Exclusive: Guggenheim advises on Hulu sale, may also bid - sources

Wed Apr 17, 2013 6:50pm EDT
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By Ronald Grover

LOS ANGELES (Reuters) - Hulu has hired Guggenheim Partners to advise on a sale of the company, even as the financial services firm is considering making its own bid for the video streaming service, three sources with knowledge of the matter told Reuters.

Guggenheim Executive Chairman Alan Schwartz was first hired by Hulu in 2011 to advise on a sale, but its owners were unable to find a buyer willing to pay the $2 billion that the company's owners wanted.

Hulu, jointly controlled by Disney's ABC and News Corp's Fox network, has re-engaged Guggenheim to handle another sale attempt, according to the sources, who spoke on condition of anonymity because the ongoing auction process is private.

Guggenheim is a New York-based investment firm with a fast-growing media business. A spokesman for the firm, Terry Fahn, declined to comment, as did Hulu spokeswoman Elisa Schreiber, Fox spokesman Dan Berger and Disney spokeswoman Zenia Mucha.

Securities experts say financial services firms are increasingly both advising on and participating in deals as they become larger and expand into more areas. While permitted under securities regulations, some corporate governance experts have raised questions about conflicts of interest.

Guggenheim has established "a Chinese wall" between its investment banking and asset management businesses, said one of the sources.

Another source said Guggenheim has taken steps to keep the situation "transparent" and it is up to Hulu to decide whether to retain the financial services firm if it makes an offer for the company.

"It's a definite conflict of interest," said Ehud Kamar, a professor at USC's Gould School of Law who specializes in securities law and is an expert on mergers and acquisitions.   Continued...

Alan Schwartz, executive chairman of Guggenheim Partners, takes part in a panel discussion titled "The Entertainment Industry: A Billion Ideas in Search of an Audience" at the Milken Institute Global Conference in Beverly Hills, California in this May 2, 2012 file photo. REUTERS/Danny Moloshok/Files