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Hulu bidding continues minus troubled Yahoo

By PETER WHITE

Published: 13 October, 2011

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Although the bidding for Hulu should be over by now with Dish Network the winner, it continues to go through rounds of discussions and leaks this week which came out through the Wall Street Journal now show that Yahoo has predictably exited the struggle.

From a consumer point of view, a sale to Yahoo may have been the best outcome for Hulu and it may have given a pure internet play a genuine chance at creating a new TV service. Yahoo is also the company that triggered the auction, by going in unbidden, to offer boldly, to buy Hulu.

Yahoo's own fortunes are now under threat given that it has placed itself in the hands of "financial advisers" and is seeking "strategic alternatives." It kicked this off with a declaration that it would sell Yahoo Japan, followed by selling off its 12% interest this week in India's Consim Info Pvt Ltd, which runs job, property and marriage portals, for $190 million. Now its Chinese partner Alibaba is understood to be bidding for the US part of Yahoo, just as figures are out this week showing that Yahoo's share of the search market continues to fall.

This now leaves Dish, Google and Amazon still in the hunt for Hulu and if no improved conditions are attached to the sale, Dish is the highest bidder. No self-respecting adviser is going to say "take the $1.9 billion on offer" without first asking the question, "Can you raise the length of contract for content," prior to completing the sale. If it does that, then Hulu must go back out to market once again and re-start the bidding. Others may have fallen out of the bidding precisely because the terms on the content contracts were wrong. It would be foolish in the extreme to limit the bidding, on renewed terms, to these three.

So in our view either Dish gets it at the current price, or it comes on the open market a second time with longer content contracts, or Hulu is pulled off the market. Expect Dish to land the deal in the weeks ahead.

This item has been extracted from a longer piece in our Faultline research service. Go to www.rethinkresearch.biz/faultine to get this week's issue in full.

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