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Microsoft Said to Drop Out of Auction for Hulu Online TV Service

Microsoft Corp. (MSFT) is dropping out of the bidding for Hulu LLC, the online video service put up for sale by its media-company owners, according to a person with knowledge of the matter.

Microsoft, based in Redmond, Washington, told Hulu executives last week it wouldn’t continue into a second round, said the person, who wasn’t authorized to talk publicly. The person didn’t rule out Microsoft re-entering later.

Hulu bankers at Morgan Stanley (MS) and Guggenheim Partners met in the past four weeks with Microsoft, which already rents and sells films and TV shows through its Xbox video-game console, to solicit an offer, people with knowledge of the situation said on July 1. The bankers also met with Google Inc. (GOOG), Yahoo Inc., AT&T Inc. (T) and as many as eight other companies, they said.

Elisa Schreiber, a spokeswoman for Los Angeles-based Hulu, declined to comment, as did Frank Shaw, a spokesman for Microsoft.

Yahoo would pay up to $2 billion for Hulu with four or five years of exclusive access to current TV shows and older movies, the Business Insider website reported, citing a person it didn’t identify.

Hulu plans to offer suitors five years of access to shows from its media-company owners, Walt Disney Co. (DIS), News Corp. (NWSA) and Comcast Corp. (CMCSA)’s NBC Universal, including two years of exclusivity, two people with knowledge of the situation said yesterday.

Details of the rights, similar to terms Hulu’s owners considered for an earlier share sale, and other financial data will be provided to bidders who sign a non-disclosure agreement, two people said. Amazon.com Inc. (AMZN), based in Seattle, is unlikely to bid without guarantees of access to shows, one person said.

To contact the reporters on this story: Ronald Grover in Los Angeles at rgrover5@bloomberg.net; Dina Bass in Seattle at dbass2@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

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