How to avoid some common pitfalls when doing business online

Christina D. Frangiosa, attorney, Semanoff Ormsby Greenberg & Torchia, LLC

Christina D. Frangiosa, attorney, Semanoff Ormsby Greenberg & Torchia, LLC

Anything published online lasts forever, so it is important to set the right tone for your company’s online communications and to mean what you say from the outset. You might try to retract or amend these public statements, but it is relatively easy to find prior versions, thus causing embarrassing or false statements to not truly disappear, says Christina D. Frangiosa, an attorney at Semanoff Ormsby Greenberg & Torchia, LLC.

“It’s safer to wait to publish materials to the Web until you have confirmed they are accurate, not misleading and not based on someone else’s intellectual property rights,” she says. “False statements about either your company’s products or about a competitor or its products could lead to lawsuits claiming false advertising, unfair competition or commercial disparagement. Misuse of the company’s or a competitor’s intellectual property can result in a loss of rights, or even, perhaps, an injunction or damages.”

Smart Business spoke with Frangiosa about avoiding legal mistakes on the Internet.

How should you handle statements about your competitors and their products?

Avoid knowingly making false statements about a competitor or the quality of its products. Publishing statements about them without appropriate due diligence could result in negative publicity for your company, corrective advertising costs or monetary damages.

How does cutting and pasting content from other websites create copyright concerns?

Many users have a common misconception: If they can find ‘free’ content on the Internet, then they must be able to use that content for any purpose. Just because content may be freely accessible does not mean that you have a right to use it. Copyright holders have exclusive rights, including the ability to choose to publish or not to publish their works; posting something on a public website constitutes publication. Copying and pasting someone else’s images, text or video into your company’s website without permission could expose the company to copyright or trademark infringement suits, among other claims.

How might misuse in social media undermine company trademarks?

Companies today use their websites and social media to communicate about their products or services. Specific employees may be assigned to prepare and/or post content. These employees should be informed about how to use the company’s trademarks to further develop the brand and maintain existing rights. If employees misuse these trademarks on the company’s sites, they may unknowingly undermine the value of the brand, and perhaps cause problems for trademark renewals or other filings.

Some employees may also use the company’s marks on personal social media. For example, an executive might use a company logo rather than a headshot on his or her Facebook page. Any statement made on these pages about company business could be seen as a formal company representation, and perhaps cause problems for the company with the Securities and Exchange Commission or other governing bodies.

What can you do to protect against these pitfalls?

  • Create your own content, rather than relying on design elements you see on other sites. This may have a higher upfront cost but could reduce your litigation exposure in the long run.
  • Seek a license to use any content in which you are interested, and pay the appropriate royalty fee for its use. There are organizations that accept those royalty payments on behalf of content owners.
  • Obtain images, videos or other content from a valid image collection service, authorized by the copyright owner.
  • Ensure employees understand the source of the content they plan to use before they upload it to the company’s site. They should be trained to avoid the impulse to right-click, ‘save as’ and then upload.
  • Avoid using a competitor’s trademarks to advertise your own goods or services.
  • Ensure employees understand the appropriate use of trademarks.
  • Establish a social media policy that includes explanations of limits on use of the company’s trademarks.

 

Christina D. Frangiosa is an attorney at Semanoff Ormsby Greenberg & Torchia, LLC. Reach her at (215) 887-0200 or [email protected]

Find about more about privacy and intellectual property law on Christina’s blog.

Insights Legal Affairs is brought to you by Semanoff Ormsby Greenberg & Torchia, LLC

How benefit administration systems can cut costs and improve efficiency

Meghann Guentensberger, Director of HR Services, Benefitdecisions, Inc.

Meghann Guentensberger, Director of HR Services, Benefitdecisions, Inc.

Benefit administration systems put information at employees’ fingertips while freeing up HR staff to focus on strategic issues such as employee engagement and retention.

“Everything related to employee benefits and an employee’s life cycle can be stored in a technology solution and then used by both the employee and the HR department,” says Meghann Guentensberger, Director of HR Services at Benefitdecisions, Inc. “Medical, dental, vision, and even ancillary benefits like transportation and flex are all in one system that’s accessible to everyone.”

Smart Business spoke with Guentensberger about the advantages of automation using an online benefit administration tool and how to choose a system that fits your needs.

What can a such a tool do?

It automates the administration process through an employee’s life cycle from onboarding to termination. The system also handles annual benefits enrollments and life event changes. When someone gets married or has a baby, they can make health care enrollment changes through the system rather than filling out a 20-page application with an HR person.

The system can also be electronically connected to the insurance carriers, feeding information directly to them in real time. This ensures timely and accurate enrollments and terminations while also facilitating the billing reconciliation process, ensuring you’re not paying for someone inadvertently left on an insurance plan. Between savings generated from efficiency of staff and error reduction, a benefit administration system can save more than $19 per employee per month.

In addition to employee benefit information, many of the tools have Human Resources Information System components and can track compensation history, paid time off and leaves of absence. Skills and past performance history can also be tracked for succession planning purposes, which facilitates resource allocation. The tools empower employees to update their electronic personnel files and promote their skills by updating certifications, education or training.

How do you choose the right solution?

There are five advantages of a benefit administration system that should be considered when selecting the appropriate system: cost savings, productivity enhancements, increased communication, facilitation of employee retention and recruitment, and the ability to eliminate paper transactions.

But first, take a step back and document current processes so you know what you’re paying for your system and in HR time. This will help build perspective around the hard and soft costs of what you’re doing now versus what you could be doing. Then list what features and functions you want, so you can evaluate providers and do a direct comparison.

It’s also important to think about the solution globally rather than getting carried away by the presentation of a tool that takes current pain away. Develop a plan for where you’re going and how it fits in. Often, the tools provide scalable solutions that will allow you to add features as time goes on.

Adding a benefit administration system doesn’t mean you have to revamp everything. These tools interface with existing systems such as payroll, so you don’t have to overhaul what you have.

Have an independent third party ask questions and go through the process of how it will be used. When a vendor does a demonstration everything looks amazing, but you’re only seeing what they’re showing. A neutral third party can provide an unbiased perspective.

Who needs a benefit administration system?

Any company big or small  — the complexity of the system is dependent on the company’s size and needs. With health care reform, it will be more difficult to remain compliant using paper, both because regulations change so quickly and the required reporting. This system allows you to analyze your population and compute costs to ‘pay or play.’ You can pull the data and run models to make a decision that makes the most business sense.

For smaller companies without an HR department or just one HR person, this tool can really help them be more effective and efficient instead of being transactional.

Meghann Guentensberger is Director of HR Services at Benefitdecisions, Inc. Reach her at (312) 376-0449 or [email protected]

Insights Employee Benefits is brought to you by Benefitdecisions, Inc.

Online games maker Zynga files for $400 million secondary offering

SAN FRANCISCO, Wed Mar 14, 2012 − Zynga Inc. filed with regulators for a secondary stock offering of up to $400 million on Wednesday.

Shares of the online games maker, which have risen 33 percent since the company went public, rose marginally in premarket trading on Wednesday. They closed at $13.38 on Tuesday on Nasdaq.

Zynga, which went public late last year in a high-profile IPO that raised $1 billion, said certain existing stockholders would sell class A shares of the company’s stock.

Washington state launches online sale of liquor stores

SEATTLE − Fri Mar 9, 2012: Washington state launched an online auction on Thursday of its 167 state-run liquor stores, which are slated for privatization on June 1 under a voter-approved ballot measure.

The ballot initiative, which passed in November, changed Washington state’s wine distribution laws, regulated alcohol advertising, created new franchise protections for liquor distributors and allowed grocery stores to sell liquor.

Washington is the first state since Prohibition to privatize its state-run liquor retail, purchasing and distribution system, which began in the 1930s.

The auction also is billed as the first-ever of its kind by the Washington State Liquor Control Board and includes simultaneous bidding for the individual state-controlled stores or all 167 outlets as one package.

What’s being auctioned today will allow interested parties rights to apply for a liquor license at current location,” board spokesman Brian Smith said. “You’re buying the right to apply for a liquor license and then purchase the right to sell at that location.”

Of the state’s 330 liquor stores, 167 are state-run. Another 163 are privately operated, mostly in rural locations, and not immediately impacted.

Bidders are vying for the right to operate the state’s current liquor outlet locations, but will have to apply to the state separately to buy liquor licenses, Smith said.

Big-box stores and grocery stores with 10,000 square feet or more do not have to bid as a result of the new initiative that will close state-run liquor stores on May 31.

Kodak sells online business to Shutterfly, patent sale pending

ROCHESTER, N.Y. –Fri Mar 2, 2012: Eastman Kodak Co. has agreed to sell its online photo services business to Shutterfly Inc. for $23.8 million, kicking off the bankrupt photography pioneer’s relaunch as a much slimmer company although a patent sale seen crucial to its turnaround may still be months away.

The once-iconic company that invented the hand-held camera has said it will quit the camera business and is expected to fetch $1 billion to $2 billion from the sale of about 1,100 digital patents, which is due to get under way by June 30.

A source familiar with the patent sale said the process was moving forward, but added that the completion was not expected anytime soon.

Complicating the prospects is a dispute with computer giant Apple Inc. over one of the patents.

At a hearing next week on March 8, a bankruptcy judge will hear Apple’s motion to move forward with its patent-infringement suit. Apple has asked the bankruptcy court to lift the automatic stay applied to pending litigation against Kodak when the company filed for Chapter 11 on Jan. 19.

Kodak said the deal with Shutterfly followed a “stalking horse” bid – a starting bid or minimally accepted offer that other bidders must surpass in a court-supervised auction – from the web-based personal publishing service.

Shutterfly shares rose 18 percent to $31.70 in extended trade, following the news. The stock had closed at $26.91 on Thursday on the Nasdaq.

Shutterfly said it will transfer Kodak Gallery customer accounts and images in the United States and Canada to Shutterfly, and will allow customers to opt out of the transition if they do not want their photos to be transferred.

Kodak Gallery – which enables users to store and share their own images and create custom printed photobooks, cards and albums – has more than 75 million users.

Returns of holiday gifts purchased online to hit record

NEW YORK ― After the holiday party comes the hangover for retailers: handling millions of returns this week.

With a Christmas season that has seen record e-commerce sales coming to a close, returns should hit an all-time high on Tuesday for United Parcel Service

.The delivery company expects to handle more than 550,000 returns on Tuesday, a record, and up almost 8 percent from a year earlier. Several other days during the first week of 2012 will also top half a million returns, UPS said.

“This will definitely be the busiest year for returns,” Ken Burkeen, marketing director of the retail and consumer products division at UPS, told Reuters.

The good news for retailers is that most of the jump is simply a reflection of the explosive growth in e-commerce this Christmas season: U.S. online sales were up 15 percent between Nov. 1 and Dec. 26, according to data firm comScore.

Burkeen said UPS expects returns to rise 7.7 percent, meaning returns as a percentage of total sales have actually dipped despite more customer-friendly return policies.

A lot of that has to do with how much better web sites have gotten, including the ability to rotate the image of a product 360 degrees.

Diana Ku, a 25-year-old elementary school teacher from the San Francisco area, said she buys more from Nordstrom Inc., in part because of the quality of the photography on the upscale department store chain’s web site.

Such improvements to many e-commerce sites have lowered the risk for a customer like Ku of placing an order only to open a package and find the item wasn’t what she was expecting.

Ku has yet to return a product she bought online this holiday period. “I do return quite a lot normally, but I didn’t this year,” she said.

It’s expensive for retailers to take back products they have already sold, check they are still in good condition, repackage them and integrate them back into inventory for resale.

Kurt Salmon retail strategist Al Sambar said that the returned items often end up in the discount bin, meaning a further danger to margins during a holiday season that has already seen steep discounting.

But retailers have found that easier returns policies, online or off, can be good business.

Nordstrom this year stopped taking $6 off of refunds on returns when an item bought online is mailed back. Kohl’s Corp., a mid-priced department store chain, has long been praised by retail strategists for its policy of accepting returns without receipts.

Even when returns spike, that can be good news. If shoppers know they can bring products back to stores or mail them back to online retailers, they are likely to buy more from that retailer.

“Making it easier to return increases loyalty and doesn’t increase returns per se,” said Fiona Dias, chief strategy officer for ShopRunner, a company that manages returns and shipping for the e-commerce sites of retailers including American Eagle Outfitters and Toys R Us.

“If retailers make it difficult to return, the customer is left with an overall bad taste in their mouth about the brand.”

Amazon may benefit as digital goods sales jump

SEATTLE, Wash. ― Digital goods are the fastest-growing category online this holiday, led by e-books, suggesting Amazon.com Inc’s strategy of blanketing the world with cheap e-readers and tablet computers may be producing some early gains.

Sales of digital goods, which also include music and videos, are up about 30 percent this holiday season, compared to the same period last year, according to comScore data.

That is ahead of sales of consumer electronics and jewelry and watches, which are up about 25 percent versus last year’s holiday season, and apparel and accessories, which are growing in line with overall e-commerce at roughly 15 percent, comScore data show.

The only other holiday season that digital goods grew the fastest was in 2006, when sales jumped 83 percent from a smaller base, according to comScore. At that time, Apple Inc’s iTunes music store drove a lot of the growth of the category.

“Music is a much more stable market at this point. The real new growth is coming from e-books,” said Andrew Lipsman of comScore.

“The increased proliferation of devices, such as tablets and e-readers, has led to more forms of digital content being downloaded,” he added. “People are downloading e-books in a way they had not previously.”

Amazon launched its $199 Kindle Fire tablet ahead of the holidays and slashed prices on its range of Kindle e-readers.

Earlier this month, Amazon said customers were buying more than one million Kindles a week and analysts at Goldman Sachs estimate the company will sell 14 million units during the fourth quarter.

Amazon priced these products aggressively and many analysts estimate the company is making little or no profit on the devices. Instead, Amazon is hoping to make money from higher sales of digital goods, according to Aaron Kessler, an analyst at Raymond James.

“Tablets and Kindles are selling a lot this season and that should ultimately benefit Amazon’s digital sales,” he said.

Still, a lot of these devices were bought as gifts this holiday, so the full impact on digital content sales will probably not come until Christmas Day and the weeks that follow, Kessler added.

Western Union bundles online, mobile business into new unit

ENGLEWOOD, Colo. ― Western Union Co., the world’s largest payment transfer company, said it will club its online, mobile and prepaid cards businesses into a new entity to offer more services and draw more customers.

Westernunion.com, the company’s online portal which provides services in 200 countries, will be part of the new Western Union Ventures unit, led by Chief Marketing Officer Diane Scott.

The company’s electronic channels business arm that includes westernunion.com and mobile payments reported revenue growth of 35 percent in the second quarter.

The new unit will drive its strategic initiatives in consumer money transfer, business-to-business payments and new products and services, the company said in a statement.

The company also said that David Yates, its executive vice-president of business development and innovation will leave the company on September 30 to pursue business interests in Europe.

In July the company agreed to buy Travelex’s global business payments division for nearly $1 billion to enhance its international business payments services.

Western Union shares, which values the company at $10.2 billion, were trading at $16.42 in morning trade on the New York Stock Exchange.

Channel partners

Talia Mashiach, Founder and CEO, Eved

Entrepreneurship arises from the strangest of places.

For Talia Mashiach, founder and CEO of Eved, her winding path began shortly after she accompanied her musician husband to a meeting at a hotel where he hoped to generate more referrals for his band.

“I have a technology background,” she says. “But I love thinking about business models. I had done some back-office work for his band, and he figured I could help with some ideas that would lead to more business.”

The meeting didn’t go as planned.

“I went with him and the hotel executive said, ‘Well, we don’t just want to offer bands. Our catering and event managers spend so much time manually handling logistics and dealing with these multiple suppliers that come in for an event, can you handle everything for us?’”

Mashiach didn’t know anything about the event business, but she did understand how to deploy technology-based solutions. “When I looked at the opportunity to aggregate all the individual suppliers and sell and manage them for the hotel, I really saw a supply chain play, which has been done in other industries, but not in Meetings & Events,” she says. “I couldn’t get over how manual and fragmented everything was, how many logistics between multiple supply chain members and how often things needed to change throughout an event. So we came up with this idea.”

Smart Business Publisher and Executive Editor Dustin S. Klein sat down with Mashiach, who was named to the 2009 class of the Ernst & Young Entrepreneurial Winning Women, and talked about the roots of innovation for her 30-plus employee organization.

What were the early applications you developed at Eved?

I saw a big opportunity for a global event portal in the long-run, but knew we needed to start with understanding the event industry, how the supply chain members worked together and what ultimately the client wanted. We needed to build our own service company to figure this out. We came up with a model in which we would put people in-house in the hotel, providing the client with a one stop shop when they came to a hotel.

We developed technology to communicate and transact between ourselves and the suppliers we bought from – florists, transportation companies, entertainers. We also created technology that enabled our sales people to view a catalogue of our suppliers’ products online and easily add items to a quick quote or proposal reducing the turnaround time to clients by an average minimum of 48 hours.  Automated purchase orders and change requests took out the manual back and forth, saving thousands of hours in labor from sales and operations to finance.

We were able to manage an average of 1,800 event orders to our suppliers per month with one finance person and 25 people in sales and operations.

The hotels had become channel partners, so when their clients came to the hotel and were looking for something, they’d say, ‘Anything you need outside of rooms and food or beverage you can work with the expert team from Eved, who is on-site and works closely with our catering and event manager to create a great event.’ This model proved that with the right technology, even small one-off orders, like a single sedan transfer or VIP floral bouquet, can be profitable. For the first time, it allowed a company to service the client for their large event needs and their very small ones. This was a key service the client was looking for.

I’m sure this was eye-opening. What did you learn from this?

Through this experience, I learned a tremendous amount about the industry. How the markets and supply chain members work together. What  clients are really looking for in an event service partner and the real inefficiencies that are experienced daily by this industry. We put a plan together to really scale this company. We created a global platform that would bring all the members of the event supply chain online to be able to communicate and transact through an online marketplace.

In 2010, we launched our global marketplace, Eved, and took the experience and technology and offered it to all members of the event supply chain to interact and transact online. Now anyone can sign up to automate their entire process – from proposal creation to purchase orders to transactions.

We are just finishing our beta and will offer online Event Galleries where event suppliers can create storefronts to sell their services online. Companies and individuals will be able to purchase all their small meeting needs online.

What do you offer in products and services for your clients today?

Eved is a B2B marketplace that allows members of the meeting and event supply chain to communicate and transact online. There’s about $150 billion spent on event services in the U.S. All of this is currently transacted offline by literally thousands of destination-specific small businesses that are involved in providing services for events – from ground transportation to restaurant reservations. Our cloud-based platform gives those businesses the ability to quickly and efficiently conduct business with each other. Whether a business is using our vendor management capabilities to search for a new supplier, or employing our online commerce tools to streamline the proposal, purchase order, invoice or payment process, The technology takes a lot of the manual labor out, significantly reducing the cost of sale. Eved is all about helping our clients grow, strengthen, and control their businesses.

How would you describe segments of clients?

We target all the members of the event supply chain – corporations and organizations that hold meetings or conferences,  third-party meeting planning companies that are hired by corporations, hotels, destination management and event companies, restaurants, suppliers such as florists, entertainers, décor companies and transportation companies. We believe that the meeting, incentive companies and destination managemetn companies play a major role in the future of events and ensuring events bring measurable results to a corporation. Our technology enables these companies to provide more cost effective and new services to their existing corporate clients.

We were fortunate enough to have some great clients come on early and clearly articulate how our technology can help them work with their suppliers. When we met their expectations, they invited their global suppliers to join them on Eved, providing value for both buyers and sellers. This also helped us quickly populate that segment of the supply chain globally. We have now provided valuable tools for these destination management and event companies to streamline how they work with their suppliers. This creates new opportunities for everyone. We have engaged all of our early adopters and clients to give us their input and continue to help us develop technology that enables all members of the supply chain to reduce costs and increase sales.  Perhaps most exciting about Eved is that you can streamline the way you do business with whoever you choose as long as both of you are on Eved. Eved creates the bridge.

What is an example of a business challenge that your organization faced and the solution you used?

What most people don’t realize is the magnitude of pioneering technology that will transform an industry. Many people assume that if they create the best technology, then people will use it. But it’s not just the technology. You have to understand and communicate how by using the technology your business can grow It’s not so much training – how to click, where to click and what to do within Eved – it’s much more about how you help these companies, especially small businesses, maximize the business opportunities Eved can create for them.  One comparison could be what businesses thought of having a website when the internet was in its early stage. Some people bought into the vision early and got their websites going and created new business models around having this new technology. Others waited and were pushed to create a website because their competition had one. The early adopters created a huge advantage for themselves. Our clients can see the Eved vision, but we need to continue to help them understand how it helps their business.  So it’s about reaching out personally, and working with them on how to use Eved to better change their business practices and grow their companies. Our future offerings will be continuing to introduce and evolve new technology that will help our clients grow their sales and cut their costs.

How do you consider yourself an innovative leader?

A lot of people realize the meeting and event industry is a good 15 years behind when it comes to technology. I think we are unique in our approach to incorporate the existing supply chain and enable them to better work with one another. I think the industry has embraced us because no one gets displaced. Everyone wins when they work with us.  What is being cut out is all the no value-add manual labor that can be reallocated to grow one’s business. I also think we have earned the respect of some of the industry leaders because they appreciate our deep industry knowledge and innovative approach.

We’re in a unique situation. Either technical people see an opportunity in the meetings industry and want to build technology to solve a problem without knowing the ins and outs of the space, or they are familiar with the meeting industry but don’t know a lot about technology. So they outsource it, with instructions on what they want it to do.

As the founder of Eved, I was a technologist that spent six years in the trenches building an actual business in the meeting and event space. I have a thorough understanding of the pains of all our clients. I also understand what it means to own and grow a business and how valuable technology can be to achieve those goals. As a technologist, I can translate those pains and develop technology to solve them.

From an organizational perspective, how do you employ innovation on a day-to-day basis to keep the company on the leading edge?

We continue to encourage that through creating a culture of innovation. Celebrate new ideas and encourage people to take some risks. We have something called an innovation box where if you come up with an idea, we are going to celebrate it. Based on how much it impacts the company, you can get a monetary award. We also have brain storming sessions twice a month where we bring everyone together just to talk about an idea.

Is there a management style you use to spur innovation?

I definitely think there is. A lot has to do with how you make people feel when they interact with you. Are you open to a discussion? How available do you make yourself to those that don’t report directly to you? How do you react when someone gives you a suggestion to improve something? Even if you don’t like it, you don’t want to say, ‘I don’t like your idea’ especially in front of other people, or they will never bring you their next idea. You want to at least think about and consider the ideas that are brought to you. You may want to give them direction and (say), ‘Ok, well think about it a little bit differently, have you thought about xyz and come back to me.’

One of our strategies to foster innovation between people was to create a small contest. Everyone was assigned to do an innovative project that could benefit the company. The team that scored the highest got a spa day. It encouraged people to work together to create something new for the company.

What’s the greatest lesson you’ve learned and how do you apply that to how you run the company?

The greatest lesson I’ve probably learned is from a mentor who taught me that everything in life, but especially in business, revolves around your relationships with other people. Whether it’s managing people, building new sales, working with clients, or dealing with investors; it is crucial to take the time to understand the person as an individual, what is important to them and how do they get value from the relationship with you. I learned that focusing on the other person and adjusting my style for them is what will make me successful, instead of assuming that everyone else should adjust to me.

I have had the privilege over the last seven years to work with many different kinds of people; the hard working banquet staff at a hotel to a hotel general manager; CEOs of large corporations to owner-operated small businesses, strategic partners and investors. I have learned something different from all of them.

How do you think your organization makes an impact on the community?

We do a number of different things. As an entrepreneur you’ve got a limited amount of time, and the things I do, I want to be impactful. We have a philanthropy program in the company where we match donations. We also offer paid days off to volunteer. But personally, I am passionate about entrepreneurship and children’s education. I sit on the board of the Chicagoland Entrepreneurial Center – a great organization that fosters and support entrepreneurs in Chicago. I am also very involved with projects that involve innovating the way our children learn. It is also very exciting for me that Eved as a technology platform is impacting small businesses all over the world to help them grow their companies, add more jobs, cut costs and find new revenue streams.

What are your plans in terms of growth?

Eved is soley focused on technology. The event service company that we started as seven years ago is now called Access Chicago and a client of the Eved Platform. We need to stay very close to our clients and understand how we can continue to bring value to them. It is hard to transform the way you do business so we want to make the experience as easy as we can.

As a global event marketplace, we see tremendous growth opportunity. Event suppliers include tours, gift items, printing, signage, restaurants, special event locations, team building, concerts, and so much more. There are businesses that don’t even realize yet that they can sell into the event market. They just need a cost effective way to do it. Then you think about the fact that events happen all over the world.  There are literally hundreds of billions of dollars that we want to streamline and aggregate on Eved.

How to reach: Eved LLC, www.eved.com

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.