What happened to the Hulu auction? (THR, LAT, VAR, DH, TC, WSJ)

By Nancy Tartaglione-Moore

Following speculation of just such a move, Hulu's owners on Thursday called off an auction to sell the streaming site.

News Corp, Disney and Providence Equity Partners, along with Hulu senior management, issued a joint statement saying, in part, "we have terminated the sale process and look forward to working together to continue mapping out its path to even greater success. Our focus now rests solely on ensuring that our efforts as owners contribute in a meaningful way to the exciting future that lies ahead for Hulu."

(The Hollywood Reporter notes that partner NBCUniversal was not mentioned in the statement, likely because it relinquished any management responsibilities it may have had as one of the conditions for governmental approval of its merger with Comcast.)

Hulu initiated a bidding process following an unsolicited offer it received from Yahoo in June and ended up garnering offers somewhere between $1.5 billion and $2 billion, according to reports. Amazon, Dish and Google were believed to be among the suitors while Yahoo had recently pulled out.

While the Hulu statement said the service has "unique and compelling strategic value to each of its owners," bids may ultimately have come in too low. Variety notes that Hulu was eyeing $2 billion, although Google was reportedly ready to spend more than that with certain conditions.

THR:

Part of the problem, observers have said, is that bidders, naturally, were leery of buying a streaming-media company without guarantees they would have easy and inexpensive access to TV shows and movies once the content partners were out of the ownership picture.

Some analysts suggested Hulu not sell itself including Richard Greenfield of BTIG and David Bankof RBC Capital Markets.

Hulu's owners may also have had second thoughts as significant innovations may have renewed faith in its future while the playing field has swiftly changed. VAR:

Over the months that Hulu has been having its tires kicked, the competitive landscape around it has undergone significant changes. Its most formidable rival, Netflix, has been humbled by pricing and structural decisions that are expected to reduce its 25 million-strong subscriber count when the company reports third-quarter earnings next week. That alone may have emboldened Hulu's owners to have another go at taking the service to the next level.

Meanwhile, sources close to the process told Deadline that one particularly ornery problem with a sale was that Comcast, Disney, and News Corp could never agree on the scope of the programming they were willing to offer to a buyer.

Per Tech Crunch:

Here's the thing about Hulu that you need to understand. Its value to the media companies that own it is not in the $2 billion to $4 billion it can fetch at auction today. Its real value is as a source of ongoing and growing licensing fees for their TV shows as more and more people watch online.

The media companies which own Hulu only wanted to extend their licensing agreements a couple years to any potential buyer because they fully planned on jacking up the price when it came time to renegotiate. And all the bidders knew that. Now that the media companies will continue to own Hulu, they kind of have a fiduciary responsibility not to ream it too much on those streaming fees.

According to The Wall Street Journal, the end of the auction may only delay a shakeout in Hulu's ownership. Providence still holds a put right to be bought out of the venture in about a year, a person familiar with the matter told the newspaper.

**This article was compiled using reports from The Hollywood Reporter, The Los Angeles Times, Variety, Deadline, TechCrunch and The Wall Street Jounral. The original stories can be accessed by clicking the hyperlinks in the text above.