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Yahoo Unlikely to Stay in Hulu Bidding (Exclusive)

Deadline for second round of bidding pushed until the end of next week

When the short list of bidders for Hulu emerges next week, Yahoo is not expected to be among them.

Yahoo’s initial bid for Hulu has been described as low, according to one individual with knowledge of the negotiations. That individual and others have described Yahoo’s interest in the streaming site as having waned in recent weeks.

A spokeswoman for Yahoo declined to comment.

Potential suitors for Hulu originally had until the end of this week to place their bids, but the deadline has been extended until the end of next week, according to one insider. Initial bids have already come in from Guggenheim, DirecTV, Silver Lake with WME, Time Warner Cable, KKR & Co.,  and the Chernin Group with AT&T.

Previous reports on Yahoo’s bid for Hulu have pegged it in the $600 million to $800 million range.

News Corp., Disney and Comcast put Hulu on the block in April, and the trio is said to be seeking in the neighborhood of $1 billion for the company. But Hulu’s value is largely derived from its content deals with all three companies, and the duration of the licensing agreements could be the ultimate determinant of its price.

Some sources close to the talks say that new owners would get at least two to three years of content through such licensing agreements. That gives a substantial runway for bidders to create original content that could sustain the company once those agreements expire.

Hulu insiders are eager to see the sales process resolved ASAP as they are worried about more execs and other employees jumping ship. Senior VP of marketing and distribution Pete Distad will leave Hulu at the end of the summer.

Yahoo recently demonstrated its ability to pull the trigger on big acquisitions, with a $1.1 billion buy of Tumblr.

Yahoo wouldn’t be the first to fall out of the Hulu race; Amazon initially expressed interest but didn’t stick around to bid.

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