Video & Audio|August 22, 2011| Author: James Johnson|Tags:

Hulu Expected To Fetch $500 Million or $2 Billion, No One Really Knows

Hulu

Typically when an organization the size of Hulu goes on the market investors have an idea as to what the company may be worth, for example based on private equity shareholder purchases Facebook is expected to fetch upwards of $100 billion when they release their IPO, however Hulu is in a realm of their own, after all the digital age of television show delivery is very new and sales of similar company’s don’t exist and that’s why the amount company’s are willing to pay for the service when it goes on the auction block this Wednesday have ranged anywhere from $500 million to $2 billion.

The reason for the discrepancy? Bidders are waiting to find out what TV shows site owners News Corp., Walt Disney and NBCUniversal will license with the brokered deal.

The initial bid may also not yield a deal as a winning bid only gives the winning bidder the ability to sit down with Hulu and work out pricing to match optioned material. For example NBCUniversal may choose to offer 10 of their shows exclusively to Hulu for 5 years, which could up the price tag, while NewsCorp offering a smaller slate of shows for a shorter time period could hurt the final pricing, at this time which shows will be optioned, for how much and for how long is still unknown.

According to the Journal, each owner is expected to give different types of buyer rights since they each value their property rights differently. The show options given could also come down to who purchases the content, for example DirecTV is expected to bid and already has relationships in place with all three site owners, while Google, Yahoo and Amazon.com will likely offer a different approach to how Hulu is run which could create different rights management by the current owners.

I will particularly be paying close attention to Yahoo’s bid as Yahoo America head Ross Levinsohn, along with his deputies James Heckman and Mickie Rosen worked together at News Corp. to help create the site, while Rosen worked directly on Hulu’s original business plan which may provide him with an advantage during bidding and negotiations.