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DirecTV, Chernin-AT&T Said to Offer $1 Billion for Hulu

DirecTV and a partnership of Chernin Group and AT&T Inc. each offered about $1 billion for online video service Hulu LLC, according to people with knowledge of the situation.

Time Warner Cable Inc., which offered to acquire a stake in the website, remains an alternative for Hulu’s board, which is overseeing an auction, said the people, who asked not to be named because the sale process is private. Guggenheim Digital, which submitted a joint bid with private equity firm KKR & Co., was eliminated yesterday as a potential buyer, they said.

Pay-television providers are vying for Hulu, which represents 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., offers a limited free version of its service on computers and sells 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.

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.

Startup Investments

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

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.

Charles Sipkins, a spokesman for Chernin Group, declined to comment.

Guggenheim Digital and KKR 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.

Michael Sitrick, an outside spokesman for Guggenheim Digital, had no comment.

CNBC reported Guggenheim Digital’s exit from the Hulu auction earlier yesterday.

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