The case for and against a Yahoo/Hulu deal
Michael del Castillo
Yahoo's Marissa Mayer might be making another big buy soon. Her company has reportedly bid on the streaming service Hulu.
Wow, slow your roll, Yahoo.
Just days after closing a $1.1 billion acquisition of Tumblr, Yahoo is reportedly putting in a bid for Hulu[5].
According to unnamed sources quoted by Variety, Yahoo is the latest company to put in a bid for the streaming video site.[6] Variety also said that Amazon, which was seen as a frontrunner for the deal, has dropped out of contention. Bid price was not disclosed.
Hulu would seem to be at the center of a full-on feeding frenzy these days, with private equity firms Silver Lake and Kohlberg, Kravis & Roberts circling as well as interest from Time Warner Cable and DirecTV. Gugenheim Media has also put in a bid, which might make for an interesting match up given that Gugenheim is headed by Ross Levinsohn[7], the man passed over for Marissa Mayer[8]'s CEO gig.
I'm of two minds about a Yahoo/Hulu merger. On the one hand, Hulu would be huge for Yahoo. It gives it exactly the kind of reach for its video that it was hoping for from the aborted DailyMotion deal, and a far better stable of original content than it probably would have gotten otherwise.
But Yahoo's war chest, while formidable, isn't inexhaustible. The DailyMotion deal was reported to be around $300 million. Hulu's revenue is more than double that.
Owners News Corp., Disney and NBC had previously tried to unload the company for about $2 billion, but weren't able to get a good enough price. This new deal will be expensive, especially given the interest from private equity firms, who can afford to do a deal with a lot of leverage.
And there's the question of the shareholders. Yahoo's stock price has been doing extremely well since Mayer took the helm, and overall investors seem pleased with what she's done, up to and including the $1 billion purchase of Tumblr last week[9].
Jon Xavier is Web Producer at the Business Journal. His phone number is 408.299.1826.
References
- ^ Jon Xavier (feeds.bizjournals.com)
- ^ This email address is being protected from spambots. You need JavaScript enabled to view it. (feeds.bizjournals.com)
- ^ Twitter (twitter.com)
- ^ Google+ (plus.google.com)
- ^ Hulu (www.bizjournals.com)
- ^ Yahoo is the latest company to put in a bid for the streaming video site. (variety.com)
- ^ Ross Levinsohn (feeds.bizjournals.com)
- ^ Marissa Mayer (feeds.bizjournals.com)
- ^ up to and including the $1 billion purchase of Tumblr last week (www.bizjournals.com)