DIRECTV (NASDAQ:DTV) is currently reviewing a deal to buy out Hulu, according to sources with The Wall Street Journal. Hulu is owned by The Walt Disney Company, News Corporation, and Comcast Corporation. The three parent companies have been exploring strategic options for Hulu including a sale. Some of the other companies that have expressed interest in buying out Hulu include Time Warner Cable, private equity firm Guggenheim Partners, Yahoo! Inc., and The Chernin Group.
Sources say that pay TV operators are interested in Hulu as part of a plan to expand their “TV Everywhere” services. TV Everywhere makes TV shows available over the web. The TV network and distributor companies offer these types of services already, but many consumers are not aware of these services or how to access them. Many pay TV distributors are seeing slow-downs in subscriber growths, causing concerns about “cord cutting.” Consumers are starting to drop pay TV connections in favor of affordable online video services like Netflix and Hulu Plus. Last month, we reported that Hulu Plus hit around 4 million paying subscribers. At a cost of $7.99 per month, this means that Hulu Plus is generating around $32 million per month alone.
Cable companies are still able to monetize from the “cord cutters” by selling them broadband subscriptions. However satellite operator companies like DirecTV and Dish Network depend more on their video businesses. The Wall Street Journal sources said that it is unclear whether DirecTV wants to buy a minority stake in Hulu or acquire the entire website. The talks between the companies may also fall through again. DirecTV initiated talks to acquire Hulu back in 2011 when the parent companies put the video website up for sale.
Hulu launched in 2007 as part of an effort to compete against fast-growing video website, YouTube.com. Netflix is Goliath and Hulu is David in the video streaming service battle because Netflix has around 28 million paid streaming subscribers in the U.S.
News Corp. and Disney each own around one-third of the website and tehy are responsible for the strategic direction of the website. Comcast has to recuse themselves from strategic options as part of a regulatory agreement for buying out NBC.