According to most reports, bidding is now complete and Hulu is going to step out and pick a new boss/owner. It could be a cable company--Time Warner Cable (NYSE: TWC) is supposedly in the running. It could be a satellite company--DirecTV (Nasdaq: DTV) has been ballyhooed for the spot. It could be a content provider or an entertainment company or a financial firm--all have apparently delivered bids that range in the $1 billion territory.
Or it could be a phone/IPTV provider. AT&T (NYSE: T), reports say, jumped in at the last second on a bid with Chernin Group. If successful, Hulu would become a part of the U-verse universe.
It's a play with more than a few questions, starting with the big one. Why? Why would a company with a nationwide wireless network, extensive Wi-Fi capabilities and a thriving wireline IPTV business, complete with content, want to step into the online OTT space? What's to be gained?
AT&T doesn't need Hulu's content or even relationships with the company's present owners Disney (NYSE: DIS), 21st Century Fox or Comcast's (Nasdaq: CMCSA) NBCUniversal. The carrier knows all of those players intimately via U-verse.
It doesn't need Hulu's Web presence. With an extensive broadband network--even if it is DSL--tied to a quadruple play of voice, video, data and wireless services, AT&T doesn't need more Web presence. After all, isn't TV Everywhere just an OTT wannabee?
And AT&T certainly doesn't need to diversify its advertising/paid subscriber base via Hulu and Hulu Plus. U-verse continues to grow at a remarkable pace, moving into new territories like Hattiesburg, Miss., and putting up great subscriber numbers at the expense of the cable incumbents.
Finally, AT&T doesn't need the headache of competing head-on with Netflix. Or--and here's where things become murkier--maybe it does. Perhaps the answer to the AT&T bid lies somewhere in the depths of its relationship with its OTT competition.
It would certainly make sense for the carrier to add an icon to its IPTV start screen that makes Hulu an available option or even alternative to U-verse service. It would also make sense to have Hulu on smart TV screens and Blu-ray players and even potentially on the menus of other carriers--although that seems less likely--being sold in retail as alternatives to pay TV service providers. This would move U-verse, at least ostensibly, into cable territories without burying a single wire or erecting a cell tower. Simply encourage potential customers to buy a connected device with Hulu installed and, rather than pay for Comcast's Xfinity or Verizon's (NYSE: VZ) FiOS, subscribe to Hulu Plus. And all the money goes back to AT&T.
In the end, looking at it like that, a Hulu acquisition would make a great deal of sense for AT&T. It's not going to add anything to what's already there; it's going to grow the business from the outside.
And that's as good a reason as any to jump through the Hulu hoops.--Jim