Early Hulu Investor Sells Stake
posted Saturday Oct 13, 2012 by Scott Ertz
It is official - the three major media partners are the only remaining owners of media service Hulu. Providence Equity Partners, an early investor in the Netflix-competitor, has sold its 10 percent share in the company to remaining owners, News Corp. (FOX), Comcast (NBC Universal) and Disney (ABC). The initial investment was for $100 million in 2007 and the sale this week was for a whopping $200 million. As an investment firm, a 100% increase in value is not a bad investment at all.
The sale not only puts the content creators in complete charge of the company, it also forces a valuation of the company. With ten percent of the company selling for $200 million, that officially values the company as a whole at $2 billion. Through its more than 2 million paid subscriptions, Hulu earned $420 million in revenue in 2011, meaning it earns almost 25 percent of its value per year. While not the best revenue in the world, it's nothing to be ashamed of.
What does this sale mean for the longevity of Hulu? Hit the break for our analysis.
We know that Hulu has been toying with selling, but they were unable to reach agreements with Yahoo! or Google because both companies demanded longer-term content deals that Disney was uninterested in guaranteeing. Because of that, the three media companies have continued working together while still being competitors. All three companies seem to have their own fears about whether or not the Internet is a viable media platform.
Disney was the last major video company to offer content on iTunes, while FOX places limitations on its Hulu content, unless you are a validated Dish Network subscriber. In addition, Comcast has launched a competitor to its own service. With all of this oddity, it feels a little like this alliance might not be successful in the long run, despite the fact that I am currently watching Hulu while I write this article. Hopefully Hulu will be able to figure out how to get the competitors working together in a way that is successful for everyone involved now that the glue binding them together is gone.
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