Yahoo! Inc. (YHOO), AT&T Inc. (T): Hulu Stops the Bidding, Who Wins?

Of the two, however, DirecTV (NASDAQ:DTV) would likely benefit more. The company is a satellite television provider in the United States and in Latin America. Buying Hulu would allow it to grow its customer base among those that would never even consider a satellite deal, opening a new avenue for growth.

DirecTV’s earnings have risen from just under a dollar a share in 2009 to over $4.50 last year. The top-line has been growing solidly for a decade. It has a notable debt load, but could handle a Hulu purchase. With a PE of around 14, DirecTV is reasonably priced and still has plenty of growth potential ahead. Adding Hulu would make the future even brighter.

Time Warner Cable Inc (NYSE:TWC), however, is the one rumored to be working on an investment in Hulu. That will let Time Warner Cable attract customers from competitors in markets it doesn’t serve. Still a good business call, but not quite as compelling a growth story as DirecTV.

Although the company’s top and bottom lines have been growing steadily since its separation from Time Warner, the shares have also been on a steady ascent lately. It’s made a particularly swift advance in the last few weeks. The PE ratio of around 16 is about five percentage points above its five-year average, so now probably isn’t the time to jump aboard. Buying into Hulu won’t change that.

Winning by Losing

AT&T Inc. (NYSE:T) and Yahoo! Inc. (NASDAQ:YHOO) are probably the big winners right now in the Hulu grab. Both are still solid opportunities for income and turnaround investors, respectively. Time Warner Cable should do well with an investment in Hulu, but that doesn’t make its relatively pricey shares any more compelling. DirecTV would probably have benefited more.

The article Hulu Stops the Bidding, Who Wins? originally appeared on Fool.com and is written by Reuben Brewer.

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

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