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Hulu Jumping The IPO Gun?

It's been a not-so-long-time coming for Hulu -- the famously funded, jointly owned premium video platform. Sources tell The New York Times that the company is eying an IPO at a valuation of more than $2 billion.

"In recent weeks, Hulu executives have begun talking to investment banks about pursuing an initial public offering as soon as this fall," sources tell The Times. "Such a move would be one of the most prominent media offerings this year."

As The Times reports, however, the success of the IPO is hardly a sure thing. "With the market for I.P.O.'s widely regarded as soft, it was unclear how a Hulu offering would fare, and there was some concern in the marketplace that a potential stock sale by G.M. particularly would soak up a large part of investor demand."

Also, while Hulu's subscription service has to take effect, the company still makes little "in the way of profit," The Times adds.

And those aren't Hulu's only problems. "Despite the estimated $200 million that it could bring in this year, a good portion of those revenues -- anywhere from 50 to 70 percent -- go to its content partners," reports GigaOm. "Those content partners, including parent Fox, NBC and Disney, might not have as much incentive to ensure Hulu's continued success once it becomes independent."

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What's more, "While Hulu's done a good job of attracting viewer eyeballs as the go-to destination for broadcast video content, some of its traffic has come at the expense of broadcasters' own online properties, which they can monetize better than Hulu currently does," GigaOm adds. "Already, you can see some competition from ABC, which released a free, ad-supported iPad app long before Hulu rolled out its own app, which is tied to the Plus subscription service."

Hulu recently said it expected to double the $100 million it made in 2009. Yet, PaidContent points to comScore numbers showing that Hulu sits in the tenth spot in the "top entertainment" category, with 24 million uniques, as compared to YouTube's 144 million.

As such, Daring Fireball blogger John Gruber calls the would-be IPO "a little (a lot) premature," noting that "they've got no revenue, and their content comes from companies that may well chose to create their own online publishing services."

"Indeed," remarks ReadWriteWeb, "Hulu has already lost content from Comedy Central and has not been able to ink deals with both CBS and CW."



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