Hulu is on the block, with bids between $500 million to $2 billion expected from companies including Yahoo, Amazon.com, and Google.But should owners News Corp., GE, Disney, and Providence Equity sell?
BTIG analyst Rich Greenfield says no.
He thinks it would be “a mistake of epic proportions.”
Greenfield points to a number of factors, including revenue topping $500 million, growing unique visitors, Hulu Plus, and its position as the No. 1 deliverer of online video ads, as reasons the site is succeeding.
But more importantly, he writes Hulu represents a new opportunity for traditional media companies to control the future of television (and TV advertising dollars). He sees the success of VEVO, believes Hulu could follow that model and thinks it would be bad business to sell the joint venture so early in its development.
The ultimate takeaway:
Media companies should be going out of their way to retain ownership of Hulu and allow it to flourish. The bigger Hulu gets, the more dollars it can pay content creators on an annual basis. While that may be true if it is owned by a third-party as well, being invested in Hulu and sacrificing near-term profits for long-term value creation appears far too compelling. In addition, why create a powerful third-party with access to the best content (think of Netflix today or MTV back in the early days of music videos)? Hulu’s big media ownership ensures it has long-term access to the best content – i.e. Amazon or Yahoo buying Hulu and cutting only a five-year deal creates a very different business model than Hulu enjoys today.
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