Hulu Is Headed for the Auction Block

Hulu is headed toward the auction block — it's retained investment bankers Morgan Stanley and Guggenheim partners to assist with a sale that will open to bidders in two weeks, according to the LA Times.

Hulu Plus on an iPad
Hulu Plus on an iPad

The company is still evaluating the one buyout offer it received, but now that the sale is public, sources say the company expects to receive many more. The company has yet to convene a meeting of its board, but sources also say that it's in the works.

There's still no word on who made that first offer, which is quite odd. A wide range of sources close to the situation swear that there was an offer, while others have suggested that news of a tentative offer was leaked in order to test the market and jumpstart a bidding offer.

No matter how serious or tentative the first bid, who's interested in Hulu and how much they're willing to pay will come out soon enough.

Of Hulu's four co-owners, Providence Equity has the most cash on the line — it invested $100 million back in 2007. In contrast, its co-owners didn't put up much cash at all — just their content and a share of their Hulu ad revenue.

For the right price, though, sources tell me all the players would be interested in a sale.

Possible Buyers

While Netflix and Google's YouTube pose growing threats to Hulu, sources have confirmed that neither company is interested in buying the online video giant.

Dish is a potential buyer — though it maintains "no comment." After snapping up Blockbuster and Hughes there's no doubt it's on a buying spree. CEO Joe Clayton even said in May that there are "more acquisitions on the horizon."

Yahoo is also a rumored buyer due to the amount of change and upheaval reported at the company, along with the fact that EVP Ross Levinsohn was an early supporter of Hulu in his days at NewsCorp .

Sizing It Up

Wall Street analysts have thrown out a $2 billion valuation. Considering that Hulu's revenue is expected to top $500 million this year, that's notably less than the 10 to 12 times multiple that recent mergers and acquisitions have yielded other companies.

Hulu sets itself apart, though, because it relies much more on its content partner deals and advertising revenue.

Regardless of the rumors and possible scenarios, in just a matter of weeks it will all play out on the auction block.

Questions? Comments?