The emerging battle for online television services is heating up with news Wednesday that Time Warner, Inc. has taken a 10 percent stake in streaming and video on demand service Hulu LLC.
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Time Warner pledged about $583 million for its piece, which values Hulu at almost $6 billion.
Time Warner is paying about US$580 million for the Hulu stake, Recode reported, citing sources.
Hulu, founded in 2006, has built a name for itself by offering the ability to stream popular shows from broadcast and cable networks, typically the day after they are shown on TV.
During its newfront presentation in May, Hulu confirmed that it will launch a streaming skinny bundle service, expected to go for $40 per month and debut in 2017.
The deal will bring Hulu a wealth of entertainment, sports, news and children’s programming from Time Warner’s Turner family of networks (TNT, TBS, CNN, Cartoon Network, Adult Swim, truTV, Boomerang and Turner Classic Movies).
“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. That stake doesn’t equal the stakes of Hulu’s current investors 21st Century Fox Inc., Walt Disney Co. and Comcast Corp’s NBCUniversal.
The results are a sign that Time Warner is still benefiting from its traditional cable business even as the TV industry grapples with declining ratings and cord-cutting.
Time Warner is about to give consumers a bit more reason to cut the cord.
Past seasons of several Turner shows are already available on Hulu. The cable provider earned $1.29 per share on an adjusted basis, up 4 cents from a year-ago and higher than the $1.16 EPS analyst were expecting, according to a Thomson Reuters survey. 3D Systems posted non-GAAP earnings of 12 cents per share on $158.1 million in sales, representing a 7% year over year decline in revenue, against the consensus estimates of 6 cents per share in earnings and $161.01 million in sales. The company’s Warner Brothers film and TV production unit saw revenue of $2.7 billion, a 19% plunge.
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None of which, of course, has been lost on Time Warner, whose entrance into the online market has been extremely slow. Its 2016 per-share earnings, excluding some items, are now expected to be in the range of $5.35 to $5.45.
