While the bidding fracas over Hulu begins to take on the dimensions of an all-out war, it appears that the brand’s suitors are unwilling to pay anywhere near its $2 billion valuation.
Yahoo this weekend announced it would throw its hat into the ring, and the reported bid (between $600 million and $800 million) is the largest that has been leaked thus far. Trouble is, it only accounts for between 30 percent to 40 percent of Hulu’s year-ago value.
Marissa Mayer’s gambit comes on the heels of Yahoo’s $1.1 billion investment in the revenue-challenged microblogging site Tumblr. Other Hulu suitors include DirecTV, Time Warner Cable and the Chernin Group, as well as the private equity firms Guggenheim Digital, KKR & Co and Silverlake Partners.
One factor in the declining valuation of Hulu is its loss of market share. Not only has Hulu been dominated by the 800-lb. gorilla that is Google, but it is also losing ground to ad-supported video services such as BrightRoll, LiveRail and Adap.TV.
According to comScore, Hulu in April 2013 served up 1.4 million ads (or 553 minutes of inventory), down 13 percent from 1.6 million video ads/612 minutes in the previous month.
Ad deliveries are on the decline as Hulu’s overall reach continues to wane. Per comScore, Hulu’s population reach fell to 7 percent in April, down from 11 percent in the year-ago period.
Also not helping matters is the rise of Netflix. The $7.99-per-month Hulu Plus service has 4 million paid subscribers, a fraction of Netflix’s 27.9 million subs.
Hulu is a joint venture owned by NBCUniversal, News Corp. and the Walt Disney Co. This is the second time Hulu has been on the market; a 2011 attempt to sell the company and its assets went nowhere (this despite a $4 billion offer from Google).