Yahoo! Inc. (YHOO), Time Warner Cable Inc (TWC), DIRECTV (DTV): Finding the Right Fit for Hulu

Page 1 of 2

The bidding war for Hulu is starting to take shape, with Reuters reporting that the video site’s price tag has topped $1 billion. That seems like a princely sum for the site, but for a select list of bidders, it might be well worth the expense.

Hulu vs. Netflix

Hulu was the media industry’s response to Netflix, Inc. (NASDAQ:NFLX). Netflix’s streaming video service was catching on quickly with customers and the traditional television content companies felt they needed to get involved. It was the right decision.

However, Hulu’s focus was about getting new content online without interfering with the television distribution model. So new content is delayed until after its traditional broadcast and even paying Hulu customers are forced to watch advertisements. Tübingen, unhindered by the television model, has focused on letting customers watch what they want, when they want, and how they want.

This makes some potential Hulu buyers more appropriate than others.

Itching to get video

Yahoo icon

Yahoo! Inc. (NASDAQ:YHOO) is one of the rumored bidders. The company has plenty of cash to make a billion dollar bid after selling half of its take in Alibaba for around $7 billion. While it has been using that cash to make small acquisitions, it also just inked a billion dollar deal to buy Tumblr.

Tumblr, a photo and media focused blog site, is a much better fit than Hulu would be. Not only does Yahoo! Inc. (NASDAQ:YHOOalready have experience in the photo space, but the service doesn’t come with legacy baggage. While new CEO Marissa Mayer has been deftly using acquisitions to further her turnaround effort, Hulu would pull the company off on a tangent. And the content providers who currently own Hulu would likely balk if she tried to turn the service into a more modern product by killing ads, increasing content, or trying to make content more timely.

Yahoo! Inc. (NASDAQ:YHOO) is increasingly looking like it has long-term appeal again, which is why the shares have been heading higher. It’s a good option for aggressive investors looking for a turnaround play. That said, the company’s top line has yet to turn higher, though it has appeared to stabilize to some degree. Caution is still warranted.

The addition of Tumblr, which notably increases the company’s ad network, should be a big help. While investors might cheer a Hulu purchase, it has too much baggage for an easy integration.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

The 10 Cheapest Places to Retire Abroad

Top 10 Most Expensive Luxury Cars in the World – 2014

Killer Small Business Ideas

The 50 Best Personal Finance Blogs

Most Expensive Apartments in New York City

Bloodiest UFC Fights Ever Fought

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!