Providence Equity selling Hulu stake to Disney, News Corp. and Comcast

Providence Equity, seeing no Hulu IPO in sight, is cashing in its chips and selling its 10 percent share in the company to partners Walt Disney Co. (NYSE: DIS) Comcast (Nasdaq: CMCSA) and News Corp. (Nasdaq: NWSA) for about $200 million, multiple reports say.

If the price is right, Providence has doubled the investment it made in the online video purveyor when it plunked down $100 million in 2007. If also means that Hulu, based on this transaction, is worth about $2 billion, which should make employees who own a chunk of the company very happy--and potentially very rich.

But RBC Capital Markets analyst David Bank advised caution in an Ad Age story, noting, "The real value of Hulu will be discovered on a longer time frame than what's likely optimal for Providence."

Shorter term, the sell-out is an obvious bonanza for Hulu employees, who own about 10 percent of the company and can now cash in on highly valued stock shares. It also signals the remaining partners have confidence that Hulu's $8-a-month Hulu Plus service, which has in excess of 2 million subscribers, might be a good way to go.

Disney, News Corp. and NBCUniversal (Comcast) own about 27 percent each of Hulu. Disney and News Corp. have a say in how the company is run, but Comcast, by virtue of deals it made to acquire NBCUniversal, can't be involved in company governance and reportedly hasn't been part of the talks with Providence.

Hulu is best known for showing old shows on new platforms but has been working on its own series of original programming to draw in more advertisers. In all, the Ad Age story said, the company plans to spend $500 million on TV shows and films this year; more than double what it spent last year.

Hulu spokeswoman Elisa Schreiber and Providence spokesman Andrew Cole had nothing to say about the report.

For more:
- Ad Age had this story

Related articles:
Viacom agrees to give Nickelodeon programming to Hulu Plus
Disney exec sees continued growth in online video distribution

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