Report says Apple could be looking to acquire Hulu

Jul 22, 2011
Finance

How is this for a big rumor going into the weekend. Apple (AAPL) could be looking to acquire streaming video service Hulu, according to reports. The story comes from Bloomberg, which claims it has it on good (albeit anonymous) authority from two trusted sources that Apple is currently discussing the possibility of buying Hulu from […]

How is this for a big rumor going into the weekend. Apple (AAPL) could be looking to acquire streaming video service Hulu, according to reports.

The story comes from Bloomberg, which claims it has it on good (albeit anonymous) authority from two trusted sources that Apple is currently discussing the possibility of buying Hulu from NBC, Disney (DIS) and News Corp. Snagging the Internet-based video service, which provides streaming movies and TV shows to its users over the web, would give Apple ammunition to take on streaming movie giant Netflix, Bloomberg reports.

Apple has been working to increase its presence as a content provider for video recently, adding video rentals to its iTunes store as well as support through its Apple TV set-top device. Apple TV is a solid service, but requires the $100 box and the purchase or rental of movies on a case-by-case basis – thus limiting its appeal and the number of customers it currently has. It also doesn’t provide a subscription service, which Hulu and Netflix (NFLX) both do.

Unclear where Netflix fit in?

Meanwhile, Netflix is a massive service that is compatible with tons of devices, including Apple’s own iPad and iPhone. With Hulu under its belt (which also is available on a number of devices and is spreading rapidly), Apple could provide a more fine-tuned, subscription-based alternative to Netflix with an Apple slant that will automatically have access to its huge customer base; plus, according to Bloomberg, Hulu’s media company owners are “offering suitors a five-year extension of program rights, including two years of exclusive access.” That means an Apple Hulu service would have access to quite a bit of programming as soon as its produced, unlike Netflix, which generally has to wait to acquire the writes to programs and movies after they’ve been released on DVD.

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Hulu and Apple aren’t commenting on the possible deal, but the streaming service wouldn’t come cheap. Bloomberg estimates it would cost upwards of $2 billion, although Apple just posted another quarter of record profits and revenue and is holding about $76 billion, Bloomberg reports.

But regardless of whether Apple is the company that it goes to, it sounds like Hulu is going to be sold. Here’s a quote from Bloomberg:

“Disney Chief Executive Officer Robert Iger told reporters July 6 at the Allen & Co. conference in Sun Valley, Idaho, that Hulu’s owners are committed to selling the company. Jobs is Burbank, California-based Disney’s biggest shareholder.

“Morgan Stanley and Guggenheim Partners, bankers for Hulu, have elicited interest from Google,Yahoo Inc., AT&T Inc. and other companies, people said earlier. Microsoft dropped out of the bidding, a person with knowledge of the matter said this week.”

If the sale works out for Apple, it could give the company a serious boost in content distribution. Just how it would roll that content into its existing iTunes offerings isn’t clear, but with Apple in its corner, Hulu could become a serious force against Netflix – mostly because Apple has the money to secure even better content distribution deals. Netflix is already battling issues customers have with its streaming service and the lack of current content, and it just announced a price hike to Internet outrage. An Apple acquisition of Hulu could be perfectly timed.

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Phil Hornshaw

Phil Hornshaw is a freelance writer, editor and author living in Los Angeles, dividing his time between playing video games, playing video games on his cell phone, and writing about playing video games. He’s also the co-author of So You Created a Wormhole: The Time Traveler’s Guide to Time Travel, which attempts to mix time travel pop culture with some semblance of science, as well as tips on the appropriate means of riding dinosaurs. Check out his profile.

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