Bloomberg News

Yahoo’s Mayer Said to Explore Bid for Hulu to Add Video Service

May 10, 2013

Yahoo! Inc. Chief Executive Officer Marissa Mayer

Yahoo! Inc. Chief Executive Officer Marissa Mayer. Photographer: Simon Dawson/Bloomberg

Yahoo! Inc. (YHOO) Chief Executive Officer Marissa Mayer is exploring whether to bid for the Hulu LLC streaming-TV service, people with knowledge of the matter said.

Mayer met this month with Hulu senior executives to learn more about the site, said one of the people, who asked not to be identified because the talks are private. Amazon.com Inc. (AMZN) has also expressed an interest in Hulu, this person said.

With advertisers willing to pay a premium to run commercials alongside high-quality content, Mayer is seeking to add videos across Yahoo’s products. Hulu, owned by News Corp (NWSA)., Walt Disney Co. (DIS) and Comcast Corp. (CMCSA), offers free reruns of television shows and movies and provides newer programming and earlier access through an $8-a-month service.

Mayer was joined at the meeting with Hulu by Henrique de Castro, Yahoo’s chief operating officer, the technology blog AllThingsDigital.com reported May 7. De Castro led a failed bid to buy a $300 million majority stake in France Telecom SA (FTE)’s Dailymotion SA video service, the website said. Amazon’s interest was also previously reported by AllThingsDigital.

Guggenheim Partners LLC, owner of the Los Angeles Dodgers and the Hollywood Reporter, also has expressed interest, people familiar with the matter said in March.

Only Peter Chernin, former president and chief operating officer of News Corp. and a co-founder of Hulu, has submitted a bid, they said. Chernin, with backing from Providence Equity Partners (PEF3212), offered at least $500 million for Hulu, not including about $330 million in debt, people said in April. The price would increase with additional content rights and longer contract terms, they said.

Business Model

Hulu directors are debating whether to sell Hulu. Disney or News Corp. could also seek complete control through a buyout. Comcast is barred by regulators from an active role in Hulu following its 2011 NBC Universal acquisition.

Disney prefers an advertising-focused business model, while News Corp. (NWSA:US) would like Hulu to rely on subscriptions, people have said. Formed by NBC and Fox, Hulu initially let viewers watch shows online with fewer commercials. Disney became an investor in April 2009.

Hulu Plus, started in 2010, provides access to a bigger library of shows and the ability to watch programs on mobile devices, Web-connected TV sets and video-game consoles.

Hulu’s revenue last year jumped more than 65 percent to $695 million, driven by advertising and subscriptions, the company said on its blog. The service has more than 4 million paying subscribers and served commercials from more than 1,000 advertisers in 2012, a 28 percent increase from a year earlier.

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

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net; Tom Giles at tgiles5@bloomberg.net


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Companies Mentioned

  • NWSA
    (News Corp)
    • $18.11 USD
    • 0.01
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