Report: Web video site Hulu preparing for IPO

The popular online video service Hulu is preparing for an initial public offering that would value the firm at $2 billion, according to a report from Reuters.

A three-year-old collaboration between NBC Universal, Disney and News Corp., Hulu offers free access to shows broadcast on Fox, NBC and ABC networks in addition to a paid service. According to the report, the deal would raise between $200 million and $300 million and could be filed by the end of the year. Morgan Stanley is reportedly set to lead the underwriters.

Hulu is the second-largest Web video service in the U.S. behind Google's YouTube, but it faces increasing competition in the market for online video, which is expected to hit $16 billion by 2012. Proceeds from the sale will be used to buy new shows for offering on the service.

Google recently signed content deals with Time Warner, which include HBO programming, for soon-to-launch Google TV service. Apple is also increasing its focus on Apple TV, and Amazon is said to be considering a subscription video service of its own. Cable companies and the popular Web-based movie subscription service Netflix also offer streaming video.