The Los Angeles-based Hulu is currently owned by Walt Disney Co. (NYSE:DIS), News Corp. (NASDAQ:NWSA), and Comcast Corp. (NASDAQ:CMCSA). The interest in the company reflects the growing popularity of online TV services. The popular streaming device has had a successful year, increasing subscription and advertising revenue by 65 percent to $695 million.
“Video is migrating to the Internet,” said Brett Harriss, an analyst at Gabelli & Co. ”Hulu is a great platform to use as a base to build an Internet video business.” Traditional TV networks are being pushed aside as online video sources are becoming a more popular way for young people to watch TV than cable.
Hulu currently offers two different ad-supported services, a free one that allows content to be streamed on personal computers, and Hulu Plus, a $7.99 per month option that streams content on smartphones and tablets as well as computers. Hulu Plus currently has more than 4 million subscribers.
Hulu’s board reached out to potential buyers in March, according to sources. The controlling owners Disney and News Corp. have disagreed about the direction the company should take, and have considered buying each other out. DirecTV (NASDAQ:DTV) and Time Warner Cable Inc. (NYSE:TWC) have also bid on the company with hopes that they could add Hulu to their currently offered services for a discount.
Yahoo is the most recent addition to the list of companies bidding for Hulu. Yahoo’s formal proposal submitted to Hulu on Friday comes on the heels of the company’s $1.1 billion purchase of popular blogging site Tumblr. Purchasing Hulu would be in line with Yahoo’s goals to move faster and gain a hipper image.
Given the success of online television and video services like Hulu and Netflix (NASDAQ:NFLX), this bidding war is expected to be an intense one.
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