Hulu Bidding War Heats Up

While the bidding fracas over Hulu begins to take on the dimensions of an all-out war, it appears that the brand's suitors are unwilling to pay anywhere near its $2 billion valuation.

Yahoo announced it would throw its hat into the ring, and the reported bid (between $600 million and $800 million) is the largest that has been leaked thus far. Trouble is, it only accounts for between 30 percent to 40 percent of Hulu's year-ago value. Marissa Mayer's gambit comes on the heels of Yahoo’s $1.1 billion investment in the revenue-challenged microblogging site Tumblr. Other Hulu suitors include DirecTV, Time Warner Cable and the Chernin Group, as well as the private equity firms Guggenheim Digital, KKR & Co and Silverlake Partners. One factor in the declining valuation of Hulu is its loss of market share. Not only has Hulu been dominated by the 800-lb. gorilla that is Google, but it is also losing ground to ad-supported video services such as BrightRoll, LiveRail and Adap.TV.