Here’s the latest from this summer’s biggest TV industry blockbuster: The number of bidders for Hulu has been narrowed down to three or four suitors, with one of them seeking to acquire rights that aren’t even necessarily up for sale. With DirecTV reportedly dropping out of the bidding late last week, Hulu’s assets are now being sought by Amazon, Dish Network and Yahoo.
Also reportedly in the running is Google, which is making a big bid for the online TV distributor, according to AllThingsD’s Peter Kafka. He reports that Google is trying to order off the menu, telling the folks at Hulu that it’s willing to pay a lot more for access to more content, for a longer period of time.
The problem with selling Hulu to Google
Google might have the money to get something done, but that doesn’t mean that Hulu’s owners — including News Corp, Disney, NBC Universal and Providence Equity Partners — will want to make a deal. After all, Google has had a historically rocky relationship with the content community. While flagship site YouTube accounts for nearly half of all online video, according to comScore, it has struggled to lock down content from the big broadcasters and Hollywood studios. Broadcasters also balked when its Google TV browser attempted to make their free, ad-supported programming searchable and available for viewing on the connected TV sets.
So what would make them do a deal with Google now?
For one thing, Google has the deep pockets necessary to keep Hulu a viable business. While the asking price for Hulu is in the $1.5 billion to $2 billion range, the real cost of buying the company comes afterward, as any potential acquirer will need to eventually negotiate more content licensing deals as time goes on. Yahoo, for one, might be able to pay the up front cost to grab Hulu’s assets, but there are questions about its ability to keep Hulu going after a deal is done.
Adding Google adds another licensee
Google also has an advantage in that it hasn’t rolled out its own subscription video service. In contrast, Amazon already has a video service tied to its Amazon Prime subscription, which gives viewers access to about 9,000 streaming titles as well as free two-day shipping on items it sells. Dish Network, meanwhile, is rumored to be rolling out its own subscription VOD service under the Blockbuster brand. By selling to Google, Hulu’s content owners would add an additional outlet for content licensing rather than being wrapped into services they have deals with already.
One big con in selling Hulu to Google is that it would provide the search giant with two of the top ten video properties, in terms of viewership. That would not only tie a large percentage of ad-supported online video to a single provider but could also draw regulatory scrutiny, especially at a time when it’s also seeking approval for a huge Motorola Mobility deal.
Would Google really negotiate in public?
Finally, it might be worth taking this report with a grain of salt. Let’s not forget: The last time Google was involved in a big acquisition — its $12.5 billion planned purchase of Motorola — no one heard about it until the morning it was announced. If Google were really serious about a Hulu deal, or if Hulu’s board were serious about selling to Google, it would be surprising to see that information leaked to the press.
But what if someone at Hulu were trying to drive up the price? What better way than to let it be known Google is mulling some big, unspecified bid for a huge, exclusive long-term deal? If you’re Amazon, Dish or Yahoo, wouldn’t that make you rethink your own bids?