Hulu Said to Be Looking for an IPO at a $2 Billion Valuation

Hulu is said to be looking at an initial public offering some time this year. The company is said to be interested in going public at a $2 billion or more valuation, a number which can seem a bit optimistic.

The owners of the site have started talking to investment banks to handle the transition to a publicly traded company which could come as early as this fall, as the New York Times reports citing unnamed sources close to the matter.

The discussion is still in the early stages, but the company seems determined to make the move as soon as possible. Hulu is a joint venture between three of the four major US broadcasters, News Corporation (Fox), the Walt Disney Company (ABC) and NBC Universal with funding from Providence Equity Partners.

Hulu has proven very successful in terms of users. It has risen to become the second largest video site in the US after YouTube, Google’s mammoth video site.

However, translating users into revenue has proven difficult for most players including Hulu. YouTube is only said to be on track to become profitable this year. Hulu as well is said to be barely profitable.

The site made about $100 million in revenue for 2009 and is on track to do at least double that in 2010. It is also close to launching a premium service, at $9.99 per month, to supplement the free offering.

Hulu is looking for a $2 billion valuation, roughly ten times the revenue, which seems as somewhat of a stretch. In fact, many analysts are saying that Hulu is hardly in a position to be thinking at an IPO, financially.

However, with its media owners increasingly wary of online content eating away at their profitable broadcasting businesses, there are fears that it will get less support from those companies and have less content to offer. Hulu possibly hopes that if it manages to have a successful public offering, it may strengthen its media owner’s trust in the company.