June 22, 2011

Is Hulu For Sale?

Online video-streaming website Hulu has been approached by Yahoo for a potential acquisition, and has been mulling over selling itself, the Wall Street Journal first reported.

Hulu, which is jointly owned by News Corp, Walt Disney Co, and NBC Universal, has shown an unclear strategy and spent nearly half of last year planning an initial public offering before ultimately dropping the plan.

The Los Angeles Times said Yahoo's offer was confirmed by a person close to the company, but noted it remained unclear whether the offer had come directly from the Internet search company or from another entity.

The offer was large enough to make Hulu's board review the deal and consider seeking other potential buyers, according to the anonymous source, who said the talks were confidential. The amount of the offer and the actual bidder were not disclosed.

Hulu, with nearly 300 employees, is best known for offering free streaming TV shows online, but also launched a paid subscription service last July as a way to expand its offerings to include TV shows from other partners, like Viacom.

Though Hulu has been extremely popular, owners of the service have come under increasing pressure from their cable and satellite distribution partners reluctant to pay premium dollars to carry content that is being offered for free online. Also, many program makers have been unwilling to put their shows on a free site with an advertising model that is yet to prove itself with premium content.

Hulu CEO Jason Kilar said in February that the company will have 1 million paying customers by the end of the year and will generate nearly $500 million in revenue, up from $263 million in 2010, and has said the company is profitable.

The talk of sale comes five months after Comcast Corp completed its takeover of NBC Universal, which owns more than 25 percent of Hulu.

Hulu's biggest rival is Netflix, which now has more than 20 million paying subscribers in the United States.


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