Hulu is reportedly preparing to go public with a $2 billion IPO (Initial Public Offering). This would raise somewhere in the region of $300 million, which the company could use to acquire more content in a bid to better compete with the likes of Netflix and Apple.
Hulu – From Zero To Hero
Before Hulu launched late in 2007, no one seemed to give the company much hope of succeeding. Here were old media companies, which had shown a complete disregard for online video and an inability to understand its finer points, attempting to move in on the emerging market.
Such was the feeling that this was a venture destined to fail, YouTube employees allegedly began referring to Hulu as “the clown company.”
Three years later and Hulu has proved itself to be no clown. Instead, it has a good relationship with content owners, a dedicated userbase, a pay service in Hulu Plus, and is rumored to be about to go public. What’s more, it’s valued at an astonishing $2 billion.
Going Public
Hulu is reported to be preparing to go public, with a deal valuing the company at around $2 billion which would bring between $200 million and $300 million into the company’s coffers. Morgan Stanley will be chief underwriters on the deal.
Hulu is set to file a prospectus with the U.S. Securities and Exchange Commission before the end of 2010, with the IPO itself taking place in the first half of 2011. This is, at least according to sources close to the company.
A decision about whether to plough ahead with this plan is due in November, and it’s likely to hinge on whether Hulu is able to renew the rights to carry some of its big-name shows, some of which end in the next year.
If the IPO does go ahead then the up-to-$300 million raised would be used to acquire new content and potentially move in to territories other than the U.S. Which has been planned for some time but keeps stalling.
Conclusions
I’m quite surprised Hulu is valued at such a high figure but it does have a very sound business at its core. The big problem for Hulu is that it is facing stiff competition from Apple, Netflix, and others. Hulu clearly wants to make sure it’s leading from the front rather than playing catchup.
[Via Reuters]
