* Hulu IPO could raise $200 mln to $300 mln -sources
* Morgan Stanley likely to lead underwriters -sources
* Hulu could file IPO plan with SEC this year -source
* IPO could come in first half of 2011 -sources
By Clare Baldwin and Nadia Damouni
NEW YORK, Oct 8 Popular U.S. Web video service
Hulu is prepared to raise as much as $300 million in an initial
public offering likely to be led by Morgan Stanley, according
to sources familiar with the matter.
Hulu is ready to raise $200 million to $300 million in a
deal valuing the company at about $2 billion, and could file a
prospectus with the U.S. Securities and Exchange Commission
before the end of the year, one source said.
Tapping public markets is one of several options under
consideration as Hulu, which offers shows such as "Glee" and
"Modern Family" over the Web, girds for battle against
fast-moving rival Netflix (NFLX.O), and better financed big
technology companies Google Inc (GOOG.O) and Amazon.com Inc
Other options include attracting other media companies to
contribute new programming or raising more money from existing
partners, another source said.
A decision could come by November, the source said, adding
that the offering is contingent on the renewal of rights to
carry shows, some of which expire in a year.
The online video service, backed by General Electric Co's
(GE.N) NBC Universal, Walt Disney Co (DIS.N), News Corp
(NWSA.O) and private equity firm Providence Equity Partners,
was launched three years ago as an ambitious attempt to harness
the explosive growth in online video viewing.
The worldwide online video market is expected to hit $16.1
billion through paid and ad-supported services by 2012,
according to ABI Research, which tracks media trends.
Hulu is now the second-largest Web video service behind
Google's YouTube in the United States.
But with fresh assaults from Google, which secured content
deals with Time Warner (TWX.N) for its new Google TV service,
and Amazon.com, which is considering a subscription video
service of its own, Hulu has found itself racing to fill up its
coffers to pay for more content.
Apple Inc (AAPL.O), which views the television business as
a "hobby," considered launching a lower-cost subscription TV
service, but faced resistance from program owners. It launched
a $99 Apple TV device that lets customers rent videos instead.
Hulu has operated a free service, but began testing a
subscription video service that offers more shows for mobile
devices, game consoles and TV sets in June.
Hulu was not immediately available for comment.
News Corp, Walt Disney, NBCU, Morgan Stanley and Providence
declined to comment.
Filing by the end of the year gives Hulu the flexibility to
push an IPO out in January or February if the new issue market
improves, but also lays the groundwork for an offering in April
or May, after first quarter results have given it more time to
gauge its financial health and the market, people familiar with
the plan said.
Banks including Goldman Sachs, Bank of America and JPMorgan
in August pitched to lead the offering.
It is unclear if any banks have officially been mandated,
but several people said that Morgan Stanley, at least
unofficially, has been given the nod for the lead slot.
It has not yet been decided how many IPO shares will be
new and how many will be sold by current stakeholders.
The offering is too small to provide much liquidity to
shareholders, one source said. Proceeds from the offering are
expected to be used to bring new shows to the subscription
service, a separate source added.
(Reporting by Clare Baldwin, Nadia Damouni and Jennifer Saba.
Additional reporting by Megan Davies, Paul Thomasch, Sue
Zeidler and Yinka Adegoke. Editing by Kenneth Li)