08 September 2011

Google Bidding In Big For A Chance To Acquire Hulu.

 Google Logo              Hulu Logo

Peter Kafka over at  AllThingsD got a great post on the news of  Google going in bidding for Hulu. From the reports i have read on this news. He is the only one that points out how Google's bid is not a straight forward one. Meaning that yes, Google is bidding for Hulu but for a whole other kind of deal. A bigger deal.

The question then is why?

Because Google perfectly knows that it is not the favorite company to bid in for Hulu. The content holders in Hulu are not exactly friends with Google. If they could, all of them would publicly say they disdain Google. But disdain even more Google entering the TV biz. Things they said by action only when they cut out their content from Google TV. Both the stand alone content by network website and via Hulu.

Many then went up in arms saying that that was a jerk move from the content holders. All but forgetting that the first jerk move was from Google by not negotiating with the content holders to begin with.

Hulu content members position at this point is one of sheer apathy for what they believe are not serious enough bids. The way they have shown this emotion is by leaking out that they were thinking of just don't selling at all.

I originally put that Hulu bidding had to be around 1.5 to 2 billion before the numbers were actually reported. Later on these were the numbers being reported as the bids. What that proved was that those bidding did their value projections right on. But maybe too right-on for Hulu partners taste. I suspect that just because Hulu is in essence a Tech Startup kind of property.  they expected a Tech Startup kind of valuation.

How is that?

In common aggressive (because many are gunning for it too) business acquisitions, you take the projected net profit a company (if private) is going to make for the year you are in, Then you multiply it by 3 -- or 2 when there is no need to be too aggressive -- and sum whatever money and assets value the company got into a number. Or in other cases you take out money from that number if the company got debt. It is clear that Hulu bosses wanted a 5x multiplication instead. As it is done with many many Tech Startups. And that is where i think they are insane because Hulu while a tech property, it is still a very simple kind of business and one that comes with a immense caveat:

Everything depends on content rights agreements and the terms for these. And because of that volatile high risk and glaring caveat that fights off with whatever potential Hulu has. There could just never be a Tech Startup kind of valuation.

What is to Google to own Hulu?

Everything if they want to Google TV to have a chance in the short term . But only if they can get very long term content rights agreements, with solid terms on them.

 How much then is Google probably be offering for Hulu as a way to lure the Hulu Owners in?

My educated guess? Twice of what any of the two figures that have been bid already. Making theirs a out-of-track 3 to 4 billion dollars power bid.

Should Hulu go with it?

HELL NO

Google is not really a partner for they to get in with. It would be better to use this out-of-track power bid to make those making regular bids to rise their game or go home. And also to cause a counter out-of-track power bid from Microsoft.

Otherwise their two only wise and predictable moves would be to add another billion to what Google is offering in order to sell or just play to fake honor and say that Google bid goes against the terms they would like to sell in and close the "auction" declaring no winners.

Now let's see what Hulu bosses do and if this Google move does brings out Microsoft into the game.

Hey, that cliffhanger alone is better than your run of the mill soup opera for those interested in tech news.

Linkage

Google Goes Big With Its Hulu Bid

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