June 22, 2011 / 1:33 PM / 6 years ago

Hulu weighs sale options after approach: source

NEW YORK (Reuters) - 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.

Hulu is best known for offering free online access to popular TV shows 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 programing partners like Viacom.

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, 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.

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's stiffest competition online is from Netflix, 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.

Reporting by Yinka Adegoke; Editing by Tim Dobbyn, Gary Hill

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