Global media conglomerate Time Warner Inc. has purchased a 10% stake in streaming TV service Hulu, the companies announced this morning.
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The company also announced, however, that it has bought a stake in one of the Internet’s leading video-viewing sites. Time Warner paid $583 million in an all-cash transaction, which gives Hulu a valuation of $5.8 billion.
Hulu’s upcoming bundle of live broadcast and cable networks will compete with traditional cable and satellite-TV providers. The new Time Warner deal secures live and on-demand content from Turner’s networks, including TNT, TBS, CNN, Cartoon Network, Adult Swim, truTV, Boomerang and Turner Classic Movies.
That’s less than the stakes of Hulu’s current investors 21st Century Fox Inc, Walt Disney Co. and Comcast Corp’s NBCUniversal. Excluding one-time items, income was $1.29, beating analyst expectations of $1.16 per share, according to FactSet.
Then there’s the crown jewel of Time Warner, HBO, which already offers its own direct-to-consumer online service with HBO Now.
Hulu’s live TV service has been in the works for some time.
Mike Hopkins, CEO of Hulu, said that the partnership with Time Warner will be most notable to subscribers when their livestreaming service launches. The Hulu alliance also could come in handy – or perhaps even complicate – Time Warner’s own strategy of streaming shows on HBO Now.
On a per-share basis, the New York-based company said it had profit of $1.20.
The 5 percent revenue decrease was due to a decline at Warner Bros. and an unfavorable foreign exchange impact, the company said, but was partially offset by growth at Turner and HBO. The competition in the market is as stiff as ever, given the shift from traditional cable services to online streaming platforms, and Time Warner will be directly pitted against the likes of Netflix and Amazon Prime Video. Its prior guidance was for $5.30 to $5.40 per share.
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The deal comes as Hulu prepares to launch its own streaming service in 2017, which would be a potent potential avenue for cord-cutters and millennial cord-nevers.
