Hulu Bidding Deadline Extended by a Week

2012-02 BIZ Andy Forssell H
Brigitte Sire

The Pennsylvania-born father of three, who began his career as an Army captain, sat down with THR in Hulu's Los Angeles headquarters to discuss his plans to bulk up on originals, how to save struggling shows and the future of Hulu ownership.

Insiders say the streaming-media company wanted bids submitted by Friday, but the deadline was "soft" as a range of suitors remain in the running.

The deadline for binding bids for online video joint venture Hulu has been pushed back to the end of next week as several suitors are believed to remain in the running, sources said late Thursday.

Bids for Hulu, which is owned by Walt Disney, News Corp. and Comcast, had been due on Friday but the target is now the end of next week. Two observers described the sales process deadlines as "soft" compared with the harder deadlines of more traditional auctions.

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Sources said that former News Corp. president Peter Chernin's Chernin Group, possibly with the support of AT&T, THR owner Guggenheim Digital Media and satellite TV giant DirecTV were all still in the running to acquire Hulu outright. Time Warner Cable has been trying to buy a stake in Hulu. Yahoo! and two private equity firms, Kohlberg Kravis Roberts and Silver Lake, whose portfolio companies include talent agency WME, were also believed to be among the remaining bidders, but with lower-end offers.

The status of bids and their price tags weren't clear as of late Thursday. It also wasn't clear if other companies may be able to enter the fray late in the process and submit offers.

Representatives for Hulu and the companies who are bidding declined to comment or couldn't be reached.

The current owners of Hulu considered a sale in 2011 but pulled the plug on the auction. At the time, the partners were hoping to get $2 billion for the asset, but potential acquirers didn’t see such a rich value unless a sale included very long-term, affordable deals for a steady stream of premium content from Disney, Fox and NBCU.

Private equity group Providence Equity Partners late last year sold its 10 percent stake in Hulu to the other owners for $200 million, ostensibly bestowing a $2 billion value on the entire asset. Sources, though, say that while some bids recently topped $1 billion they were still well short of $2 billion.

RBC Capital Markets analyst David Bank told THR on Thursday that he continues to see value in entertainment companies owning Hulu. "It has tremendous brand value and could be synonymous with 'TV' for a younger generation," he said. "Why would you want to part with that asset?"

He added, though: "On the other hand, I understand that joint ventures are very difficult to manage from a strategic perspective, and I know that the big media conglomerates would like to have another big buyer of content to insure that Netflix and Amazon don't get leverage over the content players for price."

Other analysts have in recent days also weighed in on what types of buyers would make the most sense for the current Hulu owners, primarily Disney and News Corp. since Comcast has no management control over the entity.

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BTIG analyst Richard Greenfield advises that Disney and News Corp. should not simply sell to the highest bidder.

“The more we think about the long-term implications of selling Hulu, the more we believe it would be a mistake for the content/programming based owners to sell to an existing [pay TV operator],” Greenfield wrote, adding: “It’s obvious why companies like DirecTV or Time Warner Cable want Hulu, but why is that in the best interests of its three content-owner partners? Why not add a new distributor? Selling Hulu to private equity buyers, such as Chernin/Providence Equity, or an Internet company that plays no major role in the current multi-channel video distribution ecosystem such as Yahoo, adds to points of distribution for Disney, Comcast/NBC and News Corp. and could actually add to their leverage with the current class of [pay TV operators].”