For months we’ve heard rumors that Hulu has been up for grabs, with potential buyers including Google, Yahoo, Amazon, Dish Network and DirecTV. But now Hulu has called that the sale off after months of complex negotiations. But might Google still be in the running to buy Hulu?
“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. 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” stated on their blog.
The problem with the sale lies in the contracts and exclusive content rights that Hulu owns with its premium programming partners. They only have 2 years of contracts with their major partners. After 2 years the company could be worth nothing if those contracts don't pull through and re-sign.
Many of the TV companies that currently own Hulu have said that they want to phase out free ad-supported content completely. This would hurt the viability of the current growth and profit model.
According to a recent case study about Hulu, it has more traffic in the U.S. than Fox News, Mozilla.com, Ask.com, Pandora, and Dictionary.com. It pulls premium content from 225 different companies. It currently has contracts with Fox, NBC, ABC, Lionsgate, MGM, National Geographic, Paramount, A&E Television Networks, PBS, Warner Bros, and several other large networks. Google wants much more than 2 years exclusive contract with all these companies in order to buy Hulu.
A few more signs point even more toward a possible acquisition. In the latest Panda update, Hulu along with YouTube and many other Google properties were favored in the update resulting in much more traffic to their sites. Now this isn't a direct ploy by Google stating that they plan on purchasing Hulu but it does show that everything Hulu is doing is still on Google's radar.
Acquisitions with huge price tags like this aren't uncommon with Google, especially in the video space. In 2006 Google purchased YouTube for $1.65 billion. Plus, in August, Google spent $12.5 billion to purchase Motorola.