12 ms·

Yahoo submits bid for Hulu

198 points by jmduke 13y ago

ljd 13y ago
Out of all the names on that list William Morris Endeavor is the most surprising. The agency model in Hollywood will eventually fade away because middle men don't offer as much utility as they once did when information wasn't so readily available. It's surprising to see any of the major agencies waking up to this idea and acting on it. If WME wins the bid we could see some interesting changes in the entertainment industry. If actors, writers and directors (talent) are only a single step away from creating content in an environment where distribution has very low variable cost then we could see a boom of high quality independent films and shows. Think House of Cards (Netflix US) on a more frequent basis.
- waterlesscloud 13y ago
  The agencies have been awake to this idea for quite a while now. WME and CAA have tentacles everywhere these days.
- swampthing 13y ago
  In the case of WME, they are 1/3rd owned by Silver Lake, so some sophistication in this area isn't surprising: http://dealbook.nytimes.com/2012/05/02/silver-lake-takes-stake-in-william-morris-endeavor/ http://dealbook.nytimes.com/2012/05/02/silver-lake-takes-sta... I don't know about WME, but CAA also has a small venture arm.
  - ljd 13y ago
    I used to work at CAA and there are a few agents aware of a bleak future for the agency model but to be honest no one wants to face the music over there. Their investment arm is for tech and entertainment startups, I doubt they would use it for Hulu. A Hulu acquisition would require their Silverlake equivalent, TPG. I'm all for it, but trust me when I tell you that I doubt CAA will put a bid in on this. They are so far ahead #1 that they can't see it. It's a classic innovators dilemma problem.
gcb0 13y ago
whoever buys Hulu is going to regret when they find out all the content deals goes up in smoke when the company change hands.
- 1123581321 13y ago
  An agreement to maintain licenses for a few years will be part of the sale, but it does mean that the buyer will have a limited amount of time to make Hulu licenses indispensable to the former owners.
- jaredsohn 13y ago
  Since some might not be aware and since you didn't explicitly state it, Hulu right now is owned by Disney (which owns ABC), Fox, and NBC Universal, which produce a majority of the content on the service. So while what you said may be true in general, it seems especially likely in this case.
  - samwillis 13y ago
    Hulu is only as valuable as it's content deals. They will definitely be written into acquisition deal, no one in there right mind would by them without some assurance from the content owners that said content will continue to come. This is especially true when the content owners own the site!
- jcampbell1 13y ago
  The content deals they currently have in place are so one-sided that there little to be gained by owning Hulu. Their contracts are basically, you get a license to the content, but 95% of any revenues you generate must be given to the content partners. The whole point of Hulu was to stop piracy and return any cash generated to the content providers, not to be a profitable ongoing business. I don't even know what it means to buy a company that must funnel all revenues to content providers. It seems like Yahoo is bidding on something they won't actually control.
  - jfb 13y ago
bernardom 13y ago
Holy cow. This is a big deal. There is no reason why TV networks need to exist the way they do. Hulu, Netflix and Amazon all produce original content and are perfectly positioned to disrupt them as their distribution volume increases. Even the current distribution channel is being disrupted by Aereo. Hulu is a a huge asset. If Yahoo gets in this game, they have a massive number of users, photos (flickr), blogposts (tumblr), mail, content... they're rivaling the reach and diversity of Amazon and Google as content owners (though without their respective cash cows of b2c sales and ads). What's next? Is there some sort of connection that I'm missing between flickr, tumblr, the existing yahoo platform and hulu? Do they buy vimeo from IAC, or buy/merge with IAC? What's the strategy behind all the acquisitions?
- freehunter 13y ago
  Yahoo has always been a content portal. The strategy? To have a diverse range of offerings in the hopes that everything you use will be be on the Yahoo network. That's been the winning strategy since AOL, but success in the area has proven fleeting.
- nolok 13y ago
  They tried to buy a majority share from dailymotion from Orange a couple of weeks ago, but it was blocked by the french governement (a big shareholder in Orange). Yahoo really wants a video service. I guess they want to come back to having a modern set of active services.
  - Terretta 13y ago
    From the article's third paragraph: Yahoo had previously tried to buy a large stake in French video site DailyMotion, but that bid was stymied by the French government.
  - pvnick 13y ago
    >but it was blocked by the french governement Governments screw everything up
    - 13y ago
arkitaip 13y ago
I think one potential positive outcome of all these acquisitions and rumours of acquisitions is that devs are once again seeing Yahoo as an interesting place to work. When you got so many in-shop startups working on interesting stuff, great things can happen beyond figuring out how all the individual acquisitions can fit together. Provided, of course, that Yahoo knows how to properly nurture the startups and their culture.
- camus 13y ago
  Whatever,management has not changed, the culture has not changed. Yahoo is just on a buying binge, until it runs out of cash. Mayer will have to fire half the current work force to make up for this or will be out in a year.
orangethirty 13y ago
Seems yahoo and Google are competing to be the ne AOL.
PLenz 13y ago
Ok - at this point I'm wondering just how much Yahoo thinks it can swallow as a company. Tumblr -by itself - is going to take months to integrate into the Yahoo ecosystem. And now they want Hulu? I'm really wondering if they are biting off more then they can chew.
mark_l_watson 13y ago
I don't really understand how this would work because I thought the secret sauce of Hulu was that the networks owned Hulu, so they allowed their content to be on Hulu. If Yahoo buys Hulu, do they still get the network content?
- deleted 13y ago
  [deleted]
yoster 13y ago
I tried Hulu multiple times with their free month offers. It sucked so bad that I canceled before I had to pay for a subscription. I'm sure people love Hulu, but I am definitely not one of them.
- legitsource 13y ago
  It burns me to pay a subscription and still have to watch advertisements. It burns me even more that the ads are so repetitive.
  - kbenson 13y ago
    How is that any different than cable/satellite?
- mtalantikite 13y ago
  Having access to the Criterion Collection is the only reason I pay for Hulu. More than worth the price there alone.
marcamillion 13y ago
Wow....I feel like I am watching a brilliant game of chess. Marissa Mayer is increasingly showing her genius. It is clear that she understands that Yahoo is a New Media company. They serve assets to many eyeballs and monetize those assets. It seems that in her case, their main goal is grab up as much quality inventory as she can, and monetize the hell out of it. As their media inventory gets bigger, economies of scale start to kick in. Nike may not want to just advertise on Yahoo & Flickr, but they would be damned if they turn away the potential to reach audiences in Yahoo, Flickr, Tumblr, and now possibly Hulu. Plus I imagine that the more inventory they hold, is the more they can package that inventory to increase the unit price for all properties. Holy crap....this is brilliant and yet so obvious. Why have other CEOs not grasped this and executed on it the way Mayer is. I think this is the one of the few cases, in Corporate America, where going on an M&A spree makes the most sense. Another thing is the more properties she buys, and the better deals she does is the easier it is to buy other deals. Startups loved being bought by Google because YouTube was bought by Google. The same thing is starting to happen. Yahoo! bought Tumblr, so other companies are going to feel comfortable being bought by Yahoo! and that will create more deal flow, resulting in more deals. Hrmmm...I wonder how much cash Yahoo has on their balance sheet - either way, I am sure they can raise a ton of money to do more deals. WoW....just WOW!!!!
- bernardom 13y ago
  I agree. The other contributing factor here: Yahoo's in a position to bet the farm. They're not growing, and haven't been for years. (Look at their financials: http://www.marketwatch.com/investing/stock/yhoo/financials http://www.marketwatch.com/investing/stock/yhoo/financials) Analysts only expect sales to increase 1-3% over the next few years: http://www.thestreet.com/story/11933654/3/4-big-stocks-ripe-for-a-sharp-pullback.html http://www.thestreet.com/story/11933654/3/4-big-stocks-ripe-... She was pulled in to make big moves.... and is making them!
- tomkarlo 13y ago
  Except Hulu doesn't have much inventory, at least on an exclusive basis. It has eyeballs and distribution. The assets belong to the studios and networks. A roll-up is not exactly a new strategy, especially in media. You attempt to build economies of scale by amassing audience and distribution. Historically, however, the prices you pay (especially once folks figure out what you're doing) often prove to be inflated later on.
lettergram 13y ago
Seems the new CEO is hard at work
negamax 13y ago
Marissa Meyer sure likes shopping.
- lowglow 13y ago
  Nominated as HN's best/worst comment of the day. http://on.fb.me/10Yo7An http://on.fb.me/10Yo7An
- mscarborough 13y ago
  Which follows from the axiom "women be shopping".
kevinalexbrown 13y ago
Can anyone explain why Hulu wants to sell to a third party? I understand there's infighting according to the article, but it's unclear to me why one of the owners doesn't buy out the rest. Is there some general principle behind not selling to your competitors and choosing a party currently without a huge stake in television or movies like Yahoo? I'm curious about both reasons specific to this particular deal and general principles behind selling to third parties.
- Retric 13y ago
  It's all about licencing. "In 2011, Hulu’s owners put the company up for sale and were looking for a bid of at least $2 billion; in exchange, they would offer content licenses that would run for two to three years." "Last month, former News Corp. COO Peter Chernin submitted a starting bid of $500 million, with the understanding that he would be willing to pay more for extended licenses." Basically, a huge chunk of Hulu's value is having a wide selection of content. At the same time the people doing the highest value licencing also own the content. Right now they can play an accounting game and lower the licencing costs to make it look profitable sell and then raise their licencing costs. Effectively it's the same money because they own the company as long as all the owners agree to a sweetheart deal. Unfortunately for them they are having some issue deciding just how much everyone should discount there content to make Hulu look better. However, nobody got suckered into there 2 billion dollar shell game.
  - samstave 13y ago
    I have had a Hulu account for the last two years. I recently canceled it. Their content is actually not that good, and on top of it, you're forced to watch commercials as well. The service was terrible.
    - JoshGlazebrook 13y ago
      That never really made sense to me either. If you're going to pay for hulu, you would expect to not have to sit through the commercials.
salimmadjd 13y ago
Looks like Marisa is following the Google recipe. Blogs, Videos, Photos (improving flickr), now they just need a real mobile product and a social network.
- samfisher83 13y ago
  60% of google's revenue comes from search. You can't be google without the golden hen and yahoo doesn't have search.
  - salimmadjd 13y ago
    Content discovery is moving away from search. If anyone would know that it would be Marisa. Perhaps she is positioning the company for 2-3 years down the road. Which means she needs more social component to yahoo beyond tumblr.
kenshiro_o 13y ago
Can someone tell me where Yahoo gets all this money from? It's not like they have pockets as deep as Facebook or Microsoft! Although I believe I do understand part of their strategy (having a foot in every type of medium), I have concerns about how they will integrate all this content and users into the Yahoo ecosystem. It is certainly not going to be easy work and the acquisition is the most straightforward bit. I really don't know what to think about this move. It seems a bit premature though.
- e1ven 13y ago
  Back in the day, they bought 40% of Alibaba, which has done VERY well. Selling back this stake has raised a lot of money.
ipsin 13y ago
My two biggest complaints re: Hulu are 1) "web only" content licenses. Nevermind that they really mean "PC only", it's a confusing user experience to pay for a service and have content selectively unavailable. I think that this is mostly Fox's fault. 2) choppy ad serving. Video serves very consistently, but ads are prone to pausing, stuttering and other buggy behavior.
anoncow 13y ago
If yahoo makes it back to the top, it will be a coup of sorts. I might be rushing it a bit, but we need competition at the top!
mohoyt 13y ago
Hulu has too many vowels to be a Yahoo acquisition. It just can't happen.
- lanstein 13y ago
  y is a vowel sometimes ;)
jarjoura 13y ago
Yahoo is trying to acquire so many companies, I fear they are only going to run into culture problems as they begin to assimilate them into the parent company over time. Just look at AOL as the model company that did this in the late 90s and early 2000s. They broke so many companies they acquired and it only hurt AOL. Google and Facebook have been successful at it because they essentially used it as a way to hire smart people who wouldn't have interviewed with them.
jjoergensen 13y ago
Yahoo is the new Lycos. Lol. They are just buying a lot of stuff wihout a strategy and focus.
jpatel3 13y ago
I think Vimeo might be better acquisition than Hulu.
- randomfool 13y ago
  Agree. It seems much more complementary to Flickr, and avoids all of the negotiation with the networks that any deal with Hulu would entail. This article is a leak, the question is by whom, and to what purpose. The cynic in me says that Yahoo made some lowball offer and Hulu leaked it to try to drum up more interest.
yarou 13y ago
Another example of acquisition frenzy by Marissa Mayer...already priced in, especially in this market of asset inflation.
iuguy 13y ago
I think this is a smart buy. Buying netflix would be stupidly expensive, but buying Hulu and changing it to out-netflix netflix could be a really good play to pick up a platform fairly cheaply and run with it. The question is whether or not Yahoo! has the dynamism to do that, and I'm not sure anyone other than Marissa Mayer has the answer, if her. Here in the UK, iPlayer dominates the online market. If she can come with a paid for equivalent getting things like Game of Thrones and original content on the level of house of cards, Yahoo could really challenge that.
- johneth 13y ago
  The UK market is probably one of the most 'advanced' in terms of online viewing of TV and movies (thanks in large part to the popularity of the iPlayer). There's a mix of things; multi-platform free VoD (iPlayer, 4oD, ITV), multi-platform subscription VoD (Netflix, Blinkbox, Lovefilm), subscription live stuff (Sky). I would credit the BBC with spurring on this competition - they've expanded the mindshare for these kind of products with everyday people probably more than any other company. They're not really competing with the other players in the UK, though. A new player would be competing with the likes of Sky (who own the rights to a load of premium stuff, which wouldn't be up for grabs for a long time, and when it is, would be fought for). Netflix has this problem right now with movie and TV rights.
tarellel 13y ago
Dear god no!!! As an active user of Hulu I'd hate to see this product meet the fate of numerous other Yahoo! products. Shit on and flushed down the drain!
jgalt212 13y ago
First Marissa buys Geocities and now she's making a play for Broadcast.com.
pdevr 13y ago
There is a strategy behind this - Tumblr, now Hulu. She is acquiring content generating properties. Whether it will succeed or not remains to be seen, but kudos to her for trying! To those who say it has been tried before by other CEOs: Flickr and Delicious generate pictures and bookmarks. Pictures and bookmarks have pathetic monetization rates, compared to articles/blog posts. With Hulu, it gets better - awesome paid subscription rates, along with monetization via advertising.
kunle 13y ago
"In 2011, Hulu’s owners put the company up for sale and were looking for a bid of at least $2 billion; in exchange, they would offer content licenses that would run for two to three years." Given that Hulu is now owned by the folks who license its content, any new buyer/owner can expect to pay astronomically more (think of what happens to Netflix every few years as they license content) or lose access to content every few years. Essentially, the owners would sell you the company and retain the option to put you out of business. It's a really bad deal.
- camus 13y ago
  well some people callit genius , go figure ...
ywang0414 13y ago
What's the value of Hulu to Yahoo besides trying to buy itself into the cool kids club? What is Yahoo these days anyways? Search? Content aggregation?
- kolbe 13y ago
  Yahoo is its Alibaba stake. No more, no less.
616c 13y ago
I see a lot of people down the thread complaining about advertising and saying how it has become a normalized part of the experience. I tried scanning the thread, but ironically more knowledgeable people have not mentioned cable television did not originally have ads; at least one of my parents said this was the appeal of premium cable at its inception. Wikipedia kind of confirms this in several places, but does not discuss the history of ads on cable TV specifically, which I would want to read more about. https://en.wikipedia.org/wiki/Cable_television_in_the_United_States https://en.wikipedia.org/wiki/Cable_television_in_the_United... So, keep in mind it is the lazy or indifferent among us who let them get on cable in the first place, so surprise surprise Hulu and other content providers are not going to diverge from the inertia of greediness set by their industry decades ago. Also, not to defend Hulu, but they tried a lot of experimenting with fronting the ads in blocks so you can watch shows interrupted. I respected they made an effort, and they need to show with ad revenue and subscriptions (just like cable companies and satellite providers before them) they can use these models on the web to turn a profit. I actually considered Hulu subscription, even if it is garbage, because supporting legit streaming content in any form is the only way to drive it home to these morons in the entertainment industry that I want internet-based services, not DVDs, movie theaters, set-top boxes with encryption cards, etc.
edandersen 13y ago
"Yahulu", then.
frostnovazzz 13y ago
Yahoo! is showing us what a new media company is.
androidb 13y ago
I hope they buy it and open it for international users as well, it's a pity right now it only works in the US and you have to resort to tricks to access it from outside the US (for those interested here's a chrome add-on that lets you access it from outside the US - 'Media Hint').

198 points by jmduke 13y ago

ljd 13y ago

Out of all the names on that list William Morris Endeavor is the most surprising. The agency model in Hollywood will eventually fade away because middle men don't offer as much utility as they once did when information wasn't so readily available. It's surprising to see any of the major agencies waking up to this idea and acting on it. If WME wins the bid we could see some interesting changes in the entertainment industry. If actors, writers and directors (talent) are only a single step away from creating content in an environment where distribution has very low variable cost then we could see a boom of high quality independent films and shows. Think House of Cards (Netflix US) on a more frequent basis.

waterlesscloud 13y ago
The agencies have been awake to this idea for quite a while now. WME and CAA have tentacles everywhere these days.
swampthing 13y ago
In the case of WME, they are 1/3rd owned by Silver Lake, so some sophistication in this area isn't surprising: http://dealbook.nytimes.com/2012/05/02/silver-lake-takes-stake-in-william-morris-endeavor/ http://dealbook.nytimes.com/2012/05/02/silver-lake-takes-sta... I don't know about WME, but CAA also has a small venture arm.
- ljd 13y ago
  I used to work at CAA and there are a few agents aware of a bleak future for the agency model but to be honest no one wants to face the music over there. Their investment arm is for tech and entertainment startups, I doubt they would use it for Hulu. A Hulu acquisition would require their Silverlake equivalent, TPG. I'm all for it, but trust me when I tell you that I doubt CAA will put a bid in on this. They are so far ahead #1 that they can't see it. It's a classic innovators dilemma problem.

gcb0 13y ago

whoever buys Hulu is going to regret when they find out all the content deals goes up in smoke when the company change hands.

1123581321 13y ago
An agreement to maintain licenses for a few years will be part of the sale, but it does mean that the buyer will have a limited amount of time to make Hulu licenses indispensable to the former owners.
jaredsohn 13y ago
Since some might not be aware and since you didn't explicitly state it, Hulu right now is owned by Disney (which owns ABC), Fox, and NBC Universal, which produce a majority of the content on the service. So while what you said may be true in general, it seems especially likely in this case.
- samwillis 13y ago
  Hulu is only as valuable as it's content deals. They will definitely be written into acquisition deal, no one in there right mind would by them without some assurance from the content owners that said content will continue to come. This is especially true when the content owners own the site!
jcampbell1 13y ago
The content deals they currently have in place are so one-sided that there little to be gained by owning Hulu. Their contracts are basically, you get a license to the content, but 95% of any revenues you generate must be given to the content partners. The whole point of Hulu was to stop piracy and return any cash generated to the content providers, not to be a profitable ongoing business. I don't even know what it means to buy a company that must funnel all revenues to content providers. It seems like Yahoo is bidding on something they won't actually control.
- jfb 13y ago

bernardom 13y ago

Holy cow. This is a big deal. There is no reason why TV networks need to exist the way they do. Hulu, Netflix and Amazon all produce original content and are perfectly positioned to disrupt them as their distribution volume increases. Even the current distribution channel is being disrupted by Aereo. Hulu is a a huge asset. If Yahoo gets in this game, they have a massive number of users, photos (flickr), blogposts (tumblr), mail, content... they're rivaling the reach and diversity of Amazon and Google as content owners (though without their respective cash cows of b2c sales and ads). What's next? Is there some sort of connection that I'm missing between flickr, tumblr, the existing yahoo platform and hulu? Do they buy vimeo from IAC, or buy/merge with IAC? What's the strategy behind all the acquisitions?

freehunter 13y ago
Yahoo has always been a content portal. The strategy? To have a diverse range of offerings in the hopes that everything you use will be be on the Yahoo network. That's been the winning strategy since AOL, but success in the area has proven fleeting.
nolok 13y ago
They tried to buy a majority share from dailymotion from Orange a couple of weeks ago, but it was blocked by the french governement (a big shareholder in Orange). Yahoo really wants a video service. I guess they want to come back to having a modern set of active services.
- Terretta 13y ago
  From the article's third paragraph: Yahoo had previously tried to buy a large stake in French video site DailyMotion, but that bid was stymied by the French government.
- pvnick 13y ago
  >but it was blocked by the french governement Governments screw everything up
  - 13y ago

arkitaip 13y ago

I think one potential positive outcome of all these acquisitions and rumours of acquisitions is that devs are once again seeing Yahoo as an interesting place to work. When you got so many in-shop startups working on interesting stuff, great things can happen beyond figuring out how all the individual acquisitions can fit together. Provided, of course, that Yahoo knows how to properly nurture the startups and their culture.

camus 13y ago
Whatever,management has not changed, the culture has not changed. Yahoo is just on a buying binge, until it runs out of cash. Mayer will have to fire half the current work force to make up for this or will be out in a year.

orangethirty 13y ago

Seems yahoo and Google are competing to be the ne AOL.

PLenz 13y ago

Ok - at this point I'm wondering just how much Yahoo thinks it can swallow as a company. Tumblr -by itself - is going to take months to integrate into the Yahoo ecosystem. And now they want Hulu? I'm really wondering if they are biting off more then they can chew.

mark_l_watson 13y ago

I don't really understand how this would work because I thought the secret sauce of Hulu was that the networks owned Hulu, so they allowed their content to be on Hulu. If Yahoo buys Hulu, do they still get the network content?

deleted 13y ago
[deleted]

yoster 13y ago

I tried Hulu multiple times with their free month offers. It sucked so bad that I canceled before I had to pay for a subscription. I'm sure people love Hulu, but I am definitely not one of them.

legitsource 13y ago
It burns me to pay a subscription and still have to watch advertisements. It burns me even more that the ads are so repetitive.
- kbenson 13y ago
  How is that any different than cable/satellite?
mtalantikite 13y ago
Having access to the Criterion Collection is the only reason I pay for Hulu. More than worth the price there alone.

marcamillion 13y ago

Wow....I feel like I am watching a brilliant game of chess. Marissa Mayer is increasingly showing her genius. It is clear that she understands that Yahoo is a New Media company. They serve assets to many eyeballs and monetize those assets. It seems that in her case, their main goal is grab up as much quality inventory as she can, and monetize the hell out of it. As their media inventory gets bigger, economies of scale start to kick in. Nike may not want to just advertise on Yahoo & Flickr, but they would be damned if they turn away the potential to reach audiences in Yahoo, Flickr, Tumblr, and now possibly Hulu. Plus I imagine that the more inventory they hold, is the more they can package that inventory to increase the unit price for all properties. Holy crap....this is brilliant and yet so obvious. Why have other CEOs not grasped this and executed on it the way Mayer is. I think this is the one of the few cases, in Corporate America, where going on an M&A spree makes the most sense. Another thing is the more properties she buys, and the better deals she does is the easier it is to buy other deals. Startups loved being bought by Google because YouTube was bought by Google. The same thing is starting to happen. Yahoo! bought Tumblr, so other companies are going to feel comfortable being bought by Yahoo! and that will create more deal flow, resulting in more deals. Hrmmm...I wonder how much cash Yahoo has on their balance sheet - either way, I am sure they can raise a ton of money to do more deals. WoW....just WOW!!!!

bernardom 13y ago
I agree. The other contributing factor here: Yahoo's in a position to bet the farm. They're not growing, and haven't been for years. (Look at their financials: http://www.marketwatch.com/investing/stock/yhoo/financials http://www.marketwatch.com/investing/stock/yhoo/financials) Analysts only expect sales to increase 1-3% over the next few years: http://www.thestreet.com/story/11933654/3/4-big-stocks-ripe-for-a-sharp-pullback.html http://www.thestreet.com/story/11933654/3/4-big-stocks-ripe-... She was pulled in to make big moves.... and is making them!
tomkarlo 13y ago
Except Hulu doesn't have much inventory, at least on an exclusive basis. It has eyeballs and distribution. The assets belong to the studios and networks. A roll-up is not exactly a new strategy, especially in media. You attempt to build economies of scale by amassing audience and distribution. Historically, however, the prices you pay (especially once folks figure out what you're doing) often prove to be inflated later on.

lettergram 13y ago

Seems the new CEO is hard at work

negamax 13y ago

Marissa Meyer sure likes shopping.

lowglow 13y ago
Nominated as HN's best/worst comment of the day. http://on.fb.me/10Yo7An http://on.fb.me/10Yo7An
mscarborough 13y ago
Which follows from the axiom "women be shopping".

kevinalexbrown 13y ago

Can anyone explain why Hulu wants to sell to a third party? I understand there's infighting according to the article, but it's unclear to me why one of the owners doesn't buy out the rest. Is there some general principle behind not selling to your competitors and choosing a party currently without a huge stake in television or movies like Yahoo? I'm curious about both reasons specific to this particular deal and general principles behind selling to third parties.

Retric 13y ago
It's all about licencing. "In 2011, Hulu’s owners put the company up for sale and were looking for a bid of at least $2 billion; in exchange, they would offer content licenses that would run for two to three years." "Last month, former News Corp. COO Peter Chernin submitted a starting bid of $500 million, with the understanding that he would be willing to pay more for extended licenses." Basically, a huge chunk of Hulu's value is having a wide selection of content. At the same time the people doing the highest value licencing also own the content. Right now they can play an accounting game and lower the licencing costs to make it look profitable sell and then raise their licencing costs. Effectively it's the same money because they own the company as long as all the owners agree to a sweetheart deal. Unfortunately for them they are having some issue deciding just how much everyone should discount there content to make Hulu look better. However, nobody got suckered into there 2 billion dollar shell game.
- samstave 13y ago
  I have had a Hulu account for the last two years. I recently canceled it. Their content is actually not that good, and on top of it, you're forced to watch commercials as well. The service was terrible.
  - JoshGlazebrook 13y ago
    That never really made sense to me either. If you're going to pay for hulu, you would expect to not have to sit through the commercials.

salimmadjd 13y ago

Looks like Marisa is following the Google recipe. Blogs, Videos, Photos (improving flickr), now they just need a real mobile product and a social network.

samfisher83 13y ago
60% of google's revenue comes from search. You can't be google without the golden hen and yahoo doesn't have search.
- salimmadjd 13y ago
  Content discovery is moving away from search. If anyone would know that it would be Marisa. Perhaps she is positioning the company for 2-3 years down the road. Which means she needs more social component to yahoo beyond tumblr.

kenshiro_o 13y ago

Can someone tell me where Yahoo gets all this money from? It's not like they have pockets as deep as Facebook or Microsoft! Although I believe I do understand part of their strategy (having a foot in every type of medium), I have concerns about how they will integrate all this content and users into the Yahoo ecosystem. It is certainly not going to be easy work and the acquisition is the most straightforward bit. I really don't know what to think about this move. It seems a bit premature though.

e1ven 13y ago
Back in the day, they bought 40% of Alibaba, which has done VERY well. Selling back this stake has raised a lot of money.

ipsin 13y ago

My two biggest complaints re: Hulu are 1) "web only" content licenses. Nevermind that they really mean "PC only", it's a confusing user experience to pay for a service and have content selectively unavailable. I think that this is mostly Fox's fault. 2) choppy ad serving. Video serves very consistently, but ads are prone to pausing, stuttering and other buggy behavior.

anoncow 13y ago

If yahoo makes it back to the top, it will be a coup of sorts. I might be rushing it a bit, but we need competition at the top!

mohoyt 13y ago

Hulu has too many vowels to be a Yahoo acquisition. It just can't happen.

lanstein 13y ago
y is a vowel sometimes ;)

jarjoura 13y ago

Yahoo is trying to acquire so many companies, I fear they are only going to run into culture problems as they begin to assimilate them into the parent company over time. Just look at AOL as the model company that did this in the late 90s and early 2000s. They broke so many companies they acquired and it only hurt AOL. Google and Facebook have been successful at it because they essentially used it as a way to hire smart people who wouldn't have interviewed with them.

jjoergensen 13y ago

Yahoo is the new Lycos. Lol. They are just buying a lot of stuff wihout a strategy and focus.

jpatel3 13y ago

I think Vimeo might be better acquisition than Hulu.

randomfool 13y ago
Agree. It seems much more complementary to Flickr, and avoids all of the negotiation with the networks that any deal with Hulu would entail. This article is a leak, the question is by whom, and to what purpose. The cynic in me says that Yahoo made some lowball offer and Hulu leaked it to try to drum up more interest.

yarou 13y ago

Another example of acquisition frenzy by Marissa Mayer...already priced in, especially in this market of asset inflation.

iuguy 13y ago

I think this is a smart buy. Buying netflix would be stupidly expensive, but buying Hulu and changing it to out-netflix netflix could be a really good play to pick up a platform fairly cheaply and run with it. The question is whether or not Yahoo! has the dynamism to do that, and I'm not sure anyone other than Marissa Mayer has the answer, if her. Here in the UK, iPlayer dominates the online market. If she can come with a paid for equivalent getting things like Game of Thrones and original content on the level of house of cards, Yahoo could really challenge that.

johneth 13y ago
The UK market is probably one of the most 'advanced' in terms of online viewing of TV and movies (thanks in large part to the popularity of the iPlayer). There's a mix of things; multi-platform free VoD (iPlayer, 4oD, ITV), multi-platform subscription VoD (Netflix, Blinkbox, Lovefilm), subscription live stuff (Sky). I would credit the BBC with spurring on this competition - they've expanded the mindshare for these kind of products with everyday people probably more than any other company. They're not really competing with the other players in the UK, though. A new player would be competing with the likes of Sky (who own the rights to a load of premium stuff, which wouldn't be up for grabs for a long time, and when it is, would be fought for). Netflix has this problem right now with movie and TV rights.

tarellel 13y ago

Dear god no!!! As an active user of Hulu I'd hate to see this product meet the fate of numerous other Yahoo! products. Shit on and flushed down the drain!

jgalt212 13y ago

First Marissa buys Geocities and now she's making a play for Broadcast.com.

pdevr 13y ago

There is a strategy behind this - Tumblr, now Hulu. She is acquiring content generating properties. Whether it will succeed or not remains to be seen, but kudos to her for trying! To those who say it has been tried before by other CEOs: Flickr and Delicious generate pictures and bookmarks. Pictures and bookmarks have pathetic monetization rates, compared to articles/blog posts. With Hulu, it gets better - awesome paid subscription rates, along with monetization via advertising.

kunle 13y ago

"In 2011, Hulu’s owners put the company up for sale and were looking for a bid of at least $2 billion; in exchange, they would offer content licenses that would run for two to three years." Given that Hulu is now owned by the folks who license its content, any new buyer/owner can expect to pay astronomically more (think of what happens to Netflix every few years as they license content) or lose access to content every few years. Essentially, the owners would sell you the company and retain the option to put you out of business. It's a really bad deal.

camus 13y ago
well some people callit genius , go figure ...

ywang0414 13y ago

What's the value of Hulu to Yahoo besides trying to buy itself into the cool kids club? What is Yahoo these days anyways? Search? Content aggregation?

kolbe 13y ago
Yahoo is its Alibaba stake. No more, no less.

616c 13y ago

I see a lot of people down the thread complaining about advertising and saying how it has become a normalized part of the experience. I tried scanning the thread, but ironically more knowledgeable people have not mentioned cable television did not originally have ads; at least one of my parents said this was the appeal of premium cable at its inception. Wikipedia kind of confirms this in several places, but does not discuss the history of ads on cable TV specifically, which I would want to read more about. https://en.wikipedia.org/wiki/Cable_television_in_the_United_States https://en.wikipedia.org/wiki/Cable_television_in_the_United... So, keep in mind it is the lazy or indifferent among us who let them get on cable in the first place, so surprise surprise Hulu and other content providers are not going to diverge from the inertia of greediness set by their industry decades ago. Also, not to defend Hulu, but they tried a lot of experimenting with fronting the ads in blocks so you can watch shows interrupted. I respected they made an effort, and they need to show with ad revenue and subscriptions (just like cable companies and satellite providers before them) they can use these models on the web to turn a profit. I actually considered Hulu subscription, even if it is garbage, because supporting legit streaming content in any form is the only way to drive it home to these morons in the entertainment industry that I want internet-based services, not DVDs, movie theaters, set-top boxes with encryption cards, etc.

edandersen 13y ago

"Yahulu", then.

frostnovazzz 13y ago

Yahoo! is showing us what a new media company is.

androidb 13y ago

I hope they buy it and open it for international users as well, it's a pity right now it only works in the US and you have to resort to tricks to access it from outside the US (for those interested here's a chrome add-on that lets you access it from outside the US - 'Media Hint').