Bloomberg News

Hulu Board Said to Consider Options After Approach by Suitor

June 22, 2011

June 22 (Bloomberg) -- Hulu LLC, the video-streaming service owned by News Corp., Walt Disney Co. and NBC Universal, was approached by a potential buyer and will consider its options, according to a person with knowledge of the situation.

The board hasn’t made a decision on whether to sell, said the person, who wasn’t authorized to speak publicly. The Los Angeles-based company views the overture as more serious than previous ones, the person said. Yahoo Inc. recently approached the company about a purchase, the Los Angeles Times reported.

A new owner may provide capital for Hulu to acquire films and TV shows and challenge Netflix Inc., the dominant subscription streaming service. Hulu never went forward with a planned IPO that envisioned a $2 billion value for the company. A sale may also clear the way for Chief Executive Officer Jason Kilar, who has clashed with his board, to set his own direction.

Technology companies, which have been trying to expand into television, may be more interested than media companies, said Michael Pachter, an analyst at Wedbush Securities in Los Angeles.

Elisa Schreiber, a spokeswoman for Los Angeles-based Hulu, declined to comment. The Wall Street Journal reported yesterday an approach by a potential buyer.

NBC and News Corp.’s Fox introduced Hulu in October 2007 to attract Internet users to their TV programs. The advertising- supported service allowed people to watch previously broadcast TV shows for free online.

Hulu received a $100 million investment from Providence Equity Partners when it was introduced. Disney, based in Burbank, California, became an investor in April 2009.

In June 2010, the company announced the Hulu Plus paid service that offers current and archived TV shows on computers, cell phones, Apple Inc.’s iPad and TV sets.

Netflix Challenger

In November, the company lowered the $9.99 trial price by 20 percent to $7.99 to compete with Netflix.

Hulu Plus will have 1 million paying subscribers by year- end, Kilar, 40, said in an April blog post. The company expects to pay about $300 million for content in 2011, he wrote.

Netflix said that month it had 23 million paying subscribers in the U.S. and Canada. Netflix, based in Los Gatos, California, offers online viewing for $7.99 a month, as well as DVD rentals by mail on a subscription basis.

Hulu’s board includes Kilar and representatives from Disney, Providence and Rupert Murdoch’s News Corp., according to the company’s website. Comcast Corp. agreed to give up management control of Hulu when it purchased NBC Universal while continuing to provide content.

Teri Everett, a spokeswoman for New York-based News Corp., declined to comment. Zenia Mucha, a Disney spokeswoman, and Kathy Kelly-Brown, a spokeswoman for NBC Universal in New York, didn’t immediately return messages seeking comment.

Dana Lengkeek, spokeswoman for Sunnyvale, California-based Yahoo, declined to comment on the Los Angeles Times report.

--With assistance from Serena Saitto and Cristina Alesci in New York, Brian Womack and Cliff Edwards in San Francisco and Anthony Palazzo and Rob Golum in Los Angeles. Editors: Rob Golum, Anthony Palazzo

To contact the reporter on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net


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