Hulu board members, who are being advised by Guggenheim Partners on the auction, fielded at least seven buyout offers last week, the source said.
That number will be whittled down in the next two or three weeks, the source told Reuters on condition of anonymity because the process was private.
It was unclear which two other bidders offered $1 billion for Hulu. The service has more than 4 million subscribers and generates revenue of about $700 million through subscriptions and a free ad-supported service.
The proposed price tag heightens the likelihood that News Corp and Disney will find an acceptable offer price, which was the sticking point of the 2011 round of buyout negotiations.
DirecTV spokesman Darris Gringeri declined to comment, as did Meredith Kendall, a spokeswoman for Hulu. Bloomberg first reported the news on Friday.
Sources have said the other bidders are Yahoo, former News Corp president Peter Chernin, private equity firm KKR, cable operator Time Warner Cable, Guggenheim Digital, and Silver Lake Management and talent agency William Morris Endeavor Entertainment in a joint bid.
Cable company Comcast is the third owner of Hulu alongside News Corp and Disney, but is precluded from an operational role as a condition imposed on it upon its acquisition of NBC Universal in 2011.
© Thomson Reuters 2013