CUPERTINO (CBS/AP) — Apple Inc. is in talks to potentially bid for video-streaming service Hulu, a person close to the situation said Friday.
The person, who said Apple is among several companies interested in Hulu, spoke on condition of anonymity because they are not authorized to talk about the matter. In early July, search giant Google Inc. was said to be among about a dozen companies in talks to potentially buy Hulu. Yahoo Inc. is also believed to be interested.
Hulu, which is owned by Disney, News Corp., Comcast Corp. and Providence Equity Partners, started presenting its financial information to interested bidders late last month, after an unsolicited offer prompted its board to look for other offers.
The online video service streams movies and TV shows from broadcasters ABC, Fox and NBC to computers and – for a monthly fee – to a number of Web-connected mobile devices such as smartphones and tablet computers. It expects its paid service, Hulu Plus, to have over a million subscribers by the end of the summer and its CEO, Jason Kilar, has said it is profitable.
For Apple, an acquisition of Hulu could bolster its iTunes store, which provides videos users can rent or buy, but does not currently stream content or offer a subscription streaming service. It could also help the Cupertino-based iPhone and iPad maker as it spars with competitors such as online video pioneer Netflix Inc., which offers both a DVD-by-mail and video streaming service, and Google Inc.’s popular YouTube video streaming site, which streams free, ad-supported videos and rents movies from several major studios.
Apple has plenty of available cash for making a deal. At the end of the last quarter, its horde of cash and securities totaled $76.2 billion.
And Apple CEO Steve Jobs, who is currently on medical leave, already has a connection with one of Hulu’s owners: He’s The Walt Disney Co.’s largest shareholder and a member of its board.
However, if Apple – or any other company – were to buy Hulu, there’s no guarantee it would be able to continue streaming content from the company’s current owners. A buyer may have to reach a new deal in order to license the content.
Forrester Research analyst James McQuivey said key to any deal involving Hulu would be an agreement for the continued streaming of its current video content. And if, as many analysts expect, Apple is developing its own TV set, the addition of Hulu would put the company in an “amazingly powerful position,” he said.
Hulu isn’t interested in just exploring possible offers. Earlier this month Disney CEO Bob Iger told reporters that Hulu’s owners are “committed to selling.” He spoke on the sidelines of an annual gathering of top media executives hosted by investment bank Allen & Co. in Sun Valley, Idaho. Iger’s comments were reported by Bloomberg News and The Wall Street Journal.
BGC Partners analyst Colin Gillis said it makes sense that Apple would take a meeting with Hulu, but since part of Hulu’s business is ad-supported it’s contrary to Apple’s current model of buying or renting videos. It makes more sense for Google or Yahoo Inc. to buy Hulu, he said.
“They’re not the most logical buyers,” Gillis said of Apple. “Maybe peeling off a couple bills to keep it out of the hands of Google makes some sense.”
Still, as with any deal, he noted that whether or not it makes sense depends on the purchase price.
Apple’s interest in Hulu was reported earlier by Bloomberg.
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