Hulu is about to make a big move — talk of an IPO within the next couple of months appears to be well founded. The timing is right, says BU professor N. Venkatraman, as the economy is expected to pick up in 2011, and the tech sector with it. “Media will be one of those sectors that will be redefined by tech, and Hulu wants to be seen as the leader of the pack.”
Hulu is expected to file a prospectus with the Securities and Exchange Commission for its initial public offering by the end of the year. It believes it can raise US$200-$300 million, according to an unnamed source in a Reuters report.
The final decision to move forward is expected to be made in November, the source said. If it does happen, the IPO is likely to be in April or May.
The deal would value Hulu at $2 billion.
Two billion dollars is likely a fair valuation for Hulu, according to Scott Testa, a marketing professor at Cabrini College.
“I think the partners want to take some money off the table with the IPO,” he told the E-Commerce Times. “Also, I think this may be a good time for the partners to go public from a balance sheet perspective. This way they will be able to get a tangible valuation for the company.”
Besides giving the investors an exit for their initial capital, the bulk of the proceeds will certainly be sunk into the company’s business model, continued Testa. “Data center investment is what I would guess — or buying data center space in disparate locations on worldwide basis.”
Google needs significant redundancy to keep YouTube operational, he noted. “When you are talking about video, you are talking about huge, big pipes — and fiber is expensive. It is not like running a website.”