Hulu owners abandon sale, to infuse $750 mn

The Walt Disney Co, 21st Century Fox and NBCUniversal yesterday abandoned the sale of online video-streaming site Hulu and will jointly infuse $750 million in order to ensure its future growth.

Hulu had reportedly received three bids as recently as last week as part of its owners second attempt in three years to sell the company.

AT&T Inc and Chernin Group as well as DirecTV and Guggenheim Digital Media, which had teamed up with private equity firm KKR & Co had reportedly tabled bids worth a little more than $1 billion. (See: Hulu receives three bids of over $1 bn: report)

But the owners abandoning the sale suggests that the bid amount were not up to their expectations.

A little over $1 billion is what half of what Hulu was valued at in April 2012 when the owners bought out Providence Equity Partners' 10 per cent stake for $200 million.

''We believe the best path forward for Hulu is a meaningful recapitalisation that will further accelerate its growth under the current ownership structure,'' said Chase Carey, president and COO of 21st Century Fox.

''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," he added.

In 2011, the owners had put Hulu on the block, and Google, Amazon.com, Yahoo and Dish Network Corp had reportedly put in bids, but the owners had then also abandoned the sale after they received low bids.

Robert Iger, chairman and CEO of Walt Disney, said, ''Hulu has emerged as one of the most consume-friendly, technologically innovative viewing platforms in the digital era.  As its evolution continues, Disney and its partners are committing resources to enable Hulu to achieve its maximum potential.''

Los Angeles-based Hulu is best known for free online access to popular TV shows, but it launched a paid subscription service in July 2010 to expand its offerings to include TV shows from other programming partners like Viacom.

Hulu has a large selection of videos from more than 410 content companies, including Fox, NBCUniversal, ABC, The CW, Univision, Criterion, A&E Networks, Lionsgate, Endemol, MGM, MTV Networks, Comedy Central, National Geographic, Digital Rights Group, Paramount, Sony Pictures, Warner Bros, TED and more.

Users can choose from current primetime TV hits such as The Simpsons, Modern Family, Glee, The Office, Jersey Shore, The Daily Show and The Colbert Report; classics like Buffy the Vampire Slayer, The A-Team and Alfred Hitchcock Presents; full episodes and clips from Saturday Night Live.

Hulu's stiffest competitor is Netflix, which counts more than 33 million paying subscribers in the US.

Though Hulu has gained immense popularity, its owners are under increasing pressure from their cable and satellite distribution partners reluctant to pay premium dollars to carry content that is being offered for free on the web.

Further, many content makers have been reluctant to put their shows up on a free site with an advertising model that has not yet proved itself with premium video.

Hulu posted a 65-per cent rise in revenues last year to about $700 million since paying subscribers more than doubled to 3 million.