Google to Buy Hulu for $2 Billion? Rumour Mill Grinding...

written by: Richard Kastelein

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The internet is rife with rumours that Google (along with Yahoo and Microsoft) is looking to acquire Hulu, based on an initial report in the Los Angeles Times.

Hulu has begun meeting with potential buyers including Google, Microsoft Corp. and Yahoo Inc. to drum up interest in a sale, said these people, who requested anonymity because the discussions are confidential.

...Hulu's rights to the current season’s TV shows have drawn interest from Google and Yahoo, in part because these popular programs have attracted more than 600 advertisers -- including such major brands as McDonald's, Johnson & Johnson and Toyota. Indeed, the site expects to bring in $500 million in revenue this year from advertising and proceeds from its Hulu Plus subscription service.

...Janney Capital Markets analyst Tony Wible said he expects Hulu’s owners to seek the same valuation for Hulu that Netflix commands from investors, about $2 billion.

Ever since US broadcasters put barriers up against Google TV, the company has been quietly moving into more content deals - going as far as hiring Robert Kyncl, former vice president for content acquisition at Netflix to focus on making deals with movie studios and TV networks to make YouTube an online destination for Hollywood content. Youtube event tightened up it's rules around copyright to try and appease the networks - to no avail. They also merged their Google TV and Youtube operations into one - and the acquisition of Widevine was clearly an aggressive move by Google according to Appmarket.tv editor Paul Johnson in his analysis.

The strange thing is - NBC Universal - one of the companies who own Hulu (along with News Corp. and Walt Disney), were also one of the companies that blocked Google TV. And the three companies have been challenged by Hulu cannibalizing their own revenue models, according to the Wall St. Journal.

Google also rattled the industry when it started direct talks with the NBA and NHL to broadcast live sports on Youtube - along with it's buying of New Networks who built a highly effective platform for developing, packaging and building audiences around original web video programming, attracting over 2 billion views and 6 million subscribers across their partner networks of channels and shows.

According to an unnamed source in the NY Post...

"They [Google] are going to spend $100 million on content. The plan is being spearheaded by Robert Kyncl, Google's entertainment czar who jumped from Netflix to help YouTube push ahead in Tinseltown."

Not to mention that Google has earmarked budgets of $5 million for celebrity channels on Youtube. The money would cover salaries, production values, and the celebrity would get full ownership of the show. Google allegedly hopes to get twenty celebrity channels, which equals to a $100 million investment.

If the Google Hulu deal goes through - the war over Connected TV VOD looks to be Amazon, Netflix and Google in the USA, with Amazon having the edge internationally with it's buyout of Lovefilm in the UK for a rumoured £200 million. But not without a challenge from Google, as they have plans for movie subscription service in the UK to challenge Lovefilm (Amazon).

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