Yahoo! Inc. (YHOO), AT&T Inc. (T), Netflix, Inc. (NFLX): It’s a Terrible Idea to Buy Hulu

But we don’t even know if Tumblr will make money for Yahoo! Inc. (NASDAQ:YHOO). Is it really a good idea to lay out another few billion – first to acquire Hulu, and then to acquire content for Hulu? Yahoo! only has $1.174 billion in cash sitting on its balance sheet.  It better use that cash to ensure that Tumblr has a working profit model.

AT&T? Really?

This one surprised me. First, let me make it clear that AT&T Inc. (NYSE:T) hasn’t actually put in a bid yet. But AT&T has been talking with the Chernin group, a media investment company bidding for Hulu. Chernin’s bid was too low. AT&T Inc. (NYSE:T) has cash – $3.875 billion, to be exact. Sounds like a match made in heaven, right?  But hold on.

AT&T could offer Hulu along with U-verse. U-verse is AT&T Inc. (NYSE:T)’s fiber optic package that combines digital TV, high-speed internet, and digital home phone service. Hulu would make U-verse more attractive because customers could stream shows and movies along with their digital TV subscription. But AT&T’s specialty is telecommunication services, not entertainment. If AT&T Inc. (NYSE:T) gets any management stake in Hulu, I seriously doubt it would competitively navigate the process of securing video content.

According to a Forbes.com article, one analyst suggested AT&T just wants to keep Hulu from competitors like Verizon Communications Inc. (NYSE:VZ) FiOS or DIRECTV (NASDAQ:DTV). It’s not worth it. I think AT&T Inc. (NYSE:T) could more effectively use the money to get new customers and improve its network reliability.

Stop fighting, kids

Just like a kid eating too much candy, Hulu looks attractive, but it comes with its share of problems. The ideal buyer will have a media/entertainment focus, plenty of cash, and a clear strategy for Hulu. Yahoo! Inc. (NASDAQ:YHOO) and AT&T Inc. (NYSE:T): this one’s not for you.

Who do you think is the best buyer for Hulu? Tell me in the comments.

This article was written by Nathan Adamo and edited by Chris Marasco. Chris Marasco is Head Editor of ADifferentAngle. Neither has a position in any stocks mentioned.

The Motley Fool recommends Netflix. The Motley Fool owns shares of Netflix, Inc. (NASDAQ:NFLX).

The article It’s a Terrible Idea to Buy Hulu originally appeared on Fool.com.

Marie 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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