Is Time Warner Cable Trying to Buy Hulu, Too?

Yahoo! Inc (NASDAQ:YHOO) may have some competition when it comes to trying to purchase Hulu. Reports are suggesting that Time Warner Cable (NYSE:TWC) might also want a piece of the pie, and it’s not certain just how that pie could be divvied up and who can have some.

Last week, AllThingsD reported that numerous sources close to Yahoo’s dealings said Yahoo Chief Executive Officer Marisssa Mayer had met with some of the top executives from Hulu. It was already clear that Yahoo wanted to increase its video presence and was willing to pay for it, as it had previously attempted to buy a majority stake in France Telecom’s Dailymotion service for $300 million. It’s also been suggested that Hulu’s owners were looking to sell, so things quickly added up.

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Now both Bloomberg and Dow Jones have reported on Time Warner Cable’s interest in getting a share of the company. Currently, Walt Disney Co. (NYSE:DIS), News Corp. (NASDAQ:NWSA), and Comcast Corp. (NASDAQ:CMCSA) each hold about a one-third stake in Hulu — though Comcast has no ability to make management decisions — and they could let Time Warner Cable or Yahoo buy in and split the stakes evenly, sell off the whole company, or have one of the companies buy out another company’s stake.

People familiar with the matters said in March that Disney and News Corp. were in disagreement over Hulu’s future direction, and one could potentially buy out the other’s stake. Given that the main shareholders are also major media producers, any of them leaving could cut down on the content that is vital for Hulu.

One concern for Yahoo was over the content, as the suggested purchase deal would only give Yahoo two to three years of rights to the video content of the other companies. Buying in and joining the other companies as a major shareholder might make the most sense, and sounds like it may be the route Time Warner Cable might be considering.

Hulu could have great value for Time Warner Cable, as it would allow it to expand its distribution channels beyond the boundaries of in-home services. Hulu already has over 4 million subscribers. It could also make business tricky, as it might end up partnered with Comcast — a major rival — in the Hulu business, and Comcast may be able to get in on deals that Time Warner Cable makes, disturbing the natural competition between the two companies.

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Time Warner Cable’s shares had bumped up 1.1 percent Thursday morning, and it may have been in response to the suggestions of a Hulu buy-in, but they turned around shortly after, dipping down as much as 0.5 percent before noon.

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