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Renewed licensing agreements increase Hulu's value, making it ready for potential buyers

Just yesterday, reports circulated that Yahoo had approached Hulu about a possible acquisition, but that Hulu wasn't showing any signs of selling. But today is a new day, and all of that has changed as Hulu placed a "for sale" sign on its window after reaching a licensing agreement with News Corp. to keep Fox programming on the streaming service.

Obtaining extended licensing agreements is important for Hulu on the open market because having such pacts retains its value. For instance, Hulu filed an IPO in the past, but it failed due to its lack of these agreements. 

Now, Fox Broadcasting Co. has renewed its licensing agreement. The good news is that this new licensing pact will bring Fox shows like "The Simpsons," "Family Guy" and "Glee" back to Hulu, which are shows that drew a large viewership in the first place. The bad news is that the agreement requires a "significant increase" in ad volume for Fox shows. This means that Hulu cannot control or limit the number of commercials aired, which could force Hulu to reduce CPM rates for advertisers. It will also be a major headache for viewers, since Hulu offers less than half of the average eight minutes of ads that is present in a half-hour's worth of television.

The advantage of having a heavier ad load would be increased revenue of the service, "which forgoes the conventional license fee in exchange for 70 percent of the revenues." 

There are a lot of open questions regarding this new pact, though. For instance, it is unclear what the length of the deal is and when Fox will start its increased ad time. In addition, the pact is not yet in writing, but is currently based on a handshake deal. 

But Fox has made it clear in the recent past that it wants to make cross-platform sales on television and the internet, which could enable it to join Nielsen's new Extended Screen measurement system. 

While all the details are not entirely present, the Los Angeles Times noted that Hulu has hired investment banks Guggenheim Partners and Morgan Stanley to attract possible buyers, which seals the deal on the "To sell or not to sell" rumor. 

Other reports expect Hulu owners Walt Disney Co. and NBCUniversal to extend licensing agreements as well in order to help the selling process along. 

In other news, Hulu recently announced that Hulu Plus, which is $7.99 a month, is now available in the Android Market. But it is only available for six Android devices, including Nexus One, Nexus S, HTC Inspire 4G, Motorola Droid X, Motorola Atrix and Motorola Droid ll. Hulu plans to increase the device compatibility list throughout 2011.

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By amanojaku on 6/23/2011 2:17:29 PM , Rating: 2
Just yesterday, reports circulated that Yahoo had approached Hulu about a possible acquisition, but that Hulu wasn't showing any signs of selling TO YAHOO.
Selling a profitable business to the current Yahoo is the definition of "epic fail". There's too much uncertainty over Yahoo's future, and there are other companies with fatter wallets.

RE: Correction
By MeesterNid on 6/23/2011 2:37:28 PM , Rating: 2
Something tells me they'll shop the best deal they can get instead of gunning for a specific owner.

If you were selling your house would you be looking for the "best person" to buy it from you or the one that offered most money?

RE: Correction
By MrBlastman on 6/23/2011 2:42:23 PM , Rating: 2
At the end of the day, to shareholders at least, it doesn't matter whether the buying company will succeed or not with the purchase--the only thing that really matters is if the buyer can come up with the money that was promised in the bid to pay for it.

Once the shareholders of Hulu have their money, I guarantee they could care less if it grows or not. Their involvement with Hulu is done at that point. The only exception is if the buyout is a cash + stock offer--i.e. in Yahoo's case, they might _not_ have enough cash to afford the deal, and instead may offer shares in lieu of cash or in conjunction.

Only in that case would it matter. The shareholders though have to vote to approve it in the end. If they're smart, they'll ask for cash and walk away--be done with it and have no strings attached... provided the price is right.

RE: Correction
By cerx on 6/23/2011 6:00:59 PM , Rating: 2
If it's something you built from the ground-up, you care a bit. Doesn't really apply here, just saying.

But the companies that do currently own Hulu will benefit greatly if it succeeds, as they're the ones getting paid. Since they don't want to cut off their own hand they'll sell to the owner that gives them the most in the long run.

RE: Correction
By Flunk on 6/23/2011 3:08:52 PM , Rating: 2
If Hulu fails someone else will just make a bigger, better Hulu. Steaming video is here to stay.

RE: Correction
By Reclaimer77 on 6/23/2011 4:24:33 PM , Rating: 2
Hulu fails because they charge as much as Netflix yet make their subscribers put up with commercials. Also if something isn't available on Hulu, you're just s.o.l. If Netflix can't stream something, at least it's available on disc more times than not.

I think the people have spoken. Do away with the commercials or we will do away with YOU.

RE: Correction
By FITCamaro on 6/23/2011 11:05:14 PM , Rating: 2
They also offer much newer shows. I could care less about a couple commercials.

RE: Correction
By zenom11 on 6/24/2011 10:06:40 AM , Rating: 3
damn to all these broadcasters. they make so much money already, greedy people. they charge people to subscribe (internet, cable, satellite) then they still push ads to paying subscribers. it's freaking double dipping.

RE: Correction
By Reclaimer77 on 6/25/2011 2:05:39 AM , Rating: 2
They also offer much newer shows.

Could care less. From what I can tell any new shows and most new movies are utter dogcrap anyway.

Not that anyone cares
By Breathless on 6/23/2011 6:24:55 PM , Rating: 2
But if they "significantly increase the amount of commercials", I will likely cancel my hulu plus subscription. I imagine there will be others who will do the same as well.

RE: Not that anyone cares
By bludragon on 6/24/2011 1:30:05 PM , Rating: 2
Since Fox already streams all of its shows from their own site, in HD and for free, I never bothered with a Hulu+ subscription in the first place. It is a great idea, but really they need to do away with commercials before I'd consider a subscription.

No Android tablets support?
By lennylim on 6/23/2011 6:35:36 PM , Rating: 2
Hey, Hulu. See my Android tablet? Nice big screen. Fast processor. No Hulu support. Fail.

RE: No Android tablets support?
By Renski on 6/23/2011 8:25:02 PM , Rating: 2
Where's Google?... Buy! Buy! ;)

Hulu Ownership
By ancient46 on 6/25/2011 4:58:53 PM , Rating: 2
Will Comcast,with a 32 percent stake in the company, really vote to sell it to another internet content provider? They certainly could outbid Yahoo for it. Maybe Ms.Kaiser should contact the Roberts and ask them about selling their stake to Yahoo. I would be interested in their reply.

RE: Hulu Ownership
By wlee15 on 6/25/2011 6:28:52 PM , Rating: 2
As a condition of the NBC merger, Comcast has given up it's seat on the Board of Directors of Hulu so it can't block a sale if the other parties favor it. It's also obliged to provide content to Hulu under similar terms as the other two broadcast networks.

Hulu in WMC
By rburnham on 6/24/2011 1:42:05 PM , Rating: 2
I like that I can watch Hulu on my HTPC, but it requires a program that is separate from WMC. I do have a plugin installed that adds a Hulu shortcut to the WMC interface, which is nice, but I am still not a fan of the Hulu desktop software. Sorting through my queued shows feels clunky. The software is not compatible with WMC remotes (to pause you have to press the Enter or Ok button instead of the Pause button). What would really sell me on Hulu as a replacement for cable TV would be to integrate it into WMC much like Netflix.

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