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Providence Said to Sell Hulu Stake to Disney, News Corp., Comcast for $200 Million

With No IPO In Sight, Providence Cashes Out, and Hulu Staff Cashes In

Published on .

Hulu.com owners Walt Disney Co., Comcast Corp. and News Corp. are close to buying out Providence Equity Partners Inc.'s stake at a price valuing the company at about $2 billion, said two people with knowledge of the matter.

Jason Kilar, CEO of Hulu, speaks at the Ad Age Digital Conference in New York.
Jason Kilar, CEO of Hulu, speaks at the Ad Age Digital Conference in New York.

Providence is selling its 10 percent share in Los Angeles- based Hulu for about $200 million after investing $100 million when the venture began in 2007, according to the people, who weren't authorized to talk publicly.

"This would be the optimal outcome," David Bank, an analyst at RBC Capital Markets in New York, said in an interview. "The real value of Hulu will be discovered on a longer time frame than what's likely optimal for Providence."

The companies will let employees of Hulu, including CEO Jason Kilar, sell shares of the closely held online TV service, the people said. This month, Hulu said its $8-a-month Hulu Plus service, which lets users view an expanded library of shows on game consoles and mobile devices, had more than 2 million subscribers.

Comcast's NBC Universal, which relinquished its Hulu board seat and oversight as part of federal approval of its acquisition by the cable company, hasn't been involved in the talks, they said. That complicates its role in the purchase.

Elisa Schreiber, a Hulu spokeswoman, declined to comment, as did Andrew Cole, an outside spokesman for the Providence, Rhode Island-based private equity group.

Owners' Stakes
Disney, News Corp. and NBC Universal each hold Hulu stakes of about 27 percent, while employees own about 10 percent, the people said. Disney and News Corp. have representatives on Hulu's board.

The owners canceled a sale last year after previously putting off plans for an initial public offering.

Hulu is building a roster of original programs to persuade advertisers to make bigger commitments and attract new ones. The site is offering ad buyers the ability to target viewers by demographics, geography and by viewing device. Earlier this year Hulu said advertisers would only pay for ads that had been viewed start to finish.

The service announced four new original series this month in meetings with advertisers.

Exclusive Shows
"We Got Next" and "The Awesomes," an animated series by "Saturday Night Live" member Seth Meyers, will start this year and in 2013, Hulu said. Release times for "Don't Quit Your Daydream," from "Entourage" star Adrian Grenier, and "Flow" weren't provided.

Hulu plans to spend $500 million on TV shows and films in 2012, Kilar wrote Jan. 12 on the company's website. That's up from $300 million projected a year ago, according to an April 2011 post.

Providence this week acquired a $200 million stake in the Chernin Group, the entertainment company founded by former News Corp. Chief Operating Officer Peter Chernin. The private equity firm's media portfolio also includes Univision Communications Inc. and Yankees Entertainment and Sports Network.

-- Bloomberg News --

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