Guggenheim Digital Media Bidding for Hulu

Business Insider is reporting that Ross Levinsohn, a former executive at Yahoo!, is trying to buy Hulu. Interestingly enough, Yahoo! tried to buy Hulu while Levinsohn was an executive at Yahoo for $2 billion. Hulu, is controlled by Disney's ABC and News Corp. They claim that there are 3 million subscribers who pay $7.99/month for the service.

Guggenheim Digital Media brands

A sale of Hulu would be a bizarre tactical move for Disney and News Corp because they have control continues to make more advances towards putting content online. What would be their motivation to give up a content streaming site? My only guess is that they don't feel like it is a worth while project for the company to continue to pursue at this time. If they come up with their own app for streaming content, then Hulu might be obsolete. That makes sense from Disney's perspective, but News Corp has been put in an interesting situation. I've written about how News Corp has threatened to make their own Fox News channel a subscription based channel if Aereo is not stopped, but now they have an opportunity to grab Disney's share of Hulu and control TV streaming that way. Why wouldn't they play the game on their own terms? It would give them an easy way to control the Fox News content. If both Disney and News Corp have equal controlling shares of Hulu, and one company wants to jump out more than the other, it seems like either company would benefit from taking over the shares as opposed to flipping it to Mr. Levinsohn's Guggenheim Digital Media. Business Insider reported that Hulu made $700 million in revenue last year, but has about $330 million in debt, and a quarter loss of $30 million. It could be at the point for both Disney and News Corp where it is just not profitable anymore.
over the streaming content of their choice. They are in a unique position to control content over the internet and have an ability monetize it. Giving that up would essentially be like taking a step back for Disney and News Corp. As I wrote in an earlier post, Disney

For Guggenheim Digital Media, they are looking to make a big splash in the online streaming market. According to the Wall Street Journal, Guggenheim Digital Media is engaging in discussions to buy Vevo, the online music video streaming company, and have already bought a wide variety of different online media outlets. They're making a strong play to control all of the digital consumer streaming market. At this point, it seems like Guggenheim is positioning themselves to rule the internet for now, but further down the line, they could be the major player in the online streaming market. Coupled with all of the acquisitions and other music industry related company takeovers, Guggenheim is playing to control the music industry online as well as the TV and movie streaming industry. It makes a lot of sense for the company to aggressively pursue Hulu, especially since Disney and News Corp seems to be lukewarm to the idea of keeping the service. If Guggenheim can come up with a way to get Hulu debt-free and profit-positive, it's an easy buck for the media conglomerate. This area is their expertise.

Hulu, and the business that they are in, may not be Disney or News Corp's area of expertise, but if the companies are going to continues to fight off the consumers who are shifting to the internet, they had better learn the business quickly. Giving up Hulu doesn't seem like the best way for News Corp to go, but Disney doesn't have much to lose because they are already making moves to positions themselves with their own app.

Shawn

Sources: http://www.businessinsider.com/ross-levinsohn-might-be-buying-hulu-2013-4

http://www.fastcompany.com/3008018/tech-forecast/news-corp-coo-says-channel-will-be-subscription-only-if-aereo-prevails

http://online.wsj.com/article/SB10001424127887324763404578429180740205410.html