Someone wants Hulu to be in play — or at least the idea of a possible sale to be very public. The Wall Street Journal reported late Tuesday afternoon that an offer from a mystery bidder has the video joint venture of News Corp (NSDQ: NWS). Disney (NYSE: DIS) and NBC Universal (NSDQ: CMCSA) considering a sale. PaidContent has confirmed that Hulu management and owners are discussing a bid, as well as how best to explore other options, but that no formal board meeting has been held. Less clear is whether or not a bank has been hired yet; odds are more that one bank will be involved. Hulu pulled back from a possible IPO last year.
So who is the mystery bidder?
One possibility being floated: Yahoo (NSDQ: YHOO), although in an interview with paidContent earlier this month EVP Ross Levinsohn insisted there “are no game changing acquisitions for Yahoo.” (Grain of salt, etc.) In his role at News Corp., Levinsohn was one of the early proponents of what became Hulu; more recently he has met with Hulu but that doesn’t mean an acquisition was on the table.
The LAT‘s Company Town cites a single source saying Yahoo had approached Hulu about a possible acquisition but this isn’t necessarily what touched off the internal discussions at Hulu.
Netflix (NSDQ: NFLX) would gain only if it could keep the access to the content — and that’s not likely. Comcast, suggested as a possible candidate by one industry vet, might be willing but would have to get regulatory approval. Amazon? (NSDQ: AMZN) Interesting idea. Hulu is a much better player and customer experience than its own video offerings so far but there’s that pesky rights/value issue again. Google? (NSDQ: GOOG) See all of the above.
This is the kind of leaking that’s often used by a bidder to get a public company to ‘fess up or to get out the word that a private company is or should be in play. Keep in mind, the companies that own the bulk of Hulu are public but the joint venture is not. CEO Jason Kilar prefers to keep as much as he can close to the vest but also has been open about some details, including select numbers like a projected half-billion in revenue this year compared with $263 million in 2010.
But while 10-14x revenues is a common M&A yardstick right now, Hulu’s reliance on its equity owners’ content for the bulk of its value make it highly unlikely that it will come anywhere close. Providence helped give the startup a value of $1 billion with its pre-launch investment but that was 2007.
About the only thing that is certain right now is that Comcast and NBCU will be watching from the sidelines, not taking part in any decision. As part of the regulatory approval for gaining control of NBCU earlier this year, Comcast had to agree to step aside from Hulu’s operations and, I confirmed this evening, cannot take part in any management discussions, including possible exits. Early investor Providence Equity Partners also holds a stake and, unlike Comcast/NBCU, seats on the board.
According to Hulu, the current board includes Kilar; Bob Iger, Anne Sweeney and Kevin Mayer (Disney); Jonathan Nelson and Al Dobron (Providence); and Chase Carey, Jonathan Miller, and Jim Gianopulos (News Corp.).