For people who watch TV and movies over the Internet rather than the airwaves or cable, Hulu is one of the most popular sources of content. The company has offered streaming, on-demand access to select television shows and movies since it launched in 2008. Now, the site's owners are looking to cash in, and some big guns — including Google, Amazon, Yahoo and Dish Network — are showing interest.
Why Hulu's corporate owners would want to sell in the first place is a question that many in the industry are asking. Even though Hulu made its name by providing free streaming access to shows like 30 Rock, Family Guy and Modern Family (as long as you sit through a few commercials), it has reportedly nabbed nearly 1 million subscribers since it launched a paid service last year that offers more shows for $7.99 per month.
Nicholas Carlson, the deputy editor of Business Insider, says Hulu's incentive to sell stems from the fact that its owners actually compete with one another. Those owners are the corporations — The Walt Disney Co., Comcast/General Electric and News Corp. --- that own the major TV networks ABC, NBC and Fox, respectively.
"There's really too many parents in this family," Carlson says. And they don't always play nice. "There were complaints a couple of years ago about Hulu salespeople going out and pitching against ABC salespeople who also show video on Internet, and they're undercutting their prices."
Now may also happen to be a very good time to sell Hulu, since every major Internet provider wants to offer its customers premium TV content that it can sell to advertisers. The price tag for the site could be as much as $2 billion.
Bidders like Amazon are attracted to Hulu, says Carlson, because they'd like to beef up their current video business, and because owning the site could lay the groundwork for even more technological growth.
"Amazon is going to launch an iPad rival, a clone, so to speak, later this year or the beginning of next year," Carlson says. "I've heard that Amazon is thinking a Hulu-branded tablet would be a great way to get consumers really excited."
Despite that potential synergy, Carlson says there's an even more powerful bidder.
"Google just has so much cash in the bank right now," he says.
Google already owns another streaming video site, YouTube, but despite that site's massive popularity, it has a weakness. "Birthday videos, videos of stunts — that stuff's very hard to sell advertising against," Carlson says.
How might Hulu change if it's sold? Nobody outside the company itself or its possible buyers really knows. But content is key. Marci Ryvicker, a senior analyst with Wells Fargo Securities, says that because ABC, NBC and Fox jointly own Hulu, they all have an incentive to provide content that people want to watch. If they sell, that may not be the case any longer.
"It's up to them to either continue providing or not," Ryvicker says. Without these networks' shows, Hulu won't be worth much. "No one's going to pay $2 billion for a company that won't guarantee a certain specific level of content, because again, that's all that Hulu really provides."
DAVID GREENE, host:
People who watch TV and movies on the Internet know that Hulu is one of the most popular websites. It's currently owned by several media companies, and they're looking to get rid of it. Some big tech guns, including names like Google and Amazon, are expressing interest in buying Hulu. But as NPR's Elizabeth Blair reports, nobody really knows what will happen to Hulu if it's sold.
ELIZABETH BLAIR: Hulu had hubris right from the start.
(Soundbite of advertisement)
Mr. ALEC BALDWIN (Actor): I'm Alec Baldwin, TV star.
BLAIR: Hulu launched this ad campaign during the 2009 Super Bowl.
(Soundbite of advertisement)
Mr. BALDWIN: Hulu beams TV directly to your portable computing devices, giving you more of the cerebral gelatinizing shows you want - anytime, anywhere, for free.
BLAIR: Content from big shows like "30 Rock," "American Idol," "Family Guy," was available for free. Then last year Hulu launched a paid service offering even more access, for 7.99 a month. It has, reportedly, nearly one million subscribers.
(Soundbite of TV show, "Family Guy")
Mr. SETH MACFARLANE (Actor): (as Peter Griffin) Oh, yeah. Oh, those are looking good. Yeah, that's what I'm talking about.
BLAIR: So why do its corporate owners want to sell it?
Mr. NICHOLAS CARLSON (Business Insider): Really, there's too many parents in this family.
BLAIR: Nicholas Carlson, deputy editor of Business Insider, says one problem is that Hulu's owners compete with each other. The owners include the three corporate parents of the major TV networks - ABC, NBC and Fox.
Mr. CARLSON: There were complaints a couple of years ago about Hulu sales people going out and pitching against ABC sales people, who also show video on Internet. And they're undercutting their prices.
BLAIR: And now is a very good time to sell Hulu since every major Internet provider wants to offer its consumers premium TV content that it can sell to advertisers. The price tag could be as much as $2 billion.
Unidentified Woman: You people have too much money.
BLAIR: So who are the bidders? There's Amazon. They want Hulu, says Carlson, because they'd like to beef up their current video business, and because...
Mr. CARLSON: Amazon is going to launch an iPad rival, a clone, so to speak, later this year or the beginning of next year. And I've heard that Amazon is thinking that a Hulu-branded tablet would be a great way to get consumers really excited.
BLAIR: The most powerful bidder, says Carlson, is Google.
Mr. CARLSON: Google just has so much cash in the bank right now.
BLAIR: And Google needs Hulu, because right now its video service is YouTube.
Mr. CARLSON: You know, birthday videos, videos of stunts...
Unidentified Man #1: Oh...
Unidentified Man #1: My God! Oh...
Mr. CARLSON: That stuff's very hard to sell advertising against.
BLAIR: Other bidders are believed to be Yahoo and Dish Network. So how might Hulu change if it's sold? Nobody on the outside really knows, but content is key. Marci Ryvicker is a senior analyst with Wells Fargo Securities.
Ms. MARCI RYVICKER (Wells Fargo Securities): Most of the content on Hulu is provided by the FOXs, ABCs and the NBCs.
BLAIR: And remember, they own Hulu.
Ms. RYVICKER: It is up to them upon a sale to either continue providing or not.
BLAIR: Ryvicker says without the shows, Hulu isn't worth much.
Ms. RYVICKER: No one's going to pay $2 billion for a company that won't guarantee a certain specific level of content, because, again, that's all that Hulu really provides.
BLAIR: But Hulu also provides this guy.
Unidentified Man #3: The following program is brought to you with limited commercial interruptions.
Mr. CARLSON: That's the Hulu guy.
BLAIR: Is he part of the deal?
(Soundbite of laughter)
Mr. CARLSON: He better be or you're not getting your money worth.
BLAIR: Elizabeth Blair, NPR News. Transcript provided by NPR, Copyright NPR.