UPDATE: The last time Hulu was in play, it was 2011 and an auction sale went nowhere. And before that, in 2010, an IPO was contemplated but not pursued. So I’m somewhat skeptical about a successful outcome this time around. A myriad news reports are counting 7 named suitors (and an 8th unidentified pay TV outlet) who want the 6-year-old web video service outright or at least an equity stake. Most of the bids came in time for a soft Wednesday deadline set by co-owners Walt Disney Co, News Corp, and Comcast Corp without a formal M&A process. Yahoo came in Friday morning. More may follow. The other confirmed bidders include KKR & Co, Silver Lake Management/Hollywood agency WME, Guggenheim Digital (even though Guggenheim Securities advises Hulu’s board), Time Warner Cable (interested in becoming a 4th co-owner), DirecTV, and the Chernin Group (whose Peter Chernin helped create Hulu and has partnered with investors Qatar Holding and Providence Equity Partners). But Amazon was a no-show. The Los Angeles-based Hulu board began seeking the latest round of bidding in March. Now the question is whether Disney, News Corp, and Comcast will look for an exit and take their content with them, then license it back to Hulu for bigger fees but no exclusivity. If so, then what in the world are bidders actually buying?
You wouldn’t know that the Hulu auction was a failure based on the way News Corp COO Chase Carey describes the owners’ plans. They decided to hang on to the digital video service because its value to them “dwarfed some of the values that were being put on it” by bidders including Dish Network and Google. Keeping Hulu reflects “a judgment that this digital space is incredibly important and is going to be, over the next five years and beyond, the most important field we have to navigate.” As a result, he told the UBS Annual Global Media and Communications Conference, “we’ll do what’s necessary to make it grow.” But that doesn’t necessarily mean adding movies to the package to make it more competitive with Netflix. ”Me-toos aren’t a great place to be in this business,” Carey says. “We want to look at it with a fresh eye.”
Investors strangely seemed uninterested in the News Of The World hacking scandal. But one of the consequences — News Corp’s decision to abandon its effort to buy BSkyB — was a concern. Carey says that it’s “one of the things we have to figure out” because he says the company gets ”a fraction of credit” it believes it deserves for its 39% stake in the UK media company. News Corp must ”do a better job communicating value.” Still, he didn’t leave investors empty-handed: Carey says that News Corp’s recently launched round of share repurchases is “certainly not a one-time thing. It’s an important part of our capital allocation,” he said, adding that News Corp shares are ”woefully undervalued.”