First-round bids due this week for Hulu
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The first round of bids were due this week for Hulu, the popular online TV service whose prospective sale has attracted interest from digital media players as well as cable operators.
An initial bid has been submitted by the Chernin Group, a next-generation media company founded by longtime News Corp. executive Peter Chernin, which is partnering with Providence Equity, according to several people familiar with the matter.
Guggenheim Digital Media, a group headed by former Yahoo Inc. interim Chief Executive Ross Levinsohn, also submitted a bid, say the people with knowledge of the situation who declined to be identified because of the confidential nature of the bidding process. Guggenheim is interested in expanding its media holdings, which include Prometheus Global Media, which owns a number of trade publications, including Adweek, Billboard and the Hollywood Reporter.
Meanwhile, Guggenheim Securities, which is a separate legal entity with different ownership group, is an advisor on the sale.
Time Warner Cable has discussed making a play for the streaming video service, one person in the industry confirmed. The cable company is interested because it sees Hulu as a potential vehicle to make it easier for subscribers to watch TV through high-speed Internet connections, which is becoming an increasingly important source of revenue for the company.
Chief Executive Glenn Britt has approached other pay-TV operators about the possibility of forming an industry joint venture to operate Hulu, according to the New York Post.
Under one scenario, Hulu would become the primary platform for the industry’s TV Everywhere initiative. That would enable cable customers to watch video on their computers and tablets, inside and outside the home. However, TV Everywhere has been slow to catch on with consumers, who have claimed that the interface is confusing.
Another player in the pay-TV space, satellite provider DirecTV, is interested in Hulu as well, according to a person familiar with the matter.
Yahoo was among the digital players initially exploring a bid, although it is unclear whether such a deal remains a priority in the wake of the company’s $1.1-billion acquisition of Tumblr, a social blogging service popular with teens and young adults.
Hulu, launched five years ago, has attracted 22 million monthly viewers -- and 4 million who pay $8 a month to watch even more shows on their portable devices or through their game consoles.
Hulu has been a complicated proposition for its three owners, News Corp., Walt Disney Co. and Comcast’s NBCUniversal. To win federal approval for its takeover of NBCUniversal, Comcast agreed to give up its voice in the management of the online video distributor. Meanwhile, the other two owners are often at odds about Hulu’s strategy, including whether it should restrict the amount of free programming to encourage people to subscribe to Hulu Plus.
Disney has been frustrated by Hulu, whose programming and marketing costs have been a drag on ABC’s operating income. According to one person, ABC has contemplated pulling back on the programming it offers free online through Hulu. Just last week, the network introduced an application to live-stream ABC shows on iPhones and iPads, while withholding recent episodes from the free version of Hulu.
For bidders, Hulu presents an opportunity to acquire a powerful brand in the fast-growing arena of online video, which has seen the number of subscribers to the Hulu Plus service double in a year and reported revenue of $695 million in 2012.
However, some interested parties have balked at the terms of the content licensing agreement, which extends programming rights for Hulu Plus only for two years, according to the people familiar with the matter. Parties have been pushing for a minimum three-year guarantee.
Times staff writer Joe Flint contributed to this report.
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