Time Warner, long rumored to be a potential partner for Hulu, on Wednesday announced it had acquired a 10% stake in the video service best known as a repository of recently-aired network shows.
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Time Warner is paying about US$580 million for the Hulu stake, Recode reported, citing sources. Time Warner past year launched HBO Now, a stand-alone streaming service for the channel.
Hulu will continue its existing offering of ad-supported and ad-free subscription video-on-demand (VOD) products to complement both traditional pay TV packages as well as the new streaming service.
Time Warner had been negotiating its investment in Hulu for some time and said Wednesday that TNT, TBS, CNN and Cartoon Network would be part of a live-streaming service that Hulu is expected to launch early next year.
Three other television channel owners – Disney, 21st Century Fox and Comcast – are the other parents of the almost 10-year-old Hulu joint venture.
According to the print, the company earned revenue of $7 billion during the quarter in line with consensus estimate of $7.05 billion. 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.
Mike Hopkins, CEO of Hulu, said that the partnership with Time Warner will be most notable to subscribers when their livestreaming service launches.
Time Warner completed a merger with Charter Communications earlier this year.
Time Warner raised its full-year earnings guide to between $5.35 and $5.45 per share from the previous outlook of $5.30 to $5.40 per share. Time Warner itself was a stand-alone streaming service previous year.
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What will be interesting going forward will be seeing how much freedom cable companies acquiring stakes in streaming platforms give the new kids and just which side will be adapting to the other’s way of doing things. One a per-share basis, earnings were $1.29, topping the $1.16 predicted by analysts. Analysts polled by FactSet expect $5.39 per share.
