According to the Wall Street Journal, Hulu is in talks to sell a stake to Time Warner, Inc., in a move that would value the company at $5 billion.
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For one thing, Hulu is losing money as it ramps up spending on content to compete with Netflix.
Hulu LLC, the streaming service owned by three media companies, is in talks to add Time Warner Inc.as a fourth owner, according to people with knowledge of the situation.
Hulu is seeking to sell a stake to Time Warner, Dow Jones reported, citing sources.
Commenting on Twitter, BTIG Research analyst Rich Greenfield said the deal “seems a bit odd for Time Warner”, which already has its own streaming service, HBO Now.
Time Warner Cable realizes that the Internet is slowly becoming the preferred medium of consuming content. Most of the cable companies are going all-out in making the content-viewing experience over the Internet more convenient and reliable.
On a conference call with investors last week, Bewkes hinted at concerns with the ad-free approach. In 2011, the CW network, owned by Time Warner and CBS signed a $1 billion deal with Netflix that kept the network afloat (That deal is about to expire). Such a deal could also put Hulu in line for use in upcoming virtual reality services.
“With Time Warner in the mix, it is hard to see a scenario where Hulu doesn’t become a more meaningful competitor to Netflix”, Bloomberg reported Paul Sweeney, an analyst with Bloomberg Intelligence, as saying.
“If we assume Hulu’s valuation to be in proportion to its revenues at one-third of Netflix’s market cap of $48.2 billion, the enterprise should be worth $14.5 billion”, Venkteshwar said in a report released Friday.
Hulu, of course, would love to corral Time Warner, one of the world’s largest producers of television and film. He implies that Hulu is more likely to poach traditional cable’s customers because its business model is closer to theirs.
Fox, on the other hand, plans to shake up its online ad experience on Hulu. Company CEO Mike Hopkins has tried to work with cable companies on “TV Everywhere” strategies and just earlier this year, he nailed his first deal with Cablevision.
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Comcast is working on consolidating its different video applications into a uniform and multi-purpose app, that will be able to adjust the content viewable by subscribers based on whether they are in or out of their homes.
