proposal

Disney, News Corp. reportedly meet to discuss possible sale of Hulu

Owners disagree on business model for streaming video provider
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Speculation is running rampant about Hulu's future after two of the company's three owners--Walt Disney Co. (NYSE: DIS) and News Corp. (Nasdaq: NWSA)--reportedly met to discuss a possible sale. The third owner, Comcast's (Nasdaq: CMCSA) NBCUniversal, is a silent partner thanks to federal rules that prevent Comcast from taking an active role.

At stake, besides the future of the online video purveyor, is exactly how the company will actually purvey online videos. Disney is said to prefer an advertising-focused model, while News Corp. thinks the best way to go is through subscriptions. That route would probably mean the end of Hulu's free service and full dependence on the $8 per month Hulu Plus that's already offered.

Contributing to the intrigue is the fact that Hulu's co-founder and CEO Jason Kilar earlier this year said he was leaving the company by the end of this month. Kilar, according to a Bloomberg report, earned $40 million for his Hulu stock. Hulu also dug a little deeper to come up with $200 million to buy out Providence Equity Partners' 10 percent stake.

There are several routes that the current talks could take: Disney could buy out News Corp.; News Corp. could buy out Disney; both sides could decide to do nothing. Whatever happens, Comcast won't be anything more than an observer, even though it owns a third of Hulu. The MSO was barred from active participation in the online video player when it purchased NBCUniversal.

Finally, complicating matters just a bit more is that Hulu, like all online video ventures, is doing pretty well these days. The company in December reported revenues of $695 million, a year-over-year climb of 65 percent and a doubling of subscribers to 3 million. While it's no Netflix (Nasdaq: NFLX)--which is also soaring these days--it is a substantial player in a field where the competition is heating up from the likes of Amazon (Nasdaq: AMZN), Verizon (NYSE: VZ) and Coinstar (Redbox, in partnership with Verizon).

For more:
- Bloomberg had this story
- and Investor Place had this story

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