AT&T Inc. (T), DIRECTV (DTV): Hulu for Sale, But Who Will Buy?

Page 1 of 2

The “For Sale” sign for Hulu is up again, as the company has attracted the attention of several bidders who have shown interest in buying the company. Three of the top names include Yahoo! Inc. (NASDAQ:YHOO), DIRECTV (NASDAQ:DTV), and AT&T Inc. (NYSE:T). I’ll examine the attraction behind Hulu and how acquiring the company could impact these three bidders.

AT&T Inc.

Hulu, an internet darling

Interest in buying Hulu is not new; the company drew offers two years ago from Google Inc (NASDAQ:GOOG),, Inc. (NASDAQ:AMZN), Yahoo!, and DISH Network Corp (NASDAQ:DISH), which eventually fizzled when then-owners Disney, News Corp., and Providence Equity Partners decided to not sell. Analyst David Bank, from RBC Capital Markets, stated on Bloomberg that the company is ‘an incredibly valuable brand…[and] is arguably more valuable than any of the networks themselves.’ The networks he’s talking about are The Walt Disney Company (NYSE:DIS)’s ABC, Comcast Corporation (NASDAQ:CMCSA)’s NBC, and News Corp (NASDAQ:NWSA)’s Fox.

Two of the current owners, Disney and News Corp., have bumped heads over how to run the company and decided to put it up for sale. A new bidding process started anew this year, as bidders seek to access the site’s online advertising and programming provided to Hulu’s more than 4 million paying customers, the latest number of subscribers for the first quarter of 2013.

For Yahoo!, video is a key component of strategy

Yahoo! Inc. (NASDAQ:YHOO)’s buying spree continues as it sets its sights on Hulu’s video offerings, some of which are offered for free, with additional content offered to its paying subscribers. The acquisition would fulfill Yahoo!’s strategy going forward of investing in the video format its CEO Marissa Mayer considers ‘very important,’ according to All Things D.

Yahoo!’s bid for Hulu is reported to be in the $600 to $800 million range. The price range addresses various circumstances that affect Hulu’s worth, such as the length of content licensing rights and the control current owners have over the media. As long as the quality and amount of content is not disrupted after the buyout, acquiring Hulu could benefit Yahoo! going forward and draw additional users in.

DirecTV deals with cord cutters

DIRECTV (NASDAQ:DTV)’s 20 million subscribers could soon have free or discounted access to Hulu if the company is purchased by the large pay TV provider. By offering content through Hulu, the company can lessen the impact of an ongoing trend among certain customers who leave cable and satellite service due to the high cost. This will benefit DIRECTV (NASDAQ:DTV) in the long-term as more and more content moves to the internet.

DIRECTV (NASDAQ:DTV)s current relationship with Hulu’s present owners can help the company obtain more favorable programming rights than the other bidders, some which are new to the industry. According to Bloomberg, the company is one of three bidders offering $1 billion-plus for Hulu.

AT&T joins forces with production company

AT&T Inc. (NYSE:T) is holding talks with California-based production company Chernin Group about putting forth a joint bid for Hulu. A successful deal between these two would provide AT&T with another option to push programming to additional subscribers beyond its current U-verse service, and Chernin gains even greater financial backing from the telecom giant.

Page 1 of 2