Los Angeles Business Journal

Hulu Shopping for Sale

By Tom Dotan Thursday, April 18, 2013

Rumors about the potential sale of West L.A.’s Hulu Inc. have heated up in recent weeks. The newest report is that the video streamer has brought on financial services firm Guggenheim Partners to advise on the sale.

The report from Reuters cited several sources close to the deal. It also mentioned the possibility that Guggenheim, through its new-media branch Guggenheim Digital Media, may place its own bid on the well-trafficked site that streams TV shows, movies and other online content.

Neither Hulu nor Guggenheim Partners returned requests by the Business Journal for comment.

The two firms have worked together before. When Hulu was last on the auction block in 2011 Guggenheim was among a pair of banking firms that advised on the sale. That sale was later pulled after Hulu’s owners, which include Walt Disney Co., News Corp. and Comcast, found the offers unsatisfactory. Among the interested parties during that pass were tech firms Google Inc., Apple Inc. and Yahoo Inc.

Yahoo’s offer at the time, rumored to have been $2 billion, was spearheaded by the company’s then-executive vice president, Ross Levinsohn, who happens to be Guggenheim Digital Media’s current chief executive. Guggenheim’s media holdings include The Hollywood Reporter, Billboard and Adweek.

Hulu is seen as a desirable, if troubled, property. The site pulls in millions of views from people watching TV episodes on computers and mobile devices.

It announced 2012 revenue of $695 million, a 65 percent increase from the previous year. Hulu makes money through in-video advertising, sponsorship deals and a paid-subscribers option.

But very little of that money makes its way into Hulu’s coffers. Because much of the content is owned by its big media holders, the site reportedly loses $30 million a quarter and has more than $300 million in debt according to a Wall Street Journal report last year.

And there are further concerns that Hulu’s access to the top TV shows would be limited once it’s no longer owned by the media companies that provide the content. Google’s reported offer of $4 billion in 2011 was rejected as the media companies were unwilling to give exclusive licensing deals.

Chernin Group, headed by former News Corp. President Peter Chernin, has already emerged as a bidder, according to Reuters. He was one of Hulu’s early advisors and a former board member. Reuters reported his bid is $500 million as well as assuming much of the company’s current debt.