Apple has about $76.2 billion in cash and securities on hand, which puts it in a good position to make acquisitions with very little effect on its bottom line. That said, the Cupertino company may be about to make a move, and is in early talks to acquire Hulu, sources tell Bloomberg.
It’s no secret that Hulu is shopping itself around for a potential suitor. Quite a few potential players have stepped up to the plate, including Google — which owns YouTube — as well as Yahoo and AT&T. In any case, the players in this game see the streaming video site as a big get.
Look at it this way. Save for CBS, Hulu is the major networks’ go-to online spot to distribute their content: after all, Walt Disney, News Corp, and Comcast-NBC Universal all own a portion of the site. Any suitor would gain the rights to a significant amount of content in one fell swoop.
Sources say the deal would include a five-year extension of programming rights, with two of those years being exclusive. Apple would have a use for this, and it would obviously turn Apple TV from a “hobby” into a serious part of its business overnight. Its other products, from iPhone to iPad and even the Mac platform would all benefit.
Analysts say that Hulu would likely be worth about $2 billion, chump change to Apple considering what it could mean for their business overall. You would have to think it would be in Cupertino’s best interest to at least consider a deal, especially when its competitors are swarming in like a flock of vultures.
There’s no deal yet, and such an acquisition would be by far Apple’s biggest. The company seems to prefer buying smaller companies with its largest the $400 million acquisition of Steve Jobs’ NeXT Software back in 1996.
Another consideration for Apple is that it would need a long-term vision for Hulu. The site currently generates about $500 million in revenue, meaning it would take four years at least to recoup the purchase price from Hulu alone. However, consider the increased hardware sale as a result of the deal and the benefits to Apple products, and that may take much less time.