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Yahoo: Why buy Hulu when you can license it instead?

Companies interested in acquiring Hulu are reportedly making another round of bids this week, according to The Wrap. But interest in the company is waning, possibly due to the fact that Hulu’s content isn’t all that exclusive.

Take Yahoo, (s YHOO) for instance: It might have shown early interest in acquiring Hulu, lining up alongside potential suitors such as Google, (s GOOG) Amazon (s AMZN) and Dish Network. (s DISH) However, while a Yahoo exec wouldn’t rule out an acquisition on Tuesday, Hulu’s broadcast TV content is a big part of Yahoo’s newly launched ‘Screen’ video portal.

Through a partnership with Hulu, Yahoo has access to broadcast TV content from ABC, (s DIS) Fox (s NWS) and NBC, (s cmcsa) (s ge) as well as shows from some cable networks like MTV and Comedy Central. (s VIA) In the TV portion of the video portal, Yahoo has also aggregated the Hulu content with video from CBS, (s CBS) the lone broadcast network holdout from Hulu. Of course, Yahoo isn’t the only provider to do so; Comcast’s XfinityTV portal has had Hulu shows available for years.

The Hulu relationship isn’t actually new, and Yahoo previously ran the content on Yahoo TV, although it was not as easy to access. Now, it will be much more organized and categorized for users. Erin McPherson, VP of Video for Yahoo, said the business arrangement is unchanged with Hulu running their own ads and Yahoo getting an undisclosed revenue share.

McPherson declined to comment on what Yahoo has planned further with Hulu, but she said Yahoo Screen and the better integration of Hulu content doesn’t necessarily take Yahoo out of the market for other video acquisitions.

“Regardless of what we do on the M&A front, this is a proof point in building out our footprint in video,” she said. “We have incredible success in video, and the next logical step is enhance our video distribution. Screen is a place for aggregating our content across the web.”

But having Hulu content on Yahoo’s new portal calls into question the value of what Hulu is actually selling to potential bidders. Any acquirer will get some short-term content rights, a video portal with some engaged users and some cool ad technology. But if the Hulu content can be aggregated and expanded on with a deal like Yahoo’s, what’s the actual value of that content and owning the relationship with the networks?

That’s a question Yahoo has most likely mulled as it considers whether or not to pull the trigger on a Hulu acquisition. For the time being, at least, it seems Yahoo is likely happy to let Hulu manage its own content and ad relationships, while getting a share of ad revenues and further profiting off the viewers who stick around to watch original programming that runs alongside Hulu shows.

Photo courtesy of (CC BY 2.0) Flickr user Casey Serin

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