Is Apple negotiating to make Hulu part of its growing online empire? According to new reports, the Cupertino, Calif.-based company is considering such a bid.
A report Friday by Bloomberg News Service said Apple, with more than $76 billion on hand, is in early talks to acquire the site, which is owned by several major networks and studios and has a large library of TV episodes and movies. Bloomberg cited "two people with knowledge" of the matter, although they weren't named because, according to the news service, they aren't authorized to speak publicly.
The Price: More Than $2 Billion
Apple, whose holdings include the industry-dominant iTunes, recently ventured further into online content storage and management through its new iCloud service. Acquiring the three-year-old Hulu would give the company access to Hulu's library, as well as an existing subscription service.
Hulu owners Walt Disney Co., News Corp., and NBC Universal ave said they want to sell the company. They have reportedly offered would-be buyers a five-year extension of rights to their programs, including two years of exclusive use. Apple CEO Steve Jobs sits on Disney's board.
The price for the popular site could be more than $2 billion, according to some analysts. Investment banks Guggenheim Partners and Morgan Stanley have been retained to manage the sale.
One of the reasons mentioned that the owners want to sell is that the site has become too popular and is starting to undermine traditional television models. Satellite and cable providers, in particular, have complained that the same programs they buy are available free on Hulu.
Not 'A Good Fit'
Michael Gartenberg, research director at the Gartner Group, said there have been "reports of everyone from Google to your next-door neighbor buying Hulu." Amazon.com, AT&T, Verizon and Yahoo have also been mentioned as expressing interest.
He wasn't surprised that Apple is being mentioned as a possible suitor, since it's a large presence in the content and content-delivery business.
But, Gartenberg said, "the idea of Apple buying Hulu doesn't seem like a good fit." He noted that, while Apple would get a functioning subscription service, it could set up its own subscription service alongside its rental and purchase options without spending $2 billion. He also pointed out that at least some of the same content already exists on iTunes.
Hulu includes ads in its free programs, which are offered on a limited basis, and Hulu Plus, offering a wider selection, is available at $7.99 monthly. Apple's TV shows rent for 99 cents, and its HD films for $4.99. In the ad industry, the site has gained a reputation for being particularly innovative in how it presents advertising to viewers, such as offering users the opportunity to choose which ads they want to see.