VEVO President and CEO Rio Caraeff

VEVO President and CEO Rio Caraeff speaks on stage at the VEVO Digital Content NewFronts Event featuring John Legend at Equitable Center Theater on April 25, 2012 in New York City. 

Neilson Barnard/Getty Images for VEVO

Will media heavies and telecom giants cough up $1 billion for the music video hub? Balks one insider: the financials are “bullshit.”

Vevo has helped Universal and Sony Music monetize their music video catalogs, to the tune of annual revenue that reached an estimated $250 million in 2013 (56 percent, or $140 million, went to the labels). But with the company on the block as it eyes life post-YouTube, its distributor since 2009, what is the music video hub worth to potential investors?

The Vevo sale is being led by Goldman Sachs in partnership with The Raine Group, with a valuation that could land in the reported range of $700 million to $1 billion, according to multiple sources. Interested parties have included virtually every major player across every media sector, from DreamWorks (which placed a bid in April) to firms The Chernin Group and Guggenheim Partners (parent of Billboard) to telecom giants AT&T and Verizon to Yahoo and Amazon, the latter two of which are eager to expand their footprint in streaming video. A Vevo representative declined to comment.

Marketing materials began circulating in August, and executives familiar with Vevo’s pitch are bearish on its prospects. Google’s minority investment in 2013, valued at a reported 7 percent stake, has made the company worth a minimum $650 million sale, a price tag that many are balking at given Vevo’s ultimate value without YouTube’s valuable display ad dollars, which make up a bulk of the company’s current earnings. Another potential hurdle: Vevo owners aren’t aligned on sale strategy.

“I don’t think they’re going to be able to sell it,” says a senior financial executive. “The book [Vevo’s financial data] is bullshit. The economics all depend on licenses from the major labels. If it’s sold, at what terms? The sellers can make Vevo look like it’s worth $1 billion or zero dollars.” Indeed, Vevo’s fate in the market is looking like that of streaming-video site Hulu, a well-known brand with little value outside of its content licenses. In 2013, Hulu held advanced talks with potential buyers before ultimately taking itself off the block. Says a corporate insider who opted not to bid for Vevo, “Whoever buys it will have to contend with the complications of dealing with rights holders.” Not always a pretty picture.

This article first appeared in the Aug. 23rd issue of Billboard