The selling of Hulu is ramping up, with bids required to be in by tomorrow (Aug. 24). Speculation as to who is bidding, and how much they are willing to pay has begun in earnest, but one analyst has openly questioned why this sale is necessary in the first place.
Amazon Bidding For Hulu?
Hulu is up for sale, although most people don’t understand why its owners, Walt Disney, News Corp, NBC Universal, and Providence Equity Partners, want to sell what has so far been a successful venture and one that stands on the cusp of greatness as the online video sector grows ever larger.
Some companies, such as Microsoft, have fallen out of the running, but the likes of Google, Yahoo, and DirecTV are still in. Also rumored are Apple and a new contender in the form of online retailer Amazon.
Amazon stands to gain a lot from acquiring Hulu. It would add content to its Prime subscription service and be a great selling feature were the company to release an Android tablet designed to compete with the Apple iPad in the near future. Which is pretty much guaranteed at this point.
Whoever grabs Hulu looks set to pay somewhere in the region of $1 billion to $2 billion. Which is a huge sum of money, granted, but still doesn’t justify the sale in the first place. And it isn’t just laymen such as myself who think so.
BTIG analyst Richard Greenfield has argued the case for its current owners to hold on to Hulu and questioned why they are even considering selling at such an early stage. In a recent blog post [via The Hollywood Reporter] he argues:
“We find it very hard to fathom why any media company would want to give up ownership of such a unique asset at such an early stage of growth. Hulu appears to be the perfect weapon for networks/content creators to embrace so they can grow revenues and profits, even if the current multichannel ecosystem becomes unglued over the next decade.”
“Media companies should be going out of their way to retain ownership of Hulu and allow it to flourish. The bigger Hulu gets, the more dollars it can pay content creators on an annual basis. While that may be true if it is owned by a third-party as well, being invested in Hulu and sacrificing near-term profits for long-term value creation appears far too compelling.”
It does appear as though the current owners are seeking short-term gains while completely missing the opportunity Hulu offers them in the long-term.
News Corp. has actually indicated it may retain its stake in the company, but the others all seem to want to get out while the going is good. Which makes no sense whatsoever for a growing entity such as Hulu.
I’ve struggled to understand why the current owners of Hulu would want to sell at this stage, but they seem intent on doing so for whatever fatuous reason. Their loss is going to someone else’s gain, and I wouldn’t bet against Amazon emerging victorious in this colossal auction.
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