If you wanted to buy the online video streaming service Hulu, you missed your shot. Hulu’s mega media conglomerate owners News Corp. and Disney, plus private equity firm Providence Equity Partners, are canceling their bid to sell it only four months after they began soliciting bids, according to a statement posted on the Hulu website Thursday night.
The brief statement is pretty cut-and-dry:
“Since Hulu holds a unique and compelling strategic value to each of its owners, we have terminated the sale process and look forward to working together to continue mapping out its path to even greater success. Our focus now rests solely on ensuring that our efforts as owners contribute in a meaningful way to the exciting future that lies ahead for Hulu.”
Essentially, Hulu is finally coming around to the position that a few analysts and tech writers had advocated – the owners should build up Hulu’s streaming service (which is available on desktop, TV, video game consoles and mobile devices) and make it competitive with broadcast TV and other online and mobile video offerings, a true “TV Everywhere” experience.
For consumers, ideally, the move will result in Hulu’s backers reconsidering some of their infuriating decisions to delay broadcast TV content and offer it for free on separate iPad apps. (Some Hulu content is currently available for free, but Hulu Plus subscribers get additional content and get it without delays for $7.99 a month.)
The original sales plan, first reported in June, was basically to offload Hulu to someone else now for short-term profits, betting on the sellers’ ability to wring out even more money in the long run by increasing their content licensing fees to whichever poor sucker would end up biting.
But Thursday’s move isn’t a huge shocker, given that the high-profile companies that reportedly bid for Hulu – Yahoo, Amazon, Google and DISH Network to name a few – lowballed their bids, knowing full well the content licensing costs would climb down the road.
The highest bid, $1.9 billion, reportedly came from DISH Network, according to The Business Insider in late September. Hulu’s owners were said to be looking more for something over $2 billion. Google had allegedly gambled big with a $4 billion bid, but under terms that were unacceptable to Hulu’s owners.
Hulu, which was launched by News Corp., Disney, NBCUniversal and Providence Equity in July of 2008, initially saw explosive growth in viewers for the first year of its existence before beginning to slow in 2009. It peaked around 30 million viewers in 2010 before falling back down to 24 million in 2011. Along the way in April 2009, Hulu was the third-most popular online video website in the world, but as competitors such as Netflix continued to draw viewers, it fell out to the bottom of the top 10.
Meanwhile, viewer time spent on the service has continue to climb steadily and ad monetization increased sharply in the past year, according to online market research firm comScore. Hulu also proudly announced in its third quarter results that is continuing to add new content at a breakneck pace, with video offerings up 39 percent year-over-year for free users and 106 percent for subscribers to Hulu Plus. More content is on the way thanks to a critical deal Hulu made with Spanish-language TV empire Univision in early October. (It’s also worth noting Unvision and rival Spanish-language TV company Telemundo have struck similar deals to bring popular content such as telenovelas and Spanish sports to Hulu rival YouTube, so Hulu desperately needed the deal to remain competitive.)
That said, Hulu isn’t in terrible shape by any means, and is on track to make $500 million in revenue this year (from ads and paid subscriptions), up from $263 million in 2010, USA Today reports.
Meanwhile, video streaming competitor Netflix expects to suffer a huge loss in subscribers this year due to the series of unpopular decisions that began in the summer when it announced a price hike and culminated Monday with the abrupt cancellation of its plans to divide its streaming service and disc-by-mail subscriptions into two separate companies.
Still, it remains to be seen whether Hulu’s backers, such as News Corp., go all out and begin retooling the Hulu mobile app to make it competitive with the free offerings from ABC and NBC, and whether they streaming broadcast TV content without delay after it airs. Right now, News Corp. imposes an unpopular 8-day delay before putting new Fox TV episodes up on Hulu, a decision that immediately produced a spike in online video piracy of Fox content shortly after it was announced in August.
