AT&T Inc. is in talks with the Chernin Group to join forces
on a bid for Hulu, people familiar with the situation said,
potentially adding another deep-pocketed company into the mix of
suitors for the online video site.
The Chernin group, which is run by former News Corp. president
Peter Chernin, submitted a bid earlier in the process that Hulu's
owners considered a lowball offer, a person familiar with the
matter said. Teaming up with AT&T could make Mr. Chernin a more
competitive player in the auction.
Among companies he is bidding against is DirecTV, which has made
an offer valued at more than $1 billion, including the assumption
of Hulu debt, said a person familiar with the situation. DirecTV
declined to comment. Other bidders include Time Warner Cable, Yahoo
Inc. and financial investors, as previously reported.
For pay TV operators, Hulu holds the potential to be a
nationally branded platform for so-called TV Everywhere services,
under which programming is made available on computers, tablets and
smartphones to pay TV subscribers.
Telecom giant AT&T has already taken a step into the video
streaming business with the launch early this year of "U-Verse
Screen Pack," a $5 per month add-on for its U-Verse television
subscribers. The service offers hundreds of mostly older movies.
Its telecom industry rival, Verizon Communications Inc., also has
entered the fray through RedBox Instant, a joint venture with
Coinstar Inc. that has rolled out an $8 per month streaming video
and DVD-rental service.
Mr. Chernin ran News Corp. when Hulu was launched in 2007. Since
leaving News Corp in 2009, he has started an investment group that
has put money into media, technology and entertainment properties
around the world. His backers include Providence Equity partners,
which for a time also had a stake in Hulu.
Hulu is owned by three major media companies: Fox-parent News
Corp., ABC-parent Walt Disney Co. and NBC-parent Comcast Corp. (For
regulatory reasons, Comcast can't vote its stake.) The site was
founded in 2007 to allow major broadcast networks to deliver their
TV programming online. It offers a catalog of more than 70,000 full
TV episodes, including the current seasons of hit shows.
News Corp. also owns Dow Jones & Co., publisher of this
newswire and The Wall Street Journal.
Much of Hulu's value is in the popular network programming its
owners license to the company. The price bidders are willing to pay
depends, in part, on how long the owners are willing to keep
licensing that content. Bidders are pushing for licensing deals
lasting a minimum of two years but ideally longer, a person
familiar with the situation said.
Earlier this year Disney and News Corp. put Hulu on the market,
after months of debate about the right strategic direction for the
site. There's no guarantee the companies will sell. In 2011 a
similar auction didn't lead to a sale.
The Web site AllThingsD earlier reported the AT&T talks with
Chernin Group.
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