AT&T Inc. (T), DIRECTV (DTV): Hulu for Sale, But Who Will Buy?

Chernin made an initial bid in the $500 million range, an amount that could likely rise if it agrees to do business with AT&T and as Hulu sorts through the bids coming in. According to Bloomberg, Peter Chernin, who helped start Hulu in 2007, leads the firm. Chernin’s deep pockets and insight into video distribution could help Hulu going forward to compete with rival Netflix. Joining a bidder with this favorable combination can give AT&T Inc. (NYSE:T) an advantage in the bidding process. A figure on the actual bid has not been disclosed yet, but insiders believe that a sale would require a bid in the $1 billion range.

Conclusion

Hulu has proven to be a hot internet property, though its sale does present certain challenges. The company that acquires Hulu can add to its portfolio a company that made $695 million in revenue in 2012 and whose service can be accessed by over 320 million web connected devices in the U.S. The acquisition will also mean assuming Hulu’s $330 million debt load and navigating the often-tricky negotiations surrounding long-term content license deals, which its current Hollywood owners tend to avoid signing.

Of the three companies discussed,DIRECTV (NASDAQ:DTV) and AT&T Inc. (NYSE:T) may hold an edge as long as their bids are competitive with that of other suitors. Their prior relationship in obtaining programming rights from The Walt Disney Company (NYSE:DIS), NBC Universal, and News Corp (NASDAQ:NWSA). may provide some assurance that Hulu’s content does not diminish if the buyout goes through. The company with the winning bid is sure to benefit by adding Hulu and its expanding internet TV service, as long as the content remains relevant to viewers.

Eileen Rojas has no position in any stocks mentioned. The Motley Fool recommends DirecTV. Eileen is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Hulu for Sale, But Who Will Buy? originally appeared on Fool.com and is written by Eileen Rojas.

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