Monday, October 11, 2010

Hulu IPO Would Benefit Some

GE, Fox, and others built this online content distribution service from scratch and appear ready to hand it off to the market place with a stock offering. "Hulu is ready to raise $200 million to $300 million in a deal valuing the company at about $2 billion, and could file a prospectus with the U.S. Securities and Exchange Commission before the end of the year, one source said." It also is an opportunity for its owners to reduce their ownership stake by selling stock to the public, too. So is the motivation to raise more capital and deliver an exit strategy.

Hulu's latest gambit has been to add a subscription package to its service, thus adding a second revenue stream to add to its ad model. As a private company, these figures don't need to be shared; as a public company, we would also be able to peek under the velvet curtain. An early IPO would come with the explanation that since the subscription service is new, a slow start could be easily explained. At the same time, investors would be able to quantify their ownership and perhaps even reduce their level of holdings. And if the Hulu model is shaky, a good time to take the money and run.

Will Hulu be a profitable company? Or is this IPO an opportunity to cash out their investment and play with just house money? Just wondering.