Hulu and its corporate parents are accepting final bids for the online video service on Friday, and according to several individuals close to the process the field has whittled down to three companies: Guggenheim Digital Media, Chernin Entertainment/AT&T and DirecTV.
But keep your eye on DirecTV.
Here's why: Chernin is bidding with AT&T, but the telecom giant is driving that bid, according to one knowledgeable individual. Hulu management is apparently wary of being owned by AT&T.
Observers of the M&A landscape are skeptical that Guggenheim has the intention to step up to the desired $1 billion selling price.
That leaves DirecTV. Buying Hulu would give the satellite service a major foothold in the digital world.
Several individuals warned that senior Hulu executives would bolt the company if a legacy telecommunications brand bought it, the fear being that the streaming service would lose its distinct identity and become a tool for a traditional media company to maintain its position.
The official deadline for final, binding bids was 2 p.m. Pacific Standard Time on Friday.
The one wild card in all this is Time Warner Cable, which initially bid for just a portion of the company. One individual close to the negotiations said not to count them out, a sentiment echoed by a few others who didn't know what to make of TWC's persistence.
21st Century Fox (formerly News Corp.), Disney and Comcast (which has no voting say) put Hulu on the block earlier this year and accepted the first round of bids in mid-May. Though they have tried to sell Hulu before, this is considered the most serious effort to date.
The initial round of bidders included private equity firms Silver Lake Partners and KKR, Yahoo, Chernin and AT&T, Guggenheim, DirecTV and Time Warner Cable.
Yahoo’s first bid was the lowest of the bunch, and the company all but left the race, according to several individuals with knowledge of the negotiations.
AllThingsD reported Friday that Silver Lake, which owns one-third of talent shop WME, was not going to submit a second bid. Little has been heard about KKR since its initial bid, and nobody suggested them as a likely buyer. Both of those companies could still be involved in any deal as a partner.
That leaves four, all of whom have different motives and bring different advantages, as we detailed previously. Anyone who wants to buy Hulu will have to grapple with the rising cost of acquiring shows for the site, and a number of other conditions listed on a content licensing agreement that one individual described as "onerous."