Reports: Hulu acquisition talks hanging up on exclusivity

Hulu Company Logo (thumb)

It’s no secret that online video streaming service Hulu is looking for a buyer—the company has hired investment banks to help oversee a possible sale. But while the company entertained an offer from a mystery buyer (apparently Yahoo) back in June. Now, reports are emerging that Yahoo would be willing to pay up to $2 billion for Hulu—but only if it can get a long-term exclusive lock on content available through Hulu. And the word “exclusive” is key to the deal: if content currently available on Hulu is available for licensing to every Internet company with a video offering—Google, Amazon, Microsoft, and many more—the value of Hulu really comes down to its established streaming and player technology, plus its existing user and subscriber base. And that’s not worth $2 billion.

According to Business Insider, Yahoo is only willing to consider a deal if it gets an exclusive lock on Hulu content for four or five years—enough time for Yahoo to transition users over to its services and establish Hulu as premium online streaming brand, both to consumers and advertisers. Without a content exclusivity agreement, Yahoo—or another buyer—would likely be better off seeking separate licensing deals with Hulu’s content partners—Disney, News Corp, Comcast—as well as with other studios.

According to Bloomberg, Hulu is willing to offer buyers five years of access to content, but only a two-year window of exclusivity. During an exclusivity period, networks would still be able to show programming on their own sites and offer it to on-demand paid television services.

The amount of time Hulu can offer exclusive rights to content may be limited by its own contracts with content providers: Hulu doesn’t produce programming itself, but licenses content from its partners. Hulu’s recent agreements to carry content from ABC and Fox apparently included clauses to increase the number of advertising minutes embedded in TV shows shown by the service: Hulu already has a very high ads-to-content ratio.

Unconfirmed reports have had Hulu representatives meeting with at least ten companies about a possible acquisition, including Amazon, Yahoo, Google, Microsoft, and AT&T. Microsoft has apparently indicated it’s not interested in participating in the current round of bidding, although there’s nothing to keep the company from changing its mind.

Spokespeople for Hulu and Yahoo declined to comment.

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