Google Inc. in preliminary talks to buy Hulu
Google Inc. is in preliminary talks to buy online video pioneer Hulu, people familiar with the situation said. — Hulu has begun meeting with potential buyers including Google, Microsoft Corp. and Yahoo Inc. to drum up interest in a sale …
Context & Ripple Effects
Hulu's owners have been openly testing what the service is worth since late June, when AllThingsD asked what Hulu's owners are really selling — the ad-supported streamer, its subscriber base, or the content rights underneath. This report names the bidder list: preliminary meetings with Google, Microsoft and Yahoo, all of whom need premium licensed TV inventory.
For Google, this sits in a familiar pattern: it walked away empty-handed from its Groupon bid in 2010 and lost the Nortel patent auction despite unconventional offers, so Hulu is another chance to buy scale outright rather than build it. Meanwhile Hulu carries fresh baggage — a confirmed Facebook Connect integration exposed user data this month, something any acquirer's diligence team will now price in.
First-order effects
- Hulu's media-company owners gain three named strategic suitors instead of shopping the asset cold, giving them a live auction to run rather than a leak to manage.
- Google, Microsoft and Yahoo each face an immediate build-vs-buy decision on licensed streaming content, with the Facebook Connect data exposure adding a security-diligence line item to every bid.
Second-order effects
- Yahoo, whose own strategic direction is under scrutiny, is forced to decide whether to spend heavily here or concede premium video to better-capitalized rivals — and Google's string of failed auctions (Groupon, Nortel) raises the question of whether its bid discipline will hold against motivated sellers.
- A Google win would put Hulu's content deals alongside YouTube, pressuring Microsoft and Yahoo to overpay for alternative catalog deals or accept second-tier status in licensed streaming.
Third-order effects
- If the auction completes at a premium valuation, it establishes licensed-TV catalogs as strategic infrastructure that platform companies will acquire rather than license piecemeal — shifting negotiating leverage toward studios holding renewal rights.
- The pattern of search and OS giants buying content companies points toward consolidation where distribution platforms own exclusive inventory, raising the odds regulators scrutinize vertical content-distribution combinations of this size.
The trend: Premium streaming catalogs are becoming acquisition targets for platform giants, turning Hollywood content libraries into competitive battlegrounds among Google, Microsoft and Yahoo.