Silver Lake Abandons Hulu Purchase Effort, as Final Bidding Deadline Arrives Today
According to sources close to the situation, Silver Lake will not make a follow-on bid to buy the Hulu premium video service. The giant private equity firm had been allied in the effort with the powerful Hollywood talent agency, WME, which it has invested in.
The winnowing of bidders should become clearer after today, which is the final deadline for offers in what feels like the longest-running sale of an asset ever. Hulu is owned by 21st Century Fox (formerly News Corp), Disney and Comcast. The trio of media giants have had an uneasy relationship with each other and with the service itself since it was launched many years ago.
Thus it has been on the block several times over the years, although this one has been the most serious effort to resolve its fate. But sources have cautioned that it could turn out that no sale happens if the bids do not come in at levels of about $1 billion.
Until now, all of the bids have been nonbinding, with a range of players all making various declarations of interest. Among the many tire-kickers: Yahoo, DirecTV, Time Warner Cable, Guggenheim Partners, a joint bid by the Chernin Group and AT&T, as well as Silver Lake/WME.
Silver Lake’s departure from the main group is probably not a surprise, said sources, since it did not sweeten its second bid as part of this process. That said, depending on how the next and more serious round goes, it could later align itself with one of the bidders left.
In that, multiple sources now expect that the multiplayer competition to buy Hulu will come down to four of those: DirecTV, Guggenheim Partners, Time Warner Cable and the Chernin/AT&T effort. Each has pros and cons, of course, although DirecTV is considered the frontrunner by many.
Still, the situation is dicey, with worries focused on issues such as the continuing departures of key management execs at Hulu. Most problematic, though, are the various terms of the licensing rights for content its owners are offering to whoever buys the service. A source at one bidder called the terms “onerous,” while another said that the emergence of a number of buyers for content has made it more difficult to build a big business at Hulu going forward.
Which, of course, begs the question of why they are bidding at all. (Don’t you just love negotiation noise?)