It paid $583 million in cash for the 10% stake, valuing Hulu at about $5.8 billion.
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Time Warner’s revenues decreased 5.4% year-over-year to $6.95 billion, and also missed the Zacks Consensus Estimate of $7.15 billion. 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.
Time Warner is already a streaming pioneer, as it owns HBO and launched stand-alone streaming service HBO Now past year.
The move could boost the viability of an online television service that Hulu is expected to launch next year as an alternative to cable TV.
The Time Warner investment “marks a major step for Hulu as we continue to redefine television for both consumers and advertisers”, Mike Hopkins, CEO of Hulu, said in a release. It remains unclear if that will be an entirely new service or an extension of Hulu’s current form. The company also behind original shows like The Mindy Project and 11.22.63.
Reuters reported that Time Warner’s shares saw 3.2-percent bump following the company announcing that it managed a higher quarterly profit that previously expected.
Hulu’s other owners, Disney, Fox and NBCU, are also supporting the build-out of the live service including carriage of channels like ESPN, FX, USA and many others.
Time Warner completed a merger with Charter Communications earlier this year.
Time Warner, which owns Warner Bros. film studio and TV channels HBO, TNT and CNN, has been facing a drop in subscriber numbers with cable cord cutting increasing in the USA and audiences opting for online streaming.
The online streaming market is now dominated by giants like Netflix and Amazon Prime, but it’s clear that Time Warner is trying to insert itself more into the game-just not too far.
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.
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The company says it now expects 2016 adjusted earnings per share from continuing operations to end up between $5.35 and $5.45 – up five cents from its previous forecast.
