Google Wants To Buy Hulu, Makes Offer

Google continues on its path for Global domination...

Written by ronin
Published about over 6 years ago. Filed Under: TV

Search giant Google is reportedly in talks to purchase TV streaming service Hulu.

After receiving an unsolicited offer from Yahoo last week it was largely expected that other players in the online game would step up and attempt to buy the service which streams shows from the most popular TV networks.

While the Yahoo offer was not confirmed sources “close to the deal” now say that Google, Yahoo and Microsoft have made offers and that Hulu officers have setup meetings with their financial advisers Morgan Stanley and Guggenheim Partners and all interested parties on a one-on-one basis.

With Hulu projected to bring in $500 million in 2011 revenue both through advertising and Hulu Premium subscriptions and a user base topping 28 million viewers per month offers are expected to be in the billions with many analysts putting the purchase price between $2 billion and $3 billion.

If Google can manage to pull off the acquisition it would mean they are one step closers to dominating the online video streaming sector which they already practically own thanks to their YouTube platform. The Google acquisition and their “know-how” in the video streaming business could also mean a better platform in the future, run by a company that understands the space.

The announcement of Hulu being up for sale 2 weeks ago didn't come as a surprise to many. The conglomerates that own Hulu along with Providence Equity Partners – NBC Universal, Disney and News Corp. – are competitors who haven't always agreed on how Hulu should be run, when to make content available, how much and whether any of it should be exclusive. And conglomerate executives' opinions haven't always jived with those of Hulu CEO Jason Kilar who famously threatened to quit last fall and earlier this year enraged his corporate overlords with a blog post about the future of TV, including the statement that "traditional TV has too many ads." Some of his conglomerate bosses, meanwhile, have been pushing for expanded ad slots on Hulu.

Beyond that, Hulu and its owners have also not been aligned on questions of exclusivity of content and access to it. NBC, for example, gave new Saturday Night Live episodes to Netflix, and Disney unveiled free, ad-supported access to some ABC shows via the iPad in moves that Kilar felt undermined Hulu. No wonder then that the Internet streamer is for sale, some say. “Content company owners separately started making some of their content available in various windows on services other than Hulu’s, such as Netflix, which upset other owners,” noted Miller Tabak analyst David Joyce. “As such, the disparate corporate interests again have made the joint venture difficult to sustain.” Observers said joint ownership often leads to delays in decisions and conflicts over strategy.

While some see a sale as the logical future, others argue that content giants may have an even harder time striking deals with an entity owned by someone else. Some observers also argue that Comcast and its NBCUniversal are likely more inclined to want to retain a stake in Hulu than its partners -- at least in certain cases. "Hulu is more of a threat to Comcast if in the wrong hands, while Disney and News Corp. content will always be needed," said Janney Montgomery Scott analyst Tony Wible. "Anyone that could aim to spur cord cutting or [cord] shaving" would be an unwelcomed owner for Comcast/NBCUni, he said.

The sale optimists point out though that Netflix's streaming service has become a lucrative content deal partner, and Hulu's entertainment industry owners may look for the site to become another buyer without the need to own a stake in it and sit in on board meetings. Under that view, content revenue from online streamers like Hulu, Netflix, and others will soar in the coming years.

"They don't need it, [but] Hulu can't exist without their content," said one former executive of one of the Hulu owners about the relationship between Hulu and its owners.

At this time however, everything is conjecture and only a deal being revealed will prove that any real offers were made.

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