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Report: Hulu Up For Sale

22 Jun, 2011

Scuttlebutt suggests the repurposed TV content website has upped ad revenue at the expense of owners’ other distribution channels

, the popular website for ad-supported and subscription-based repurposed TV programming, has reportedly put itself up for sale.

The site, which is co-owned by The Walt Disney Co., News Corp. and NBC Universal, hired investment banks Morgan Stanley and Guggenheim Partners to assist with a possible sale, according to the Los Angeles Times, which broke the story.

The Times also reported that Hulu received an unsolicited acquisition offer from an unnamed suitor, in addition to interest from .

While Santa Monica, Calif.-based Hulu has not publicly, or on the blogosphere, denied or confirmed the report, it is no secret the site’s meteoric success as a go-to destination for missed network programming has ruffled feathers among executives at content owners’ other distribution channels, including TV syndication, video-on-demand and physical discs.

Specifically, the revenue generated via ad-supported streams pales in comparison to the aforementioned channels. In short, Hulu had become too successful at generating subpar margins.

Tensions intensified when reports suggested Hulu CEO Jason Kilar was running afoul of his corporate bosses in an attempt to promote the service.

Media companies have become acutely aware of digital rights and incremental revenue potential with the burgeoning success of Netflix.

Edward Woo, research analyst with Wedbush Morgan Securities in Los Angeles, said he wasn’t sure if interest from a third-party prompted Hulu to retain outside (mergers and acquisition) experts more than internal interest.

Woo agreed Hulu is very much in the growth phase with reports suggesting the site could generate $500 million in revenue this year.

“If the price is high enough, Hulu would sell,” Woo said, adding he thinks an actionable offer of $2 billion would make it happen. “But you never know, as there are many technology companies with deep pockets who are eyeing Netflix’s $12 billion valuation.”

Colleague Michael Pachter concurred, saying a tech company might buy Hulu to jump-start entry into the streaming video business by capitalizing on the site’s content, technology, relationships, customer list and brand.

“A sale gives the media founders an exit at an attractive price, and sets Hulu up to succeed without requiring the founders to absorb further losses,” Pachter said.

Representatives from Disney, News Corp. and NBC Universal (Comcast, which owns NBC, removed itself from Hulu’s affairs to satisfy regulatory concerns) were not immediately available for comment.


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