Hulu in Talks to Sell Company

Online video site Hulu has begun preliminary sales talks with about a dozen potential buyers, including Google Inc. (NASDAQ:GOOG), Microsoft Corp. (NASDAQ:MFST), and Yahoo Inc. (NASDAQ:YHOO), according to a source familiar with the situation.

Hulu's financial advisers, Morgan Stanley and Guggenheim Partners, set up meetings with potential buyers, and the company has been making the rounds this week. More discussions are expected to occur next week, said the source, who spoke on the condition of anonymity because of the sensitivity of the negotiations.

Hulu, owned by Walt Disney Co, News Corp , Comcast Corp's NBC Universal and Providence Equity Partners, offers free online access to prime time television shows such as ``The Office.'' Sources said last month that Hulu, approached by a potential buyer, was pondering a sale.

Last year, Hulu planned to raise $200 million to $300 million in a public offering that would have valued the company at about $2 billion. But it backed out in favor of a focus on new subscription models. Last July, Hulu introduced a paid service to expand its offering to encompass TV shows from other programming partners, such as Viacom.

Google and Hulu declined to comment. Microsoft and Yahoo were not immediately available for comment.

Though Hulu is popular, its owners are under pressure from cable and satellite companies that are reluctant to pay top dollar to carry programming offered for free on the Web.

Plus, many programmers are unwilling to put their shows on a free site with an advertising model that has yet to prove itself with premium video.

Hulu Chief Executive Jason Kilar said in April the company was on track to nearly double its revenue to $500 million and bring its paid subscriber count to more than 1 million this year.

Its largest online competitor is Netflix Inc, which has more than 20 million paying subscribers in the United States.

Talks with Google and Microsoft were first reported by the Los Angeles Times.

(Reporting by Paul Thomasch and Edwin Chan; Editing by Derek Caney, Dave Zimmerman)