Print 16 comment(s) - last by wlee15.. on Jun 25 at 6:28 PM

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.

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

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.

"Folks that want porn can buy an Android phone." -- Steve Jobs

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki