” He’s got two more films in production and should see multiple TV pilots picked up for the 2013-14 season through his lucrative production pact with 20th Century Fox.

There are really two Chernins: The one who still thrills enough to traditional producing to enjoy a day on the set of the “Planet of the Apes” sequel, and the other who’s tech-minded enough to tweet about it, as he did last week about watching Andy Serkis’ simian simulation.

Hulu or Fullscreen are of the latter Chernin, who wants to figure out how to build businesses around the explosive global growth of online video, which attracts more younger viewers than TV and has fewer barriers to entry.

Hulu represents the opportunity to rescue an entity he helped put on the map to unexpected success only to watch it rendered rudderless by conflicting owners and the departure of CEO Jason Kilar. Hulu even has something it didn’t when Chernin sat on its board: a presence in Japan, which might agree with a man who has a taste for Asian assets.

A $500 million bid reflects its distressed status; last time News Corp. and Disney hung a “for sale” sign on Hulu in 2011, $2 billion was the asking price. That may mean licensing deals for nextday access to primetime programming aren’t guaranteed for the long term, which begs a question: Why buy it?

Chernin has the advantage of knowing this property inside and out. Disadvantage: If Hulu draws the deep-pocketed companies like Google or DirecTV that came its way last time, Chernin may not be able to compete in a bidding war.

Don’t get too excited by the Hulu prospect. It is far from the first major media entity put on the auction block to bear Chernin’s shoe print on its tires only to go nowhere. MGM, Yahoo, Tribune Co. and Endemol also make the list. Chernin has been happy post-News Corp. to make selective investments in either new sensations like Flipboard, Pandora and Tumblr or far-flung properties like animation biz Graphic India.

Fullscreen, incubated in Chernin’s own office more than two years ago with less than $1 million of his money, shot to the top of the rankings among YouTube’s multichannel networks, now commanding better than 2 billion monthly views. And while it boasts more than 5,000 channels on YouTube, Fullscreen’s true differentiator in the crowded MCN category may be a concierge side business of sorts that helps established brands from NBC to FremantleMedia make the most of their YouTube channels.

Chernin could buy dozens of Fullscreens for the price of one Hulu, and yet this isn’t an insignificant investment.

It’s actually one of three MCNs Chernin has made small investments in over recent months, including Latino-themed MiTu in December for $3 million, and U.K.-based Base79 in November for $10 million. Other conglomerates are in the hunt, too: Time Warner’s investment arm led a $36 million investment round for Maker Studios, and Bertelsmann grabbed a stake in StyleHaul for $6.5 million.

See Also: Media Bigs Flock to YouTube Power Players

Why bother with these guppies when there are whales like Endemol to consider? Because they have the growth potential to become global networks for a lot less outlay than cable channels, which skew much older and aren’t really for sale, anyway. Should Chernin acquire an Endemol, these become instant homes for its content.

Sure, Hulu could be a coup. But Chernin is more interested in hatching new properties customized to capitalize on the new media world than to salvage wrecks that barely escaped the old world.

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