Hulu is being sold off, of that there is no question. But everything else, it would seem, is being questioned. From the chances of achieving profitability to the possibility that the content will vanish from the company’s grasp in the future.
Hulu Bids Incoming
The deadline for bidders to submit the figure they are willing to pay to acquire Hulu has reportedly been extended from until the end of the week. This is to allow potential buyers more time to study the financials of the company to ensure they stack up against the considerable asking price.
Hulu is looking for bids in the region of $2 billion, which would seem excessive when revenue has only just hit $500 million for the year and profitability is still some way off. There are also other questions being asked by those in the know, especially related to the longterm future of the business.
Future Failings
is nothing without content. Yes, it’s a well-known brand with millions of users in the U.S., 1 million of which have deemed the service good enough to pay the subscription fee required to receive Hulu Plus. But content is still king.
For Hulu the content all comes from the big media companies, and there are deals in place with the likes of CBS and NBC. But these aren’t deals that will run for ever, and in fact some are due to expire in just one year’s time. Even the longest is for less than five years.
When these do come to an end they will have to be renegotiated, and media companies have a tendency to display greed at these moments as they realize there is good money to be made in an online service that is actually working.
The new owner, whoever that may be, will have to be strong in order not to be bullied into signing one-sided deals. Unfortunately the content providers hold all the cards in such situations. Because they can, if they want, just threaten to walk away and take their ball content with them.
Conclusions
Whoever takes Hulu on is going to face some pretty serious challenges. But if they navigate these successfully then there is a good chance they’ll have bought wisely.
This element of risk does, however, increase the likelihood that a big player will be the eventual buyer, as the likes of Google and Amazon can afford to lose a couple of billion dollars. In the same way we don’t sweat losing $1 down the back of the sofa.
[Via Reuters]
