Speculation about the Hulu auction continued to mount this week. The latest reports indicate AT&T (NYSE: T) may join with the Chernin Group on a bid for the online video site. Hulu is owned by Comcast (Nasdaq: CMCSA), News Corp. (Nasdaq: NWSA) and Walt Disney Co. (NYSE: DIS).
Reports emphasize there is no guarantee the auction will result in a sale, and that's true. The last time Hulu put itself on the block, no deal materialized. The same could happen again if prospective buyers don't like what they see or aren't willing to pay enough to dislodge the company from its corporate parents.
The big question surrounding the auction is whether Hulu's prospective buyers are bidding on licenses to the major network programming that Hulu made its name on, in addition to the site's more tangible assets. If so, that would drive up the price considerably. If not, whoever wins the auction would have to reach new deals with TV programmers.
"Whatever the price they pay [the winners] they need to add a minimum of $2 billion in content costs annually to grow the business," Hudson Square Research analyst Dan Ernst told The Street. "To compete with Netflix (Nasdaq: NFLX) and cable, it's a money loser."
Commentary: A sale would mean the end of Hulu as we know it
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