Time Warner announced this morning that it has acquired a 10 percent stake in the streaming service Hulu for just under $600 million. In last year’s second quarter, the company reported $7.06 billion in revenue and $1.25 per share in adjusted earnings.
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The chart below gives an idea of each company’s ownership, assuming that Time Warner’s investment equally diluted each existing shareholder.
Time Warner announced on Wednesday that it agreed to buy a 10 percent stake in Hulu for $583 million.
Time Warner past year moved into video streaming by launching the stand-alone HBO Now service.
Furthermore, Turner’s entertainment, sports, news and kids networks, including TNT, TBS, CNN, Cartoon Network, Adult Swim, truTV, Boomerang and Turner Classic Movies, will be available live and on-demand on Hulu’s new live-streaming service, expected to launch early next year. But the investment deepens their relationship at a time when Time Warner is facing a seemingly irreversible decline in cable TV customers and increasingly tussling with pay-TV operators about digital distribution rights. 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. But overall sales fell 5% in the second quarter and missed Wall Street’s estimates, mainly due to a almost 20% drop in revenue at the company’s Warner Bros. movie and TV studio.
Hulu has been valued at around US$5.83 billion after Time Warner made a multi-million dollar investment in the United States streaming service. Time Warner has not only beaten the expectations but has also raised its guidance for the next quarter. Per-share earnings, excluding some items, are now expected to be in the range of $5.35 to $5.45. Its previous forecast was between $5.30 and $5.40 per share.
Revenue from CNN rose to 6.5%, while home to the one of the most popular TV shows of all time “Game of Thrones”, HBO increased its revenue contribution to 2% of the total.
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Excluding items, the company earned US$1.29 per share, compared with the average analyst estimate of US$1.16.
