Jennifer Saba and Soyoung Kim

Hulu, the web video service that features popular shows such as Glee and Modern Family as well as movies, is planning an initial public offering that could value the company at more than $2 billion, a source familiar with the situation said on Monday.

The three-year-old service, backed by some of the most powerful companies in entertainment, could sell shares to the public before next year, the source said. An IPO could be postponed or scrapped, and precise details about the size of the offering and the ownership structure were unclear.

But consideration of a public sale underscores how quickly the world of movie and TV programing distribution is shifting: No longer is watching TV and movies on the Web or handheld devices the territory of early adopters or technophiles.

Hulu is owned by General Electric Co's NBC Universal, Walt Disney Co's ABC, News Corp's Fox Networks and private equity firm Providence Equity Partners.

Hulu and News Corp declined to comment. Walt Disney and NBC were not immediately available for comment. The New York Times first reported Hulu's plans.

Hulu began as free service that streamed programing to computers and depended on advertising revenue. Last month, Hulu introduced a paid, subscription-based service for mobile devices, game consoles and TV sets to strike a balance between paid and ad-supported models.

Other sites that provide similar services to Hulu, such as Google Inc's YouTube, are trying to find the right business model to capitalize on their audiences.

Questions remain regarding the stakes of the three major networks, which have trumpeted Hulu as the future of content distribution.

One of the important challenges to work out is a corporate governance structure that allows to maintain some sort of control, said Standard & Poor's media analyst Tuna Amobi. The partners view Hulu as a strategic asset. They view this as an integral part of their digital strategy.

CBS Corp is the only major broadcast network not involved with Hulu, but in recent weeks Chief Executive Les Moonves said it is in talks to possibly bring some of its TV shows to Hulu, thanks to its paid service.

Netflix, the online movie rental service, recently struck a deal with the Epix pay TV channel for exclusive online rights to stream movies from the three studios that own Epix.

Hulu reported revenue of about $100 million last year and was on track to repeat the same by the middle of this year, the Times said in its report.

(Reporting by Jennifer Saba and Soyoung Kim. Additional reporting by Archana Shankar in Bangalore; Editing by Jon Loades-Carter, Derek Caney and Robert MacMillan)

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