Tag Archives: Amazon

Hulu Deal Falls Through

DirecTV-HuluRemember when we wrote that DirecTV was supposed to put pen to paper on a deal to acquire Hulu by the end of last month?  Big news: the deal, which would have given DirecTV the online presence it desperately needs, has been called off by Hulu owners 21st Century Fox, NBC Universal and Disney in a joint press release last Friday.  This is the second time Hulu’s co-owners have canceled acquisition proceedings for the company in two years, as they did the same thing in 2011 (although the group of owners then had different members).

In these most recent dealings, DirecTV is said to have offered just over US$1B (S$1.26B) for the OTT platform, which Hulu’s owners were supposedly prepared to accept.  However, they have obviously had second thoughts, and are now planning on infusing US$750 million (S$950 million) of their own funds in an effort to realize Hulu’s potential.  

Jim O’Neill thinks that said potential, and not necessarily an inadequate offer from DirecTV, was the driving force behind the decision to axe the deal:

“The easy answer, but not necessarily the correct answer, is that the price being offered just wasn’t enough…The right answer may be more that the triumvirate finally realized they had a plum in their hand.

[Hulu]‘s got cheap, fresh content coming in from its three owners, 4 million paid subscribers, and a lot of potential. It just hasn’t been realized by anyone other than its original CEO, Jason Kilar, who tried and tried again to tell his bosses what a great company he’d made for them.”

Hulu sits in a distant third place behind American OTT providers Netflix and Amazon, and this fresh supply of cash from its owners is certainly a step in the right direction.  However, Netflix dishes out more than US$2B (S$2.5B) per year to both buy and create new content, and Amazon reportedly spends about half that.  Furthermore, Hulu’s owners have made it clear that their new funding for the company will not be a yearly expenditure, so it seems that the company’s management will continue to be a step behind its competitors.

Referenced from theConvergence.tv and allthingsd.com