On Monday, August 22nd, the Wall Street Journal reported on the sale of Hulu, LLC, a privately owned video streaming company. I’m sure you are familiar with Hulu. I use it to watch my favorite episodes of The Office and Family Guy. It has been around for a while now but it has always been a private company. Well, now Hulu has announced that the company is for sale and you can get in on the action, the question is, are you buying?
No IPO for Hulu
Hulu, LLC recently explored the possibility of an IPO back in December of 2010. However, they did not go through with the IPO because they lacked the long term exclusive rights to the digital content that it streams. This could possibly be because Viacom pulled The Daily Show and The Colbert Report from offerings in 2010. I think that was very smart on the part of the IPO analysts. If your entire business model is based on selling content that you don’t own and if there is a high risk that you will not be able to sell that content in the future, your current valuation would be based on hot air and rainbows.
Who Owns Hulu Now?
So who currently owns the company? According to Hoovers, Inc. Comcast currently owns a 27% stake in the company after purchasing a majority stake in NBCU through GE. Disney acquired a 30% stake in the firm after a deal in 2007 that allowed Hulu to stream several of it shows and selected content including Desperate Housewives and Lost. Hulu is also portioned out to Providence Equity Partners who invested 100 million back in 2007.
Who Will Buy Hulu?
So now the big question is, who is licking their chops, circling patiently and waiting to get their hands on this popular digital content streaming service? It looks like DirectTV is considering the purchase. All Things Digital reported on this back on the 4th of August.
Amazon, Yahoo and Google are also names that have been thrown into the ring as likely to make a bid to buy Hulu. Bids for the company are due August 24th, 2011.
How Do I Buy Hulu?
One way that you could get into the buying craze is to purchase a piece of the company that you think will end of buying Hulu, however this could backfire because the cost of merging a firm is often negatively reflected in the stock price of company that does the buying. You could buy stock in one of the publicly traded companies that owns a piece of Hulu like Comcast or Disney. Or you could wait to see how things work out in the first few months and avoid all of the speculation that will surround the news.
Would you buy a piece of Hulu? And if so what is your bid for Hulu? (I’ll give you a hint, if you are starting below 500 million, you are too cold.)
Disclaimer: At the time of posting I do not own shares in any of the stocks listed here. However, if you are nosy, I share my personal portfolio and investments with newsletter subscribers each month. Please continue to the full disclosure regarding posts about stocks and investing.
Factual source: Hoover’s Inc. (2011, August 15). Hulu, LLC. Hoovers Company Records Hm-Hz. Retrieved August 23, 2011 from ProQuest database. (Document ID: 230553501)