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Owners announce they're investing $750M into the service to spruce it up
For the second time in as many years, Hulu has failed to sell. Hulu’s owners, NBCUniversal, 21st Century Fox, and The Walt Disney Company, were trying to sell and had received bids from DirecTV, a partnership between AT&T and Chernin Group, and a partnership between Guggenheim Digital Media and private equity firm KKR.
But the three companies announced Friday that they have decided not to sell after all. They’re going to stay together and work it out for the kids. In fact, they’re actively working on their relationship and have decided to invest a combined $750 million (O.O) into the subscription streaming TV service.
“We believe the best path forward for Hulu is a meaningful recapitalization that will further accelerate its growth under the current ownership structure,” said 21st Century Fox President and COO Chase Carey, in a statement. “We had meaningful conversations with a number of potential partners and buyers, each with impressive plans and offers to match, but with 21st Century Fox and Disney fully aligned in our collective vision and goals for the business, we decided to continue to empower the Hulu team, in this fashion, to continue the incredible momentum they've built over the last few years.”
In other words, no one was willing to pony up the cash Hulu’s owners wanted in exchange for only a couple of years of streaming rights. Because once those streaming rights are gone, so is Hulu’s value.
As you may recall, the three media giants had attempted to sell Hulu back in 2011. At that time, they got bids from all the major digital media companies: Amazon, Google, Dish Network, and even Yahoo. Hulu was reportedly seeking at least $2 billion, but could only guarantee streaming rights for two or so years. Google was rumored to offer $4 billion for the service, but only if Hulu could guarantee a longer shelf life for streaming rights.
This time around, DirecTV was rumored to be the strongest bidder after submitting an offer of $1 billion. Other parties rumored to be interested in buying Hulu included Yahoo, which was reportedly offering a bid of $600-$800 million, and Time Warner
While Hulu reached record-breaking revenues of $690 million in 2012, the company still has yet to become profitable. Premium subscription service Hulu Plus, launched in 2010, now has over four million subscribers. The basic site sees over 30 million unique visitors a month.
Image source: worldtvpc.com
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