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April 6, 2013 2:37 am
Peter Chernin, former chief operating officer of News Corp, has made a formal $500m bid for Hulu, the online video site owned by News Corp and Walt Disney.
A person close to the owners said they were “wholly underwhelmed” by the offer, which was first reported in a Reuters story, and “would anticipate that Mr Chernin’s bid could increase significantly with certain [programme] rights attached to the sale”.
The offer represents a significant drop in value for Hulu, which attracted bids approaching $2bn when it was auctioned last year. At the time, News Corp and Disney decided not to sell because the bids did not reflect their valuation of the site.
Mr Chernin, backed by Providence Equity Partners – a former Hulu shareholder – has been on the lookout for deals since leaving News Corp in 2009. He was a driving force in the foundation of Hulu six years ago, realising that News Corp and its partners needed a counterweight to YouTube.
Mr Chernin, who declined to comment, is also eyeing IMG, the sports management group that represents stars including tennis champion Rafael Nadal and singer Justin Timberlake, according to two people familiar with the situation.
Forstmann Little, the private equity firm, is considering a sale of IMG, and Mr Chernin could expect competition from Creative Artists Agency and WME, the two largest Hollywood talent agencies, were he to bid.
Hulu has grown rapidly but News Corp and Disney have been unable to decide on a clear strategy for the company, which has more than 3m subscribers but has not yet turned a profit.
Hulu’s value lies in its content, with much of the programming provided by Disney and News Corp. But the two companies have different goals – News Corp wants to build the premium, subscription business, while Disney reportedly favours an ad-supported site.
The site offers both free and premium content. But uncertainty over how long it will have rights to hit shows once it is sold has deterred potential buyers.
“Over the long term Hulu will need to be put on an even playing field from a rights perspective with the other companies that distribute content from News Corp and Disney,” said a person close to the situation. The person added that Hulu had “incredible brand value, great technology and a loyal following”.
The company has faced an uncertain future since the recent departure of chief executive Jason Kilar.
His tenure was marred by differences with Hulu’s shareholders that came to a head last year when he pushed for more funds to expand Hulu internationally.
In a 2011 blog post he infuriated News Corp and Disney – which both own US TV networks – when he wrote that “traditional TV has too many ads”. Disney said at the time that Mr Kilar’s views were “personal and clearly not shared by anyone at Walt Disney”.
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