Time Warner Inc TWX.N disclosed a 10 percent stake in video streaming site Hulu on Wednesday, setting its sights on the web TV market, and it raised its 2016 forecast on expectations of sustained growth in its traditional media business.
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Additional channels have not been confirmed, but a report from The Wall Street Journal indicates that Fox, ABC, ESPN, FX, and the Disney Channel are in negotiations with Hulu.
As part of the deal, Time Warner Inc. will also join part of Hulu’s planned live internet TV service, which is slated to arrive sometime in 2017.
“This investment from Time Warner marks a major step for Hulu as we continue to redefine television for both consumers and advertisers”, Hulu CEO Mike Hopkins said in a statement.
The deal will see an influx of Time Warner programming being supplied to Hulu, such as shows originating from Turner Broadcasting channels CNN, CBS, TNT and Cartoon Network.
Time Warner Inc. and Hulu LLC announced today that Time Warner will become a 10% owner of Hulu, the premium streaming TV service that offers the best of current season programming, premium original content, films and full seasons of hit series.
The company launched its own steaming service HBO Now previous year and it has tried to attract viewers with “binge-watching” marathons of select television shows. HBO is also a subsidiary of Time Warner, but the announcement makes no mention of HBO.
Mortgage giant Freddie Mac reported net income of $993 million for the second quarter, down sharply from the same period of 2015.
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Investing in the future of streaming media and pay TV, Time Warner spends $583 million for an equity stake in Hulu in an all-cash transaction. A Time Warner representative did not respond to a request for inquiry. Its prior guidance was for $5.30 to $5.40 per share. At that price, Hulu will have a valuation of about US$6 billion. Revenues were up 2 per cent to $1.5 billion as subscription revenues rose 6 per cent. Content revenues were down 17 per cent. The earnings per share, on the other hand, was comprehensively ahead of the consensus estimate of $1.16 and amounted to $1.29.
