Is Hulu news being leaked to jack up sale price?

All the reports hitting at one time appears to be an attempt to whip up interest in the video service. But is Hulu worth much?

Hulu has hired investment banks to oversee a sale of the streaming-video service, according to The Los Angeles Times.

The news comes a day after someone leaked word that Hulu had received a buyout offer. Later, it was reported that Yahoo was the company that had expressed interest. And now comes another report from Variety that Hulu has renewed its content licensing deal with Fox Broadcasting. Fox is owned by News Corp., which also owns a share of Hulu, along with Disney and NBC Universal.

All these stories hitting at one time (head scratch), what are the odds?

Well, the odds are long, maybe too long to be a coincidence. What is much more likely is that one of Hulu's studio backers or some other interested party is orchestrating the news blitz to drive up interest in Hulu. The reports, if planted, are a form of communication and the message they're conveying goes something like this: "Hey AOL and Google, you're not going to let rival Yahoo walk away with one of the Web's top video platforms, are you?"

Indeed, Hulu is one of the most popular entertainment destinations on the Internet. But if it were so valuable, why would anyone feel the need to tweak demand? Simple, there are red flags sticking up all over Hulu.

•  Friction exists between Hulu's management and the founding studios about how the service should operate.
•  Doubts about whether Hulu is an effective advertising vehicle have dogged the company almost since the start.
•  There are no guarantees that once Hulu is out of the founders' hands, they will continue to provide content to the service.
•  Hulu has been eclipsed by Netflix , the Web's No. 1 video rental service.
•  Some content creators are concluding they don't need Hulu and can build their own successful Web service. (See HBO Go ).

In 2007, when Hulu debuted , the service was considered a way for viewers to catch up on shows they missed when they appeared on broadcast TV. Hulu was supposed to be an answer to the runaway success of Google's YouTube and prove that professionally created content was king and that the amateur stuff at YouTube would never generate real profits. In this way, Hulu failed to deliver.

In the past several years, reports surfaced, typically quoting unnamed sources in the film or TV industries, that ad revenue they content providers received from Hulu was miniscule. The Santa Monica, Calif.-based company doesn't publicly disclosed its financial numbers but the service isn't believed to be profitable. Another problem for the company's backers is the possibility that Hulu steers people away from TV broadcasts of their shows, where the ad revenue is much higher than the Web.

What Hulu has going for it is a large following, a respected brand, and CEO Jason Kilar, who has won accolades for the skillful way he has managed the service as well as his investors.

Whether Hulu is a financial flop, the service should still be considered a success for Hollywood. Hulu was created in part as a defense against piracy. It was designed to give film studios and TV networks a chance to control their own Web distribution.

Big media companies weren't supposed to get the Internet and Hulu proved that they could compete effectively online. These companies learned just how much demand there was for their content to be delivered via the Web. Hulu may not have become the cash cow that backers had hoped for and they may be looking to unload it, but they shouldn't forget it blazed a trail that could one day lead the industry to future paydays.

 

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