Should media owners rethink Hulu sale plan?

August 23, 2011

BTIG’s Rich Greenfield is an analyst who seems to have never met a contrarian debate on the media business he didn’t like. This morning, he turned his attention towards online video site Hulu, arguing in a research note that its owners should think twice about selling the business (subscription needed). First round bid for Hulu, which is owned by News Corp., Disney, Comcast, and Providence Equity Partners, are due Wednesday and are expected to reach as high as $2 billion.

In his note, Greenfield, known for his embrace of hyperbole, says selling Hulu is “a mistake of epic proportions.” He says Hulu is the perfect weapon for combating cable TV’s excessive ad load, supercharging on-demand TV, and for integrating social media’s impact on how consumers watch TV.

Greenfield asks why Hulu owners would sell now, at a time when Hulu is growing viewers, advertising and subscription revenues. As he sees it, on-demand online video is clearly the future and big media would be better served having a say in how the future of video distribution over the long-term is shaped rather than handing Hulu over to Google, Amazon, Yahoo or some of the companies that are supposed to be interested.

The site’s success has clearly left Hulu’ owners conflicted over how to proceed with the sale and there is even talk about whether a sale will happen at all. For instance, prospective buyers we’ve spoke with are uncertain about the Hulu’s value, particularly after the owners appear to be caving into pressure from pay-TV distributors to restrict the newest TV shows to paying subscribers.

“All you’re getting is a bunch of rights, and if they’re restricting those rights you have to ask what is the value of what they’re selling,” said one source we spoke with on background.

More to come.

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