PRIVATE EQUITY FIRMS Silver Lake Partners and Kohlberg Kravis Roberts (KKR) have reportedly joined Yahoo and four other outfits bidding for video streaming service Hulu.
Hulu, which is owned by Disney, News Corporation and Comcast, has been holding a secret auction to sell itself. According to reports, Yahoo put in a bid for the service while private equity giants Silver Lake Partners and KKR have made separate bids.
Yahoo announced last week that it had made a $1.1bn purchase of photo blogging service Tumblr and previously tried to buy French video streaming website Dailymotion, however that deal has stalled. But Yahoo won't be alone in trying to buy what is arguably the third most important video streaming service after Youtube and Netflix.
Although details of the deals reportedly posted by Silver Lake Partners and KKR are not available it is widely reported that one suitor, Chernin Group has put forward a deal that values the firm at $830m. Given that the firm claims to have advertising revenue close to $700m last year, that figure seems a reasonable starting point.
However given that Hulu has attracted a gaggle of big name bidders in its auction, it is likely that the price will increase as the bidders try to get hold of the only major video streaming website on the market. With Google unlikely to let go of Youtube any time soon and Netflix doing very well for itself, Hulu is perhaps the only chance to get a significant piece of the lucrative video streaming market.
Yahoo's appearance in the Hulu auction is not altogether surprising, as unlike rival web firms, it doesn't have a popular video streaming service, meaning it cannot offer advertisers the chance to display advertising on video that typically commands higher rates.
However if Yahoo CEO Marissa Mayer wants to get her hands on Hulu she will have to stump up close to another billion dollars. µ