July 15, 2024

DealBook: Hulu Weighs Sale After Unsolicited Bid

Hulu, the online video service, is weighing a possible sale of the company after it received a takeover offer from an unidentified suitor, people briefed on the matter said Tuesday.

The unsolicited offer has prompted Hulu’s board to consider its options, and the company is speaking to potential advisers, these people said. It may contact potential buyers, including other media companies and private equity firms that have wanted the chance to buy the service.

Yet one of the people cautioned that Hulu’s board had not decided to sell.

Founded as a joint venture by NBC Universal, the News Corporation, the Walt Disney Company and Providence Equity Partners, Hulu has established itself as a top hub for streaming television shows and movies online.

Though popular, Hulu has labored to make a profit. The company introduced a subscription service to supplement its free, advertising-based core offering.

A potential buyer would also have to consider the cost of Hulu’s premium content, noted Andy Hargreaves, an analyst with Pacific Crest Securities. A technology giant like Microsoft or Google could be a good fit, he said, but it would be tricky. “The difficulty of buying Hulu is that you’re buying it from the content providers, so there’s a decent chance that the cost of content will eventually go up,” he said. “But if you think revenue will grow in line with costs, then it could be worth $2 billion or more.”

Hulu has lost two of its most vocal backers: Peter Chernin, formerly the News Corp.’s president, and Jeff Zucker, who left NBC Universal last fall. James Murdoch, who became News Corp.’s deputy chief operating officer in March, is among those who is much more skeptical about Hulu’s business prospects

Last year, Hulu considered staging an initial public offering, but put aside those plans.

Representatives for Hulu declined to comment or were not available.

News of the approach was earlier reported by The Wall Street Journal.

Article source: http://feeds.nytimes.com/click.phdo?i=7b51d4475864b25201b24e1b057ff7ea

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