Is Yahoo about to start a bidding war for Hulu?

Amidst the recent uproar about network television’s decline, streaming video services are among the year’s biggest winners. YouTube continues to grow in viewership and internet clout, and Netflix and Amazon have both moved beyond simple movie and TV show streaming into developing their own original content. And then there’s Hulu, perhaps the first go-to site that internet users hit when they miss a show on TV and want to catch it for free, in high quality playback, online.

In that case, it’s no surprise that a stealthy Hulu auction process has attracted a range of potential suitors. According to reports, the bidders for the streaming video site include private equity firms like Silver Lake Partners and Kohlberg Kravis Roberts, along with Yahoo! and four other major media companies.

Hulu, which is currently owned in part by Disney, News Corporation, and Comcast, recently began a plot to sell itself. Yahoo was one of the first responders, hardly surprising considering the company’s recent attempts to grow their brand. Just last week, Yahoo announced that they had spent over $1 billion to procure the blogging/social media service Tumblr, while previous bids for video streaming services such as Dailymotion have made it clear that the company wants to break into that market.

Yahoo is going to hit some fierce competition here, though. Where Tumblr is a well-known site with an oft-duplicated blogging and photo-sharing function, the video streaming market is relatively small at the moment, condensed to a few major services. YouTube is firmly in the claws of Google, and Netflix, having already changed the film distribution game, has no reason to sell, so the fact that Hulu is now up for bidding will not escape most potential buyers. And while Yahoo may be determined to get their hands on the website–video services can both boost online traffic and command higher advertising rates than other forms–they will have to pay a substantial chunk of change to get there. Sources point to an estimate of $800 million as the auction’s starting bid, and the amount could easily soar past a billion before all is said and done.

The question, of course, is whether or not Hulu is worth all the money and trouble. According to theinquirer.com, the site earned $700 million just in advertising revenue last year, and with the growing demand for streaming television and good entertainment selection, a number in the hundred-million dollar range seems almost like a bargain.