Yahoo, DirecTV And Time Warner Cable Bid Big for Hulu

By Christopher Versace for Forbes

Not only is the bidding heating up on streaming video service Hulu, but it looks it could be a shoot out between a number of players. Although Yahoo announced it would acquire blogging site Tumblr for $1.1 billion, it seems the company is entering the fray for Hulu and has bid in the $600-$800 million range for Hulu according to AllThingsD. That means it will be going up against DirecTV, Time Warner Cable , and The Chernin Group and private equity players, Guggenheim Digital, KKR & Co LP, and Silver Lake Partners.

To say it’s an interesting time for Hulu is an understatement. Google is in the process of building a subscription business for You Tube and Netflix has been beefing up its streaming service with a combination of movies and older television programs.  At the same time Discovery Communications launching its own online video destination, TestTube.

Now it’s easy to understand why a number of these companies are looking to snap up Hulu given what’s at stake.

According to comScore 178.0 million Internet users watched 33.0 billion videos, with 9.87 billion ads served (representing 3.77 billion minutes) in February 2013. The clear winner was with 150.7 million unique visitors and 11.3 billion video clips served Google’s YouTube. After Google and YouTube, the top 10 online video sites in terms of unique monthly viewers for February were: Facebook (61.2 million), Vevo (49.5 million), NDN (46.3 million), Yahoo! (43.6 million), Viacom (39.1 million), Microsoft (36.7 million), AOL (35.3 million), Turner (30.2 million) and Amazon.com (28.7 million).

While Hulu did not rank in that top 10, it does rank far better in the comScore’s U.S. online video ad property rankings where it placed fifth in April 2013. While still a distance away from the leader, which is once again Google, Hulu served up 1.4 million ads for a total of 553 ad minutes in April. To give some perspective, those April figures are down compared to the 1.6 million video ads and 612 ad minutes that Hulu served up in March, but are on par with the February 2013 figures.

The real story, however, is seen when we compare Hulu’s video ads and ad minutes with those from a year ago. While the actual figures are down modestly, Hulu has been losing market share to not only Google but to other video ad properties such as BrightRoll, LiveRail and Adap.TV. All told, Hulu’s total U.S. population reach fell to 7.4% in April 2013 down from 10.7% in April 2012.

That share loss is going to weigh on Hulu’s valuation and helps explain why Yahoo may have bid $600-$800 million compared to the $2 billion that Hulu’s owners — The Walt Disney Company, News Corp and Comcast’s NBCUniversal — were said to be hoping for.

This is an excerpt. Click here to read the full article in Forbes.