Google, Amazon, Yahoo, DirecTV said to be potential suitors
The owners of Hulu are due to receive first-round bids today, with the winning company likely to make a splash in the already turbulent seas of digital entertainment.Google, Amazon, Yahoo and DirecTV are said to be potential suitors, though it’s possible that current owners News Corp., NBC-Universal and Walt Disney Co. could opt to hold onto the service. Apple and Microsoft aren’t regarded as likely buyers, though their deep pockets and tech savvy make them too dangerous to rule out entirely. It’s too early to discount any other comers, but one sure outlier is Netflix, which signaled in its second-quarter earnings call that it had no intent to pursue Hulu. That could end up a regrettable decision given whichever buyer does snap up Hulu will likely go after the Los Gatos, Calif.-based market leader, which has a sizable lead of more than 25 million subscribers. Merriman Capital analyst Eric Wold estimates that Hulu could fetch anywhere from $500 million to $2 billion. In a research note Monday, he identified Google and Amazon as the top contenders because Hulu could represent a quantum leap over the modest forays they’ve made to date into securing premium content. The broad price range reflects the uncertainty over what exactly a buyer would be getting. The most valuable parts of Hulu are the licensing deals the streaming service has with its principals that delivers series programming from broadcasters Fox, NBC and ABC as soon as 24 hours after its original airdate. While News Corp. and Disney have renewed those deals to help the sale, it isn’t known just how many years they’ll let Hulu hold onto that content. The latest episodes of hits like “Family Guy” and “The Office” are the biggest draws on Hulu, which has also begun to license and develop original content such as its new Morgan Spurlock series “A Day in the Life.” Another important deal term with uncertain conditions is how quickly series go from on air to online. Just last week Fox extended the delay on its shows from one to eight days unless the viewer has a subscription to Dish Network that would grant authenticated access or Hulu Plus. Fox is on the hunt for more multichannel providers that could reserve the one-day delay to their subscribers, and other broadcasters like ABC are expected to follow suit as well. The move toward authentication and the impetus to sell Hulu itself are a recognition of the reality that the congloms have a greater financial incentive to protect the retransmission-consent fees they negotiated with MSOs than the mix of advertising and subscription revenues they gained from Hulu. But therein lies the $2 billion question: Will Hulu be reduced to a shadow of its former self if next-day access to top primetime shows aren’t readily available to everyone? While Hulu served 963 million video ads in July, according to Comscore — far more than any other website — its impressive metrics could be seriously diminished soon given that Fox began tightening its reins as of Aug. 15. Hulu has already begun to emphasize attributes other than its traffic in advance of the sale. Earlier this month, it declared its intent to expand into Japan — one of the only regions Netflix hasn’t claimed amid a rash of recent reports that see the brand relocating everywhere from Latin America to Europe. Hulu also barely addressed its core ad-supported business in a corporate blog post attending its second-quarter results. CEO Jason Kilar projected that Hulu is on course to top 1 million subs for Hulu Plus by the end of summer. While this number is still well below Netflix, Kilar was essentially positioning Hulu Plus as a potential vehicle for giving chase to Netflix. For interested companies, the value of Kilar himself may be second only to that of the content deals. The well-regarded CEO defied dim expectations to steer a path to the projected $500 million in revenues Hulu projects to reap this year, a feat made all the more difficult by contending with multiple owners with differing agendas.