Yahoo! and Google are the most likely to buy Hulu. Currently, Yahoo! is operating an acquisition-based business mode. Google could also be a contender, as it previously offered to buy the company just two years ago.
Yahoo! still has $4.1 billion in short-term investments and cash on its balance sheet, and it is projected to generate around $1.25 billion in profit this year. So it can easily add to the size of its bid just from the income it generates from operations. Yahoo! may crank up the size of its bid to push private equity and cable operators out of the room.
Some say Yahoo! needs this deal with Hulu, as it doesn’t own a truly compelling web property in the video space. Thus far, creating video streaming under the Yahoo! umbrella has been unsuccessful, as Yahoo! Screen has failed to garner a substantial user base. Yahoo! is fairly compatible with Hulu, and it's highly probable Hulu's management would like a deal with Yahoo!.
If Yahoo! were to succeed in acquiring Hulu, it would be Marissa Mayer’s best acquisition to date as it gives the company a real foothold in paid-for content streaming.
Yahoo! has made a billion dollar bid for Hulu. The company has plenty of cash to make a billion dollar bid after selling half of its take in Alibaba for around $7 billion. While it has been using that cash to make small acquisitions, it also just inked a billion dollar deal to buy Tumblr.
Tumblr, a photo and media focused blog site, is a much better fit than Hulu would be. Not only does Yahoo! already have experience in the photo space, but the service doesn't come with legacy baggage. While new CEO Marissa Mayer has been deftly using acquisitions to further her turnaround effort, Hulu would pull the company off on a tangent. And the content providers who currently own Hulu would likely balk if she tried to turn the service into a more modern product by killing ads, increasing content, or trying to make content more timely.
Yahoo! is increasingly looking like it has long-term appeal again, which is why the shares have been heading higher. It's a good option for aggressive investors looking for a turnaround play. That said, the company's top line has yet to turn higher, though it has appeared to stabilize to some degree. Caution is still warranted.
The addition of Tumblr, which notably increases the company's ad network, should be a big help. While investors might cheer a Hulu purchase, it has too much baggage for an easy integration.