DirecTV Emerges as Frontrunner to Purchase Hulu

Joe Goldman  |

Guggenheim and KKR are no longer involved in the bidding war for Hulu, leaving DirecTV (DTV) as the perennial favorite to win the company. A sale, moreover, could mean the birth of an entirely different Hulu.

Brian Sozzi of Belus Capital Advisors told Yahoo! Finance on Wednesday that DirecTV has emerged as the frontrunner, which is being sold off by Disney (DIS), 21st Century Fox (FOX), and NBC Universal, Hulu’s parent companies. Sozzi believes that the partnership of AT&T (T) and the Chernin Group is still in the game, while Time Warner could purchase a minority stake.

If DirecTV wins the bid, the company could include Hulu in its satellite packages, creating a powerful selling point to lure new subscribers. DirecTV is is the only suitor without regional barriers and can, therefore, reach a greater demographic of customers. Thus, Hulu presents the most value to DirecTV, which is why Sozzi expects the satellite company to place a winning bid between $1 and $1.5 billion.

However, many theories and ideas dictate that a sale could entirely reshape Hulu’s services. Here are some changes that will be on the table, pending the sale’s completion.

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Original Programming: Netflix (NFLX) has had enormous success developing original conent such as House of Cards and Hemlock Grove, the former serving as a major catalyst for new subscribers. A new, wealthy owner could give Hulu the financial support to develop such content.

No More Advertisements: Hulu’s new owner could position Hulu as an HBO-like network with premium content available ad-free and on-demand 24/7. The buyer would likely offer the channel for a monthly subscription fee, if it chooses to take this route.

No more next-day episodes: Hulu subscribers could lose the luxury of watching episodes available the day after airing live. Michael Eisner told Bloomberg on Wednesday, “the price you pay for the actual asset will be tempered by what you think you have to spend to make the asset work because NBC, Fox, and ABC are not going to give you a great deal on their own content any more.” The three networks could, therefore, delay episodes from Hulu for days to encourage viewers to watch the shows live.

DirecTV shares are flat this week this week as investors await the outcome of its bid for Hulu. Shares are up 27 percent year-to-date.

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