Yahoo is getting some stiff competition in its reported quest to buy Hulu.
DirectTV reportedly joined two other unnamed companies in bidding at least $1 billion for streaming video site Hulu, according to an AdAge report Friday. The ten-figure bids increase the likelihood that Hulu will finally be sold, while also lessening Yahoo’s chances of acquiring the online property they need to sell more lucrative video advertising.
Yahoo CEO Marissa Mayer tried and failed to buy Dailymotion, a French video startup, earlier this year before bidding a reported $600-800 million for Hulu earlier this week. At least seven suitors are said to be vying for Hulu, which went back on the auction block after previous attempts at a sale and initial public offering both failed. A deal would hinge as much on terms as sheer dollar value, as the length of Hulu’s content licenses – and what control the site’s trio of owners have over content available to subscribers – will be part of any negotiations. Hulu’s days of exclusive rights to popular television content could be drawing to a close as networks see the financial benefit in licensing online rights to multiple players including Amazon, Netflix and YouTube/Google.
Offering both free and subscription-based content, Hulu brought in $695 million last year. That number represents a combination of advertising dollars and a reported four million subscribers paying $7.99/month each.
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That said, it’s widely believed that $1 billion is the floor for any bid to be taken seriously by Hulu’s trio of owners, Comcast, Disney and News Corporation. Whether Mayer is willing to spend another billion hot on the heels of Yahoo’s $1.1B acquisition of blogging platform Tumblr remains to be seen. AllThingsD’s Kara Swisher reported earlier this week that Y! is considering another pair of acquisitions totaling $300-500 million, contributing to visions of an Marissa Mayer M&A frenzy.
Yahoo’s recent moves, including the launch of redesigned mobile apps and a dramatically overhauled photo upload and sharing service Flickr have been well received by critics and consumers alike. The Tumblr acquisition is seen as a risky effort to increase Yahoo’s relevance amongst a younger audience while also harvesting hundreds of millions of unmonetized monthly visitors via Y’s native advertising platforms. Nay-sayers predict user revolts once Yahoo steps up its advertising efforts on Tumblr, a process that took a small step forward this week with the introduction of sponsored posts on users’ Web dashboard.
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Earlier this month Yahoo announced high-profile deals with Saturday Night Live and WWE (don’t laugh – pro wrestling is big business). And they’ve been investing in original programming a la Amazon and Netflix, including the awesomely titled, “Losing Your Virginity With John Stamos.” Don’t forget, Marissa Mayer was a long-time Googler before taking Yahoo’s reins. It’s a safe bet she’s seen a thing or two in her day when it comes to the business of online video.
