The field of potential Hulu buyers just got a little thinner. Bloomberg reported Microsoft (NASDAQ:MSFT), for the moment, has joined Netflix in pulling out of the bidding for the online video company that began earlier this month.
Microsoft execs, after an initial briefing with Hulu, reportedly informed the company they wouldn't move to the second level, a deep look at the books.
Hulu, which is owned by News Corp. (NASDAQ: NWSA), Disney (NYSE: DIS), and Comcast's (NASDAQ:CMCSA) NBCUniversal, has nearly a dozen buyers peeking under the hood and kicking tires, but, so far, none has been willing to pull the trigger to purchase the company, which is valued at approximately $2 billion.
Web portal Yahoo (NASDAQ: YHOO), however, has stepped up to the plate, with sources telling Business Insider it would be willing to pay up to $2 billion if it could get a content guarantee from Hulu's media owners that it would have exclusive access to their content for four or five years. The owners earlier this week said they would guarantee content availability to a new owner for five years, including a two-year exclusivity window (See related story: Hulu owners offer buyers content access guarantees, exclusivity).
"If [Hulu's content creating owners] came out and said, we've renewed [Hulu's exclusive rights] for four years at the same terms we have today--it's really easy to model [a valuation between] $1 billion and $2 billion--maybe more," the source told Business Insider. Without it, the source said, Hulu is "not worth anything."
A stumbling block to the sale is the site's continued access to the content that has driven it to nearly 1 million paid users and revenues that are projected to reach $500 million this year. Pundits questioned Hulu's potential success with an IPO, which it tested last year, worrying that any of its three media owners could cut off access to popular shows or reserve advertising space for themselves, cutting off a major source of Hulu revenue. The IPO quietly was dropped in December 2010.
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