News Corp., Disney pull Hulu from auction block

In a minor setback for Dish Network (Nasdaq: DISH), DirecTV (Nasdaq: DTV) and other companies vying to acquire Hulu, the owners of the popular online video provider said Thursday that they scrapped plans to sell the company.

Image source: Hulu

"Since Hulu holds a unique and compelling strategic value to each of its owners, we have terminated the sale process and look forward to working together to continue mapping out its path to even greater success. Our focus now rests solely on ensuring that our efforts as owners contribute in a meaningful way to the exciting future that lies ahead for Hulu," owners News Corp.  (Nasdaq: NWSA), Disney (NYSE: DIS) and Providence Equity Partners said in a joint statement.

While Comcast's (NYSE: DIS) NBCUniversal also owns an equity stake in Hulu, NBCU and Comcast weren't included in the statement. That's not unusual, since as a condition of their merger, the Dept. of Justice forced Comcast to relinquish its management rights in Hulu. "Without such a remedy, Comcast could, through its seats on Hulu's board of directors, interfere with the management of Hulu, and, in particular, the development of products that compete with Comcast's video service," the DOJ said in January.

The decision to pull Hulu from the auction block comes about one month after Hulu disclosed that it had surpassed 1 million paid subscribers for its Hulu Plus subscription service. The paid subscription allows viewers to watch commercial free TV shows and movies on a PC and through over-the-top video set-tops such as Microsoft's (Nasdaq: MSFT) Xbox, Roku and the Boxee Box.

Hulu owners News Corp. and Disney likely saw that Hulu--which has also seen significant increases in traffic and ad revenue since it first debuted in 2007--was worth more to them as a long-term investment. And as analyst Will Richmond notes in VideoNuze, with Amazon (Nasdaq: AMZN), Apple (Nasdaq: AAPL), Google (Nasdaq: GOOG) and Microsoft battling in the mobile video sector, it may be too soon for Hulu's owners to sell distribution rights to online video content to another company. "Ceding distribution rights now, when billions of dollars of licensing fees loom just  ahead, would be a serious miscalculation," Richmond said.

For more:
- see statement from Hulu owners
- VideoNuze has this story

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