Would you sell Hulu if you were a Pay-TV parent?

--What's to Gain or Lose in a Hulu Sale?

--Rumor: Yahoo May Have Made an Unsolicited Bid

--Hulu Becomes Immediately Relevant in Pay-TV, OTT

Hulu, the streaming TV lovechild from News Corp, Disney and NBC Universal, is in play, thanks to a mystery bid that hit early this week and has been lighting up the news feeds ever since.

Or, at least that's what someone wants us to think, someone who'd benefit from the possibility of a Hulu sale being thrust into the limelight. There's a lot of skepticism on this because it's hard to nail down a buyer and because sources are all over the place. Our double agent behind Hulu lines says that the word coming down from the top is that a bid was indeed made but another friend in the digital content distribution and licensing arm of a Hulu parent has said the bid is all hype.

The Wall Street Journal reported late Tuesday that an offer from a mystery bidder did indeed happen and that Hulu's board is considering a sale. paidContent said it confirmed Hulu management and owners are discussing a bid and other options but that there's been no formal board meeting.

The Los Angeles Times was one of the first to say that Yahoo was the mystery bidder, which makes some sense as the company is trying to reinvent itself as more of a content destination. However, Yahoo's EVP Ross Levinsohn has recently told paidContent and others that there "are no gamechanging acquisitions for Yahoo" planned, but Levinsohn has been a big supporter of Hulu since his days at News Corp, so it's a statement that can be overlooked if Hulu is up for grabs.

Our Thoughts on the Usual Suspects

--Amazon: It hasn't been talked about much, but Hulu could greatly help its Amazon Prime offering, the one that hasn't really made a splash or garnered much attention since its launch. Hulu has a better video player and overall user experience, and a lot more content than what Amazon is offering. The only issue here is getting to keep all the rights and licensing, and being able to make such a potentially expensive purchase worth the cost. Amazon would most benefit from this purchase if it transitioned its Prime offering, like we previously suggested, to augment content sales. Users could get access to free digital copies of any DVD or Blu-ray they purchase plus a related film or a teaser of the next season's first two or three episodes when purchasing a TV show. Amazon is a great retailer and a decent streamer. Enhancing retail could be a happy place for Hulu's existing owners.--AOL: The once king of the Internet has been spending a lot of money in acquiring new entertainment content and burning its old bridges that don't fit an entertainment model. If it has the cash, a Hulu buy would be big, especially when linking that content to its other properties. AOL already uses properties like The Huffington Post to link back to its TV site, http://www.aoltv.com/, but what if it could instead embed a TV episode (with ads!) into both its AOL TV page and directly onto the Huffington Post's site. Licensing would be the only issue here and AOL will likely have to shell out a bit more than the rest on our list to ensure it can put streams across its properties. A worthwhile deal if it has the cash and can guarantee itself it'll get the eyeballs. "I think content subscriptions on the Internet can be a very viable business,"

said CEO Tim Armstrong. "We put major investments into things like video [and are] now the number 2 video player on the Web after YouTube. [Two years ago] AOL was nowhere on the Web."

--Apple: Really not the first person you'd think of, especially considering iTunes, but the timing is interesting since there's a new fire lit under the Apple rumor mill concerning an iOS-based TV set. A former Apple executive said the company plans to "blow Netflix and all those other guys away" by bundling Apple TV with iTunes inside a physical display, DailyTech reports. A fall launch could mean iOS 5 and iCloud integration, with apps and likely cloud-based content syncing TV shows and movies as well as music via iTunes Match. Apple isn't a likely buyer since it prefers to sell content via iTunes, but it could use the streaming service as a push to its platform. Apple has shown some flexibility by allowing Netflix onto its Apple TV STB, but a Hulu move seems a step too far into its own content realm.

--Comcast: This is the least likely to hold water as Comcast and NBCU can't really have a hand in Hulu. As part of the regulatory approval for gaining control of NBCU, Comcast agreed to step away from Hulu's operations and likely can't even take part in any of these management or sale discussions. Attempting to purchase Hulu outright could end up being a nightmare for the cableco. The only possibility is that Comcast has figured out how to work the regulation and is making a purchase to use this as its OTT delivery for Xfinity TV, but still not a likely buyer.

--Google: Various reporters have confirmed that Google isn't the bidder and we agree. A Google purchase for a YouTube companion service would be a smart offering since YouTube, according to recent reports, sees more streaming traffic per day than its top five competitors combined. The problem here is that TV networks don't all like YouTube.

--Microsoft: We've heard Microsoft mentioned a few times, but it isn't likely to be a player. The company has its hands full with its mobile offering now, Skype and WP7, and dumping that much cash for Hulu means it has less on hand to make deals like its partnership with Nokia and other recent purchases.

--Netflix: This is a purchase that's getting the most talk beyond Yahoo. Netflix would do well if it could make the purchase to keep access to the content and shift it to Netflix or a unified platform, which is unlikely given the problems it has with some of Hulu's parents. Netflix has also said that it isn't interested in getting into the catch-up TV business. Such an acquisition would boost Netflix' streaming offering dramatically, but would also require an increase in subscription fees or a series of new tiers for its service.

--News Corp or Disney: Everyone likes control, so why not have more of it over your own content? There's always been a bit of a disagreement over how to run Hulu and how to go after licensing, so one of these two remaining parents could be a potential buyer at the end of the day. Neither of these were likely to be the initial bidder but both could easily jump into the game. Or if they were interested, they could've floated the "bid" to the press in order to get everyone talking and work in their own offer.

--Yahoo: The rumored bidder at last. Yahoo would gain a lot since it's been struggling to move to an entertainment destination and gets somewhat passed over as users think of search, e-mail, entertainment and the like. The biggest boon would be Yahoo's Connected TV platform, currently on 8 million devices in consumers' homes. Not only could Yahoo guarantee a Hulu Plus widget on every TV and STB, but it would have a great incentive to move more content to being TV-only on the service instead of Web-only. The licensing costs would be huge, but it would have the perfect playground to launch its Broadcaster Interactive platform, which would mean better ad rates than what Hulu currently gets and a better platform to tailor ads to specific users--something Hulu currently does well on its Web site but utterly fails to do on its STB/connected TV/game console platform. Hulu was an overnight success when it launched in 2007 but has in some ways struggled to keep up with Netflix and others. The problem with the bid is that there are many unanswered questions, all of which point out areas where the service has struggled.

A sale could simplify Hulu's ownership issues as the company continues to struggle in both streams and hardware. It has a complicated ownership arrangement which has made the service hard to gauge but has also likely helped it maintain exclusive content deals from its parents. However, the ownership formation also has led to the company's biggest headaches when there have been disagreements over its future direction.

Dark Horse Bidder

There is one dark horse in all of this that's not getting too much attention: no one.

With the people playing in the top echelon of Hulu, perception gives as much power as anything else, especially as the company continues to eye a public offering.

Hulu could benefit with a lot of coverage and some beefing up of its valuation, so it could easily be someone with stakes in the game either from the standpoint of directing the company's future or even for someone looking to get in on the content side that's seeking some better advertising pricing.

The initial leak lacking a bidder's name is a tactic that can be used to get a private company to admit that it's in play or that it should be, both of which could do well for the studios behind the service and for the men and women sitting on its board. While Hulu's parents are for the most part public companies with many public arms, the joint venture itself is private.

One reason to suggest it should be in play is the $500 million projected revenue for all of 2011, compared to just $263 million in all of 2010.

Hulu explored an IPO last year when it was seeking money to license more content according to various reports, and its valuation was put at around $2 billion. Eventually this plan was halted, but this could be a good time to start it up again since the pay-TV companies have all signaled plans to develop their own OTT services.

Why a Sale Seems Dubious

Even if all of the somewhat fake seeming pieces fall together, a Hulu acquisition at this point feels pretty far off and it comes down to the content on the service.

We at The Online Reporter aren't experts in content licensing deals for TV shows on broadcast networks or the Web, and honestly through the years we've seen the folks who are miss the mark and trip themselves up in trying to explain this, so we're going to simplify the goals in all of this to a recent fortune cookie message that crossed our path: "Work hard and you will become more wealthy."

Hulu has worked hard to secure dozens of content partners across a wide range of content genres, but its core business and its best assets are the series of exclusive next-day distribution deals it has with its owners and their properties. It's broadcast owners along with Providence Equity own the majority of the service and they also hold the power on Hulu's board--Comcast is absent because of its deal when purchasing NBC Universal.

Any sale would give a short-term payout to these companies and even if it was a big offer it might not be enough because it didn't realize the nuance to our fortune cookie: power and wealth are sometimes interchangeable.

These media giants don't want to give up any control over their content and they typically don't trust anyone else with it especially with what they hold most dear. (Think we'll ever see a big ESPN ticket on Hulu? We don't either.). A purchase of the service would see a shift in the distribution rights for some of this big content to another party, and if the owners dragged their feet on these rights there'd be no sale.

Any move on Hulu is solely for these next-day episodes--we love the Criterion Collection's masterpieces of film as much as the next guy, but for money-making they pale in comparison to the latest episode of "The Daily Show," "Hot in Cleveland" or "House." Even older shows like "Lost" and "Heroes" stand to make a pretty penny on Hulu, but they help more for retention during the summer months as shows take their holiday from releasing new episodes than during the regular season where every night brings in a swath of new content that we can't possibly watch all at once.

Buying Hulu without these next-day airings isn't hard work, so it won't make anyone wealthy.

Web streams are changing the way everyone is looking at any video content. Mobile streams are going through the roof, videos and ads are becoming instantly interactive, YouTube is pulling in more and more eyeballs for longer and longer, and there are hundreds of millions of TVs that can get Web content to play on them through apps and connected devices, and the key theme to all this growth is confusion.

Anyone in charge of content right now has to be careful getting into the mix, especially when it comes to long-term deals. Even Hulu has had trouble securing them--that's one rumored reason its IPO didn't get off the ground last year--because no one wants to bet on the wrong horse six months down the line when the next great revolution occurs. Starz gets a bad wrap for this because of its previous $30 million per year deal with Netflix. Everyone is looking at it with fresh eyes. Starz made a bold and profitable move when it first got in bed with Netflix for that price, but now the market values those streams at much higher rates, and no one wants to be the next guy that has to wait until a deal is over to get back to market value.

Getting the whole of Hulu's board together is a tough task, but it's doable. Adding to that a deal that keeps Hulu's broadcast partners and content owner partners will be a tough one, but it could be done for Web-only content after greasing a lot of palms. Shifting this content to a new owner and then to TV sets would be incredibly expensive and could easily lead to a service that only a few studios want to work with again once their existing licensing deals are up.

Yahoo is still the top name in the rumor mill and it's perhaps the most interesting with its Connected TV platform and Broadcaster Interactive initiative, but it's a big, expensive play that we're not sure anyone in the market is quite ready to make. It's not impossible, but a profitable purchase of Hulu is well past aiming for the stars. It's boldly going where no one has gone before.