Hulu Owners Cancel Auction - Again
UPDATED: 21st Century Fox, NBCUniversal and Disney will continue to own the online video site and invest $750 million in it -- the second time the service was put on, and taken off, the block.
The auction for Hulu is off.
A news release announcing the decision was jointly issued by 21st Century Fox, NBCUniversal and Disney on Friday morning. It came after a final bid that reportedly topped $1 billion from DirecTV, one that reportedly topped $900 million from Peter Chernin and AT&T and interest from Time Warner Cable in acquiring a stake.
“Hulu has emerged as one of the most consumer friendly, technologically innovative viewing platforms in the digital era. As its evolution continues, Disney and its partners are committing resources to enable Hulu to achieve its maximum potential,” said Disney CEO Bob Iger.
Speaking at the Allen & Co. retreat in Sun Valley, Iger offered more of an explanation about why Disney and its partners decided to keep the online video site. "We ultimately concluded that, even though we had some very compelling offers on the table, the future of Hulu is bright,” Iger told Bloomberg. "And if the future of Hulu is bright we should hold on to it."
"This had nothing to do with the offers that were on the table -- they were actually quite compelling," he added. "But, again, when we compared them with what we saw the potential of what Hulu could be, particularly because we were aligned in vision, it was smarter for the shareholders of our companies for us to stay in."
“We believe the best path forward for Hulu is a meaningful recapitalization that will further accelerate its growth under the current ownership structure,” said Chase Carey, president and COO of 21st Century Fox.The auction had drawn initial bids bids from Yahoo, Silver Lake Management with William Morris Endeavor, and also a final-round bid from Guggenheim Digital Media, the parent company of The Hollywood Reporter, in partnership with private equity firm KKR. Hulu generated about $695 million in revenue in 2012 via ad sales and through 4 million subscribers who pay for monthly access to Hulu Plus, the company's premium service.
It's the second time in two years that Hulu's owners have considered selling the company, and pulled the plug on an auction. Two years ago, some potential buyers were hesitant over a lack of assurances that Hulu would retain access to TV programming from Disney, Fox and NBCU if those companies were no longer equity owners.
Sources familiar with the process said last-round bidders were disappointed by the last-minute cancellation of the auction. One source said bidders were only told on Friday that the current owners had pulled the plug.
Hulu's library today includes 70,000 TV episodes from about 2,500 series.
DirecTV was interested in making Hulu its TV Everywhere platform and possibly bundling pay TV and Hulu subscriptions.
21ST CENTURY FOX, NBCUNIVERSAL AND THE WALT DISNEY COMPANY TO MAINTAIN OWNERSHIP POSITIONS IN HULU
Companies Make Commitment to Recapitalize Hulu with $750 Million in New Funding to Propel Future Growth
New York, NY & Burbank, Calif., July 12, 2013 – 21st Century Fox, NBCUniversal and The Walt Disney Company today jointly announced that they will maintain their respective ownership positions in Hulu and together provide a cash infusion of $750 million in order to propel future growth.
Launched in 2008, Hulu is now a leading aggregator of premium online television content from over 400 content partners, and has achieved more than 30 million monthly unique visitors.
“Hulu has emerged as one of the most consumer friendly, technologically innovative viewing platforms in the digital era. As its evolution continues, Disney and its partners are committing resources to enable Hulu to achieve its maximum potential,” said Robert A. Iger, Chairman and CEO, The Walt Disney Company.
“We believe the best path forward for Hulu is a meaningful recapitalization that will further accelerate its growth under the current ownership structure,” said Chase Carey, President and Chief Operating Officer of 21st Century Fox. “We had meaningful conversations with a number of potential partners and buyers, each with impressive plans and offers to match, but with 21st Century Fox and Disney fully aligned in our collective vision and goals for the business, we decided to continue to empower the Hulu team, in this fashion, to continue the incredible momentum they've built over the last few years."
Hulu launched its premium subscription service, Hulu Plus, in 2010, which has now surpassed four million subscribers after more than doubling in 2012. Hulu achieved record revenues of $690 million that same year.
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