Kara Swisher

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Yahoo’s Bid for Hulu in $600M to $800M Range — Even as It Preps Other Big Deals in Mobile and Communications

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According to numerous sources close to the situation, Yahoo has bid from $600 million to $800 million for the premium video site Hulu.

The reason for the wide range is due to the fact that the Silicon Valley Internet giant — similar to most bidders in the new effort to acquire Hulu — has proposed several different prices based on a variety of circumstances. That includes the length of the licensing rights for content and how much control the programming companies selling Hulu have over their media.

At the same time and separately, according to sources inside the company, Yahoo is also contemplating at least two other significant purchases — in the $150 million to $200 million range — each for a mobile and a communications company.

It’s certainly an ambitious and busy M&A agenda for Yahoo’s CEO Marissa Mayer, who just forked over $1.1 billion in cash to purchase youth-skewing blogging site Tumblr last week.

Presumably, she is interested in upping Yahoo’s longtime lackluster video efforts — it famously lost out at the last minute on the acquisition of YouTube many years ago to Google — as the arena becomes more critical to advertisers.

But, said sources, while allowing the bid to proceed, Mayer is more focused on the integration of Tumblr, as well as other acquisitions that will bolster other key product areas.

Thus, sources said that the Hulu effort is being led at Yahoo by Los Angeles-based Ian Weingarten, VP of corporate development, who works for M&A head Jackie Reses.

AllThingsD.com first broke the news of that deal, as well as Yahoo’s initial interest and subsequent bid for Hulu, which is owned by a trio of media giants: News Corp., Disney and Comcast.

The site, which has both a subscription and an advertising business, was on the market in 2011, with the hope for a bid of $2 billion that came with several years of programming rights. The sale was pulled after those higher bids did not materialize.

But Hulu is on the market again in the most advanced effort to sell it so far, with bids coming in from a range of suitors over the last week.

Yahoo’s Mayer and COO Henrique De Castro had met with Hulu’s team earlier this month for a get-to-know-you, just after an effort to buy a large stake in French video site Dailymotion was blocked by the government there.

Besides Yahoo, others interested in acquiring Hulu include: Separate bids from private equity firms KKR, Guggenheim Digital and Silver Lake (in conjunction with Hollywood talent agency William Morris Endeavor); Time Warner Cable; DirecTV; and the Chernin Group.

There could still be others, of course, though a deadline for initial bids has passed. Interestingly, so far, neither Google nor Amazon have made official efforts, perhaps because the pair already have robust video platforms.

Chernin’s bid, as had been widely reported, started in the $500 million range, which is interesting since the longtime media executive was once the COO of News Corp. and was critical to Hulu’s creation. Translation: He’d know just what the video platform is worth and how the place works.

Of course, low bids at the start are part of the normal process; sources close to the owners said that any bids under $1 billion are unlikely to be accepted.

One thing is certain: Now comes what will look a lot like a very noisy game of musical chairs, in which the various groups will vie for one-upmanship, even as they talk to each other about possible joint efforts. Who the most attractive candidate is, of course, will be much debated.

In addition, there is much disagreement over who and how Hulu should be sold by two of its owners, Disney and News Corp., which have squabbled over its direction from the start. (Comcast gave up its management rights as a concession to federal regulators a few years ago, so is sitting on the sideline twiddling its giant cable thumbs and doubtlessly wishing it could be a bidder, too.)

No matter the ceaseless bickering among giants, the trio of media conglomerates are providing Hulu’s most valuable programming, largely television shows from their broadcast networks. And that is the real point of the negotiating, according to many involved.

“Hulu is a very nice brand and technology, but the entire negotiation will be about the control and price of the content,” said one person close to the situation. “It’s the only thing that matters.”

I sent an email for comment to Yahoo, but expect no response.

(Full disclosure: News Corp. owns Dow Jones, which owns this site.)


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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik