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DirecTV Said to Bid for Hulu as Guggenheim Digital Joins

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DirecTV Said to Make Hulu Offer as Time Warner Cable Seeks Stake
Pay-television systems are vying for Hulu LLC, which offers a lower-cost option than the video subscriptions on cable and satellite systems. Photographer: Scott Eells/Bloomberg

July 9 (Bloomberg) -- DirecTV made a bid for the online video service Hulu LLC, as did Hollywood Reporter owner Guggenheim Digital and its partner, KKR & Co., people with knowledge of the situation said.

Time Warner Cable Inc. offered to acquire a stake in Hulu, said the people, who sought anonymity because the sale process is private. The suitors join Chernin Group, working with AT&T Inc., in meeting a July 5 deadline for binding proposals. Terms of the offers weren’t known.

Pay-television systems are vying for Hulu, which offers a lower-cost option than the video subscriptions on cable and satellite systems. The website, owned by Walt Disney Co., 21st Century Fox Inc. and Comcast Corp., provides a limited free version of its service on computers and offers an $8-a-month subscription with access to more programs on more devices.

Time Warner Cable, the second-largest U.S. cable TV service, is seeking to become an investor alongside the current owners, offering an alternative to an outright sale of the video service, which had more than 4 million paying customers as of the first quarter.

Deep Pockets

Hulu’s owners are looking for a buyer that will keep spending on shows for the upstart Web-video site. Incumbent pay-TV providers such as Comcast, DirecTV and Time Warner Cable are contending with the growing popularity of mobile and Web-based viewing, and competition from companies including Netflix Inc.

Meredith Kendall, a spokeswoman for Los Angeles-based Hulu, declined to comment as did Robert Mercer, of El Segundo, California-based DirecTV, and Maureen Huff, with New York-based Time Warner Cable.

AT&T operates the U-verse pay-TV service and Chernin Group, producer of “Rise of the Planet of the Apes” film and TV’s “New Girl,” has invested in startups such as Tumblr Inc. and Flipboard Inc. Officials of AT&T and Chernin, which would gain an online outlet for programming, declined to comment last week.

Guggenheim Digital and private equity firm KKR had initially bid separately for Hulu before joining forces. Guggenheim Digital is an affiliate of Guggenheim Partners LLC, the private equity firm running the Hulu auction. In addition to the Hollywood Reporter, the digital arm owns Dick Clark Productions.

Thomas S. Mulligan, an outside spokesman for Guggenheim Digital, had no comment.

The Wall Street Journal reported the joint Guggenheim Digital-KKR bid yesterday.

To contact the reporters on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net; Alex Sherman in New York at asherman6@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net; Nick Turner at nturner7@bloomberg.net

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