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Google in preliminary talks to buy online video site Hulu

July 1, 2011 | 10:06 am

Hulu on WebOS 3.0

Google Inc. is in preliminary talks to buy online video pioneer Hulu, people familiar with the situation said.

Hulu has begun meeting with potential buyers including Google, Microsoft Corp. and Yahoo Inc. to drum up interest in a sale, said these people, who requested anonymity because the discussions are confidential.

The presentations to the potential suitors are a first step as Hulu's owners weigh whether to sell the site after having received an overture from Yahoo.

Hulu's financial advisors, Morgan Stanley and Guggenheim Partners, set up the meetings with media, technology and communications companies.

The technology heavyweights are seeking to capitalize on the widespread popularity of online video and position themselves to reach the growing number of viewers who watch television shows, movies and short videos on computers, mobile devices and Internet-connected television sets.

Hulu's rights to the current season's TV shows have drawn interest from Google and Yahoo, in part because these popular programs have attracted more than 600 advertisers -- including such major brands as McDonald's, Johnson & Johnson and Toyota. Indeed, the site expects to bring in $500 million in subscription and ad revenue this year.

Google, which has had a testy relationship with Hollywood, is making a major push to add professionally produced content to its mix of user-created videos on YouTube. It has hired industry veterans to help the Internet search giant make inroads and strike deals.

Yahoo is crafting its own strategy of bringing more premium content to its popular portal. Microsoft has had success offering access to movie subscription service Netflix Inc., dominant sports cable channel ESPN and the Hulu Plus paid offering to users of its Xbox game consoles.

Read more of our post on Company Town.

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-- Jessica Guynn and Dawn C. Chmielewski

Image: Hulu's website, Hulu.com, on an HP TouchPad. Credit: Hulu/Hewlett-Packard

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