Hulu has been taken off the market after its owners 21st Century Fox, NBCUniversal and The Walt Disney Company decided not to accept the offers on the table. Instead they will jointly invest $750 million in the online video venture. So what does this mean for the future of Hulu and its thirty million users?
It seems the bids the owners received for the company were too low. Direct TV and AT&T are reported to have submitted bids in the region of a billion dollars, about half the valuation created when the owners bought out the 10% stake owned by Providence Equity Partners for $200 million in April 2012.
Time Warner Cable had proposed to join the owners as a minority shareholder, which remains a possibility.
“We believe the best path forward for Hulu is a meaningful recapitalization that will further accelerate its growth under the current ownership structure,” said Chase Carey, the president and chief operating officer of 21st Century Fox, which recently separated from News Corp.
“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.”
Fox and Disney have previously disagreed over the future direction of Hulu but apparently believe there is more strategic value in maintaining ownership of the online video service than selling it to a competitor.
NBCUniversal is a silent partner in Hulu, as a condition of its acquisition by Comcast in 2011.
Hulu launched in 2008 as an online video service supported by advertising, adding a premium subscription service in 2010.
“Hulu has emerged as one of the most consumer 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,” said Bob Iger, the chairman and chief executive of The Walt Disney Company.
It seems possible that Hulu will move more towards the subscription model, possibly becoming an online hub for those with pay-television services.
The ‘television everywhere’ concept was pioneered by Comcast and Time Warner, partly in response to online services like Hulu and Netflix. So far it has failed to find the same level of adoption by American consumers, lacking the ease of use and device support of the standalone subscription services of Hulu and Netflix.