DirecTV Competing with Time Warner Cable and AT&T in Bid for Hulu
El Segundo, Calif., July 8, 2013 -- Three top pay-TV companies have emerged as the remaining serious contenders for online video service Hulu in a bidding completed on July 5 according to media reports.
The largest satellite company in the U.S., DirecTV, made a bid for the online video service, while Time Warner Cable offered to acquire a stake. AT&T, which operates the U-verse pay TV-service, also submitted a joint bid with Chernin Group, producer of "Rise of the Planet of the Apes" film and TV's "New Girl" as well as an investor in startups such as Tumblr and Flipboard.
Reports earlier this week said Hollywood Reporter owner Guggenheim Digital Media and KKR and Co. have dropped out of the hunt for Hulu after having been informed their bids were too low and were no longer being considered.
The terms of the pay-TV companies’ offers have not been disclosed.
Hulu owners are reportedly expecting a bid of about $1 billion, which is much lower than the $2 billion they would have expected to fetch had they sold the company two years ago.
Hulu is an online video subscription service that offering ad-supported on-demand streaming video of TV shows, movies, webisodes and other new media, trailers, clips, and behind-the-scenes footage from NBC, Fox, ABC, TBS, and many other networks and studios. Hulu is a joint venture of NBCUniversal Television Group (Comcast), Fox Broadcasting Company (21st Century Fox) and Disney–ABC Television Group (The Walt Disney Company). The company also got funding from Providence Equity Partners, the owner of Newport Television, which gave a US$100 million equity investment and received a 10 percent stake.
Like the other newcomers, Hulu offers a lower-cost option than the video subscriptions on cable and satellite systems, including a limited free version and an $8-a-month subscription with access to more shows on more devices. Hulu claims more than 4 million paying customers as of the first quarter.
DirecTV is the largest satellite company in the U.S. with revenues of $7.58 billion in the first quarter of 2013 and the No. 2 pay-TV company overall behind Comcast. Time Warner Cable is the second-largest U.S. cable TV provider.
Pay-television systems are vying for Hulu because it offers a lower-cost option than the video subscriptions on cable and satellite systems. Hulu’s website provides a limited free version of its service on computers and offers an $8-a-month subscription with access to more programs on more devices.
Their interest suggests that pay-TV providers see the rise of streaming video providers such as Netflix, Redbox Instant by Verizon, Amazon Prime and, of course, Hulu.
While Hulu Plus is a lot cheaper than cable TV subscription at $8 a month, critics say the package of Netflix and Aereo, which costs about twice as much but they include a larger catalog of content, same-day network TV shows and live sports.
Analysts say DirecTV may have the upper hand in the bidding war as it could offer Hulu both as a standalone service and bundled in with a satellite TV subscription.
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