Wednesday, September 7, 2011

Is a Google Acquisition of Hulu a DOJ Issue, Too?

We all know that Hulu's partners would like a little return on their investment. And with Hulu's announced sale, the list of buyers are well known. "Hulu’s corporate owners are currently mulling bids from three would-be buyers: Amazon, Yahoo, and the Dish Network. And then there’s Google." AllThingsD is reporting that Google is willing to pay more than the others to acquire Hulu.

I have speculated in previous blogs that a Hulu deal may require more long term content deals and Google seems to agree. Should Google be an active buyer, the question is, should the Department of Justice be equally concerned about one company owning the majority share of online video? Like their suit against AT&T getting to big and monopolistic, is the same true for Google? Does this type of acquisition fan the flames for more monopolistic drama?

You Tube already has the biggest share of usage and I wonder if real synergy actually exists by adding Hulu. Couldn't You Tube simply make the same deals without also buying the Hulu platform. And Google already has potential antitrust drama with its planned Motorola. With all their efforts to succeed with that acquisition, the timing may not be right anyway to try and also acquire Hulu.

Still the rumors are out there and it is fun to speculate what will happen next. For me, I think I will guess that Dish or perhaps Yahoo are the final buyers.

Is Yahoo Selling Or Restarting

The news of Carol Bartz's firing may have been for lack of growth of Yahoo's revenue and brand, but the hiring of "strategic advisers" does not sound promising either. My brother-in-law said something to me this weekend that made me sit up and think. As a hedge fund guy, he noted that anytime a company brings in a "suit", the attention is never on innovation, but rather on reducing costs to improve profits. He said that "suits" don't take risks because they are only focused on the ROI. And he cites great examples of leaders and companies that take risk without worrying about the return and when they leave, the lack of risk leads to lack of change and a declining future. When My Space founders sold to News Corp, those entrepreneurs left and My Space fell into disrepair. Apple's growth has been the result of Jobs taking risks without worrying about research and returns. It seems instinct does matter.

So what will the future of Yahoo be post Bartz? I am not saying that she was that kind of leader, but with her gone, can "strategic advisers" be risk takers or more likely "suits". According to AllthingsD, "Yahoo is preparing to hire investment bankers and other strategic advisory firms, said sources close to the Silicon Valley Internet giant, as it seeks to figure out what to do next at the company." Other reports have Yahoo putting itself up for sale. That seems to be a likely outcome for investment bankers. New leadership would more likely reinstall in Yahoo its adventurous spirit and risk-taking.

"The company will also be conducting a search for a CEO, which will be difficult because any new top exec will want to be part of such a company-wide review." Should that be the case, that leader must focus on future not ROI, on innovation, not simple profits, on growth strategies, not expense reductions. Yahoo is a strategic challenge before it, but has opportunities galore to succeed. Take risks, hire out-of-box, use content to drive great partnerships and re-establish itself as the great aggregator of content. Don't sell, buy.