Is Hulu Edging in on Netflix?

If Netflix (NASDAQ:NFLX) wasn’t making waves before, it certainly did when Carl Icahn bought a 9.98 percent stake and drove the share price through the roof. Internet television subscription services have been getting a lot of attention as their fate is debated on Wall Street. Analyst opinion on Netflix’s stock is pretty much split right down the middle, with most maintaining a “Hold” rating until actionable insight emerges.

On Monday, Netflix adopted a “poison pill” plan, which establishes a mechanism for the company to resist a takeover. The plan was likely adopted as a result of Icahn’s purchase and for his part, Icahn has called the plan — passed without a shareholder vote — an “example of poor corporate governance.”

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Icahn is likely upset by the move because it’s speculated that he wants see the company sold to a large company like Microsoft (NASDAQ:MSFT), Google (NASDAQ:GOOG), or Amazon (NASDAQ:AMZN). In 2011, Amazon began offering video streaming services with its Prime membership and has been acquiring content ever since. Netflix’s value comes with its massive library and relatively large subscriber base.

Access to quality content is a top concern for services like Netflix. Traditional television networks and content providers have waged their own licensing wars and the fighting has spilled into Internet subscription television. In 2011, Netflix paid $3.9 billion for streaming rights, a move that forced it to increase its subscription cost. Still, the service claims 25 million subscribers. These subscribers and streaming rights are what any company would be analyzing for a takeover.

hulu streams its way to an IPO.Whoever has content is king, and to that end, Hulu — owned by a consortium of companies including Disney (NYSE:DIS) and Fox Broadcasting (NASDAQ:NWS)(NASDAQ:NWSA) — has struck a deal with CBS Corporation (NYSE:CBS) for access to over 2,600 episodes.

The deal gives Hulu subscribers access to classics like “Star Trek” and “The Twilight Zone,” as well as shows like “CSI: Miami.”

In a press release, Scott Koondel, senior VP of Corporate Licensing at CBS, said that the deal “marks another agreement that meets the growing demand for our content on new platforms while establishing other incremental ways to get paid for our library.”

One of the turn-offs involved with Netflix is the cost it pays to maintain its library and the apparently highly-complicated relationship it has with providers. Netflix has arguably been sacrificing smart content acquisition for aggressively expanding its subscriber base overseas, where its current library seems good enough for now.

While Hulu is ostensibly focused on providing current television shows to viewers, it has been steadily building out its library. Access to classic CBS programming is another drop in this bucket and another reason for would-be Netflix subscribers to shop around. There’s something to be said for the value of a company actually being the provision of a service instead of its potential to be acquired.

Other options include Verizon (NYSE:VZ) and Coinstar’s (NASDAQ:CSTR) Redbox kiosk and digital streaming endeavor. A subscription service called “Redbox Instant” would offer customers access to both Redbox kiosks and streaming content. The service is expected by the end of the year and has already signed up studios such as Warner Brothers.

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