Yahoo Inc has submitted a formal proposal to buy Hulu

LOS ANGELES/NEW YORK (Reuters) - Yahoo Inc has submitted a formal proposal to buy Hulu, joining a growing list of bidders for the video service owned by News Corp and Walt Disney Co, two sources with knowledge of the bid told Reuters on Friday.

Yahoo just this week announced a $1.1 billion acquisition of blogging service Tumblr. It now joins rival bidders for Hulu, including Time Warner Cable Inc, DirecTV, former News Corp president Peter Chernin and Guggenheim Digital Media, sources have said.

It is unclear how much the Internet company bid.

Sources have said Chernin is bidding $500 million, excluding an additional sum to cover Hulu's debt and programming commitments. But a source close to the bidding told Reuters his offer was too low, that Hulu could be worth as much as $1 billion to $2 billion.

Time Warner Cable's bid was fashioned as an equity investment, another person said, as the cable operator hopes to set up a joint venture with other cable companies to operate Hulu.

Yahoo did not respond to requests for comment. Its shares closed up 1.2 percent at $26.33.

At least five bidders have emerged for the five-year-old video service with 4 million users, potentially setting up a bidding competition. A second source close to the bidding said the offers submitted so far were non-binding and dependent on Hulu amending content licensing agreements the bidders found too restrictive.

Silver Lake, a minority owner of influential Hollywood talent agency William Morris Endeavor, has also submitted an indicative letter of interest, the source familiar with the Hulu bidding said, confirming an earlier Bloomberg report. The private equity firm teamed up with William Morris Endeavor, which it invested in a year ago, for the bid, according to the source.

Hulu, which generated revenues of around $700 million last year, streams TV shows online in similar fashion to Netflix Inc. It is being advised in the sale by Guggenheim Partners, a separately funded group from the digital media unit that placed the bid.

Yahoo has gone on an acquisition spree to bring in talent as well as beef up its mobile and online products and content, as CEO Marissa Mayer tries to revive a once-dominant Internet icon that has for years bled users.

Yahoo remains one of the Web's most popular destinations, but has seen its revenue shrink, as consumers