Time Warner Cable Inc (TWC), Best Buy Co., Inc. (BBY): Hulu was DIRECTV (DTV)’s Best Buy

Hulu sounds like a match made in heaven for DirecTV, but since the company rejected DirecTV’s bid in July, its options going forward appear limited. DirecTV could attempt to purchase another online video streaming company, but it would quickly find that no suitable alternatives exist. My recommendation: place another bid for Hulu, and not just any bid. A bid so large, it won’t be turned it down a second time.

The company’s previous bid was not enough to persuade ownership. A higher bid is in order, and with $2.3 billion in cash, as well as record low interest rates, DirecTV has ample funds at its disposal. In an industry that is rapidly evolving, the acquisition of Hulu is a necessity. One DirecTV can’t afford to miss.

The final cut

Younger consumers are moving away from in-home televisions. DirecTV’s competitors have diversified into other income streams and can rely on them as the market for in-home cable slowly declines. DirecTV needs Hulu to align itself with the growing demographic change. It can absorb Hulu’s paying subscribers, as well as leverage its streaming network to better distribute its channels. DirecTV may be able to acquire a smaller streaming service at a lower cost, but there’s little doubt that Hulu was, and still is, DirecTV’s best buy.

The article Hulu was DirecTV’s Best Buy originally appeared on Fool.com and is written by Marie Palumbo.

This article was written by Joshua Sauer and edited by Chris Marasco and Marie Palumbo. Chris Marasco is HeadEditor of ADifferentAngle. None has a position in any stocks mentioned. The Motley Fool recommends DirecTV.

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