Could old connections lead Hulu into the arms of Amazon.com?

LOS ANGELES ― Bids for the online video service Hulu are expected Wednesday, and The Wall Street Journal reports that Amazon.com, Google, Yahoo and DirecTV are considering offers.

Amazon could be an interesting suitor, especially given the company’s plans to expand into tablet computers. (Imagine the gadgets pre-loaded with a Hulu channel). Amazon also has been expanding deeper into online video, inking a deal last month with CBS to stream classic TV shows such as Cheers and Star Trek.

But a Hulu buyout may come with too high of a price tag. The Journal reports that bids could range between $500 million and $2 billion. If bidding goes to the upper end of the range, that would be the largest acquisition in Amazon’s history. (Topping the more than $800 million paid for online shoe retailer Zappos).

Here’s why there’s such a big potential gulf in the bidding prices, according to the Journal:

The often diverging interests of the media owners and Hulu management is a reason the controlling owners decided to explore a sale around June, people familiar with the matter have said. Now the owners expect they will have to decide what sort of rights they are willing to give what sort of buyer, and to address that different buyers may value rights differently, according to one of the people familiar with the matter.

If the digital rights get sorted out, Hulu could make a pretty interesting target. And here’s why:

Hulu CEO Jason Kilar previously worked at Amazon.com, writing the original business plan for the online retailer’s expansion into DVDs and movies. In that role, he reported directly to Amazon.com CEO Jeff Bezos.

Could he soon be reporting to his former boss again?

Certainly, a lot of things would need to be sorted out, and the purchase price would have to make sense. But Amazon may make for one of the more interesting suitors.

And with Google — owner of YouTube — now trying to digest Motorola for $12.5 billion it could be an interesting time for Amazon to put a stake in the sand as it relates to online video.

However, as noted above, Hulu may just be too rich for Amazon’s blood. After all, the company’s cash position stood at just $2.6 billion at the end of the second quarter.

Viacom profit beats Wall Street on cable ads, digital

NEW YORK ― Viacom Inc., parent of MTV and Comedy Central, on Friday reported a bigger-than-expected increase in quarterly profit on strong growth in cable advertising and licensing of TV shows to online sites such as Netflix and Hulu.

Excluding special items, Viacom earned 99 cents per share in its fiscal third quarter, exceeding analysts’ average estimate of 86 cents per share, according to Thomson Reuters I/B/E/S.

Revenue in the quarter, ended June 30, rose 15 percent to $3.77 billion, ahead of the $3.52 billion expected by analysts.

Advertising revenue at its cable networks rose 14 percent to $1.28 billion, while revenue at its affiliates increased by nearly one-fifth to $971 million, boosted by higher digital distribution revenue as well as rate increases to cable and satellite partners.

While healthy advertising growth has been a common feature of the big media companies’ results in the quarter, digital licensing of TV shows to online partners has been another significant driver of profits.

Viacom struck a new deal with Hulu in February and expanded an existing agreement with Netflix in May, helping to boost its bottom line with one-time licensing fees. A similar effect was seen at Time Warner Inc. and CBS Corp.

“Digital distribution is going to be important for all media players and there’s still upside to come from this,” said David Joyce, analyst at Miller Tabak.

At Viacom’s filmed entertainment unit. Paramount Pictures, revenue grew 13 percent to $1.41 billion on the back of higher TV license fees for movies and DVD sales. But movie box office revenue dropped 9 percent as titles “Thor,” “Super 8” and “Kung Fu Panda” fell short of what Viacom had hoped.

Hulu owners seeking best sale value, says Disney’s Iger

LOS ANGELES ― Hulu’s current joint owners are seeking the highest possible value in a sale rather than focusing on who a new owner might be, Walt Disney Co. Chief Executive Bob Iger said Wednesday.

The popular online TV video site is jointly owned by Disney, News Corp., Comcast Corp’s NBC Universal and private-equity firm Providence Equity Partners.

The owners have agreed to put the site up for sale. Disney and News Corp recently renewed new programming licenses to aid that process.

Iger said all the owners are committed to selling the site, but declined to comment on the timing of a deal.

“I don’t think it matters to us, we just need to get the best value,” Iger told Reuters on the sidelines of the Allen & Co. conference attended by some of the biggest names in technology, media and deal financing.

The owners have begun preliminary sales talks with about a dozen potential buyers, including Google Inc. and Microsoft Corp. a source familiar with the situation said last week. .

Hulu expects its number of paid subscribers to top 1 million by summer’s end, earlier than previously forecast, its chief executive said on Wednesday.

Online video site Hulu weighs sale options after approach-source

NEW YORK ― Online video site Hulu has been approached by a potential buyer and is weighing whether to sell itself, according to a person familiar with the matter.

The approach presents another decision point for the jointly owned company, which has shown an unclear strategy and last year spent six months planning an initial public offering before dropping the plan.

The development has encouraged the Hulu board to engage with the banking community to help handle the approach from the “serious” buyer and other potential offers, the person said.

Hulu is jointly owned by News Corp., Walt Disney Co. Comcast Corp.’s NBC Universal and private equity firm Providence Equity Partners.

The acquisition approach has not been made by any of the current equity holders, the person said. The buyer is expected to be either a strategic buyer or private equity. No decision has been made about whether the board is prepared to sell the company or not.xxHulu is best known for offering free online access to popular TV shows like ‘The Office’ and ‘Modern Family’ from its strategic owners but last July launched a paid subscription service as a way to expand its offerings to include TV shows from other programming partners like Viacom.

Though Hulu has been immensely popular with users, its owners have come under increasing pressure from their cable and satellite distribution partners reluctant to pay premium dollars to carry content that is being offered for free on the Web.Added to that has been the unwillingness of many program makers to put their shows up on a free site with an advertising model that is yet to prove itself with premium video.Hulu Chief Executive Jason Kilar said in April that Hulu is on track to nearly double its revenue to $500 million and bring its paid subscriber count to more than 1 million this year.However, Hulu’s stiffest competition online is from Netflix Inc., which now has more than 20 million paying subscribers in the United States.Last year, Hulu had been planning to raise $200 million to $300 million in a public offering that would have valued the company at about $2 billion. But the company backed out of the plan in favor of a focus on new subscription models.A Hulu representative was not immediately available.