Hulu owners Walt Disney Co. (NYSE:DIS), Comcast (NASDAQ:CMCSA), and News Corp. (NASDAQ:NWSA) are close to buying out Providence Equity Partners’ 10 percent stake in the streaming video service for $200 million, twice what the firm invested when the venture began in 2007, according to two people with knowledge of the discussions. The deal values Hulu at $2 billion.
The companies will also allow employees, including Hulu CEO Jason Kilar, to sell some shares of the streaming company, according to sources, who weren’t authorized to talk publicly. Hulu spokeswoman Elisa Schreiber and Andrew Cole, an outside spokesman for Providence Equity Partners, both declined to comment.
Hulu’s four owners initiated but then ultimately canceled a sale last year after previously having put off plans for an initial public offering, clearly struggling with what to make of their platform. This month, Hulu said its $8-per-month Hulu Plus service had more than 2 million subscribers. Hulu Plus has a larger library of ad-free content than does Hulu.com, which allows users to watch free ad-supported videos.
The Hulu Plus service is the entertainment companies’ answer to Netflix (NASDAQ:NFLX), which still has a larger library of streaming titles, but does not have access to recently-aired programming, something that gives Disney, Comcast, and News Corp. a leg up, as between them they own three of the nation’s four major networks: NBC, ABC, and Fox. The fourth, CBS, is owned by CBS Corp. (NYSE:CBS). Disney also owns ESPN and The Disney Channel. Comcast owns E! Entertainment Television, Style Network, G4, The Golf Channel, and NBC Sports Network. And News Corp. owns FX, National Geographic Channel, Fox News, and a host of other cable channels.
Like Netflix, Hulu is building its roster of original programs in an effort to persuade advertisers to make bigger commitments, and to attract new ones. The site offers advertisers the ability to target viewers by demographic, and allows viewers to decide whether ads are relevant to them, tailoring their ad-viewing experience in a much more effective way than has been done in the past with television programming. Hulu also promised advertisers earlier this week that it would only charge them for ads that had been viewed from start to finish.
Hulu announced four new original series in April in meetings with advertisers: We Got Next, The Awesomes, Don’t Quit Your Daydream, and Flow. Hulu will spend $500 on TV shows and films in 2012, Kilar wrote on the company’s website in January.