Just as it seemed the race to purchase online entertainment service Hulu was entering the final straight, its three owners – Fox, Disney and NBCUniversal – have called off their planned sale and announced that they will invest $750 million in the service. The move represents the second time Hulu has been taken ‘off the table’. Reports have also emerged that a partnership with Time Warner Cable is being negotiated.
Although as many as seven different parties had entered the bidding fray, the number of interested bidders had diminished as the owners reportedly insisted on receiving at least $1 billion for the company.
Onerous content demands were understood to be a further stumbling book, with networks such as NBC, ABC and Fox wanting the power to hold back certain shows from Hulu and impose strict windows on airing recent material.
“Hulu has emerged as one of the most consumer friendly, technologically innovative viewing platforms in the digital era. As its evolution continues, Disney and its partners are committing resources to enable Hulu to achieve its maximum potential,” said Robert A. Iger, Chairman and CEO, The Walt Disney Company.
“We believe the best path forward for Hulu is a meaningful recapitalisation that will further accelerate its growth under the current ownership structure,” said Chase Carey, President and Chief Operating Officer of 21st Century Fox. “We had meaningful conversations with a number of potential partners and buyers, each with impressive plans and offers to match, but with 21st Century Fox and Disney fully aligned in our collective vision and goals for the business, we decided to continue to empower the Hulu team, in this fashion, to continue the incredible momentum they’ve built over the last few years.”
Hulu launched its premium subscription service, Hulu Plus, in 2010, which has now surpassed four million subscribers after more than doubling in 2012. Hulu achieved record revenues of $690 million that same year.
Hulu accepted final bids last Friday from DirecTV, Chernin Entertainment along with AT&T and Guggeheim Partners (in conjunction with private equity firm KKR). Guggenheim withdrew from the process earlier in the week.
Meanwhile, suggestions have emerged that the move to take Hulu off the table is prior to the finalisation of a partnership with Time Warner Cable – the US’s second largest cable MSO- in order better to compete with Netflix. Bloomberg reported that Time Warner Cable (TWC) is seeking a 25 per cent stake.
Any such deal is likely to be centred around the Hulu Plus subscription service and designed to promote TWC’s its high-speed broadband service, via a bundled subscription that would be exclusively available to Hulu’s new Internet-paying customers.