Time Warner announced this morning that it has acquired a 10 percent stake in the streaming service Hulu for just under $600 million. Time Warner has bought a 10 percent in the company, according to Variety. The transaction values Hulu at about $5.8 billion, The Wall Street Journal reported.
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Of course, things have changed since February when those reports about Time Warner’s plans first broke – Hulu hadn’t yet announced its plans for a live TV service, for example, and Time Warner also didn’t acquire as much of the company as it had reportedly hoped. Naturally, the deal doesn’t include HBO (which CNET calls the “Time Warner crown jewel”), and it also won’t add any new titles to Hulu’s on-demand library, but it’s still better than nothing. The new Hulu streaming OTT service is expected to debut early next year, competing with similar offers from Sling TV and Sony PlayStation Vue. Per the deal, Time Warner networks like Turner Classic Movies, Cartoon Network, CNN, TNT, and TBS will be available live and on-demand on Hulu’s new service-a service that will now be even more appealing to consumers looking to give up on their cable bundles.
Time Warner joins Disney, 21st Century Fox and Comcast in the streaming-TV service joint venture.
It also probably underscores Time Warner’s acknowledgment that their entire business model is changing and being challenged at a rapid pace. The company’s quarterly fell 5.4% year-over-year to $7 billion. Shares of TWX rose 3.5 percent in premarket trading.
Nomura analyst Anthony DiClemente said signing up Time Warner turns the Hulu live offering into a more “robust” product with all four big media conglomerates on board.
As more families and individuals are running away from cable TV, Time Warner is finding its way to online video services led by Netflix and Amazon.
The company said it expects adjusted profit for the year of US$5.35-US$5.45 per share, up from its previous forecast of US$5.30-US$5.40.
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“They want to ensure that the Turner networks have the broadest possible distribution without really compromising the traditional cable, satellite and telco channels”, said Wunderlich Securities analyst Matthew Harrigan.
