Hulu’s Owners Said to Offer Bidders Five-Year Program Extension

Hulu LLC, the online video service seeking bids, plans to offer suitors five years of access to shows from its media-company owners, including two years of exclusivity, two people with knowledge of the situation said.

The extended terms would provide a new owner with continued access to programs from owners Walt Disney Co., News Corp. and Comcast Corp.’s NBC Universal, said the people, who weren’t authorized to speak publicly.

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. Inc., based in Seattle, and Microsoft Corp. are unlikely to bid without guarantees of access to shows, said people familiar with the companies’ discussions who weren’t authorized to talk publicly.

During the exclusivity period, TV networks would still be allowed to post shows on their own sites, said one of the people. There would also be exceptions for on-demand services offered by pay television operators, the person said.

Elisa Schreiber, a spokeswoman for Los Angeles-based Hulu, declined to comment, as did Julie Henderson, a News Corp. spokeswoman. Kathy Kelly-Brown, an NBC Universal spokeswoman, and Disney’s Zenia Mucha didn’t answer requests for comment.

Morgan Stanley and Guggenheim Partners, Hulu’s bankers, have met with 10 to 12 potential bidders including Mountain View, California-based Google Inc., Sunnyvale, California-based Yahoo Inc., Redmond, Washington-based Microsoft and Dallas-based AT&T Inc., people familiar with the process said last week.

Seeking Bidders

Disney Chief Executive Officer Robert Iger told reporters July 6 at the Allen & Co. conference in Sun Valley, Idaho, that Hulu’s owners are committed to selling the company.

The owners, which include Providence Equity Partners, chose last month to proceed with a sale after being approached by a possible acquirer. Hulu, which didn’t go forward with an initial public offering that may have given it $2 billion in market value, said it will exceed 1 million subscribers paying $7.99 a month by the end of August.

The company may approach $500 million in revenue in 2011, CEO Jason Kilar said April 4 on Hulu’s website, citing trends at the time.

Hulu’s tentative agreements for renewed rights to shows from Disney’s ABC and News Corp.’s Fox will increase the number of commercial minutes in current season episodes at the website, people with knowledge of the arrangements said June 24.

Comcast, required by U.S. regulators to give up Hulu oversight as a condition of its NBC Universal acquisition, will likely agree to terms negotiated by its partners, said one person.

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