Enough with Yahoo’s spate of small-scale deal making; Stifel Nicolaus analyst Jordan Rohan suggests in a report today that Yahoo (NSDQ: YHOO) should either buy Hulu or take a “significant stake” in the video site, saying that Hulu’s reported interest in an IPO opens it up to other types of deals too.
Rohan’s reasoning for why Yahoo should be interested: “While an investment in Hulu doesn’t solve Yahoo!’s long term relevancy problems single-handedly, it could reinforce Yahoo!’s position as a core entertainment destination.”
He describes Yahoo’s recent deal-making, including its purchase of Associated Content and interest in CafeMom, as being “not large enough to change how Yahoo is perceived by advertisers.” A tie-up between Hulu and Yahoo, however, would provide it with an opportunity to cross-sell ads on a site that is a “must-buy” among brand advertisers.
For Hulu, a significant investment by Yahoo might also be better timed than an IPO. Despite its claims of rosy finances, there have been questions about whether the company is ready to go public, in part because its subscription service, which could ultimately provide a significant source of revenue, is just starting to roll out.
An outright sale seems much more far-fetched, considering at least some of Hulu’s joint venture partners likely want to retain some ownership of the site if they are going to keep their content there.