On Friday (6/14), proprietary market intelligence firm StreetAccount reported that TiVo shares were up on “follow-through from speculation on a Hulu acquisition.” A rising tide lifts all boats? Or the first whiff of TiVo as a potential acquirer? Although TiVo has never been mentioned as a suitor, the company declined to comment on this note and reports indicate multiple firms have submitted bids for Hulu – with at least 3 exceeding $1 billion.
Mergers and acquisitions take various forms and a Hulu M&A will be no different. While we believe a TiVo-Hulu tie up is unlikely, by entertaining the notion we could imagine a scenario with TiVo sharing primary billing with some of Hulu’s current backers, perhaps Comcast and/or Disney, maintaining a small ownership interest to lower their cost while buying some say in future direction. The big unknown, irrespective of who ultimately lands Hulu, is what sort of content guarantees an acquirer would receive from the current owners.
TiVo recently settled with Google, Time Warner Cable, and Cisco for $490 million, swelling its balance sheet to over $1 billion. With limited debt, TiVo’s finances would conceivably provide comfort to Hulu’s owners as it is possible that they could maintain some sort of partial interest in a combined company. Hulu’s existing owners would appreciate TiVo’s neutrality, as the “Switzerland of the cable industry” – having partnered with many top US MSOs.
