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Hulu calls off sale due to content conditions

by Donna Horowitz  |  Published October 14, 2011 at 12:18 PM
hulu_homepage_227x128.jpgAfter several months on the block, online video service Hulu LLC has called off its sale. The move was announced in a statement issued late Thursday by owners News Corp., Walt Disney Co. and Providence Equity Partners and the company's senior management team. (NBCUniversal remains an owner but lost its voting rights in a consent decree signed by Comcast Corp. when it bought NBC.)

"Since Hulu holds a unique and compelling strategic value to each of its owners, we have terminated the sale process and look forward to working together to continue mapping out its path to even greater success," the statement said. "Our focus now rests solely on ensuring that our efforts as owners contribute in a meaningful way to the exciting future that lies ahead for Hulu."

The move ends months of speculation, which began in June when rumors emerged of an unsolicited bid for the Los Angeles-based company. On July 5, Hulu, which offers free online streams of television shows and movies and generates revenue through advertising and a premium subscription service, announced it had retained Morgan Stanley to explore a sale.

Since then, bidders for the video site, which boasts more than 1 million subscribers to its $7.99-per-month service, reportedly have included Inc., Dish Network Corp., Google Inc. and Yahoo! Inc.

The highest bidder was said to be Google, with $4 billion, but the offer came with conditions for access to content that were unpalatable to the owners.

The bid considered most likely to be accepted came from satellite TV company Dish Network, which offers an online streaming service under the Blockbuster brand. Dish is said to have offered $1.9 billion, close to the $2 billion Hulu was believed to be seeking.

"It wasn't necessarily the price but rather the requests related to the content deals that likely hindered the eventual sale," said a Friday morning research note from Wells Fargo Securities LLC.

At least some of the owners reportedly balked at the buyers' insistence on longer or broader rights to shows, such as "Modern Family." The sale process is said to have exposed differences among Hulu's owners, which have clashed in the past over strategic decisions.
Tags: Hulu LLC | M&A | News Corp. | PE | Providence Equity Partners | tech | Walt Disney Co.

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