Time Warner says it is buying a 10 percent stake in Hulu; a person familiar with the deal says it is putting in around $580 million for that stake, which values the entire company at $5.8 billion.
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Rumors of Time Warner’s interest in the streaming service were first reported back in February, with allegations that the television empire was looking to get rid of Hulu’s ability to stream next-day content. Hulu’s over-the-top bundle, which is set to launch sometime in 2017, will benefit from the deal with content from Turner networks.
That bought the company a 10 percent stake, less than joint owners Disney, Comcast and 21 Century Fox, parent companies of ABC, NBC and Fox. Turner channels to be available live on Hulu include TNT, TBS, CNN, Cartoon Network, Adult Swim, TruTV, Boomerang and Turner Classic Movies.
Currently, Time Warner will not contribute any of its content to Hulu, but it will stream live TV services on Hulu platform next year when it starts its live streaming services.
“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. This new investment would value Hulu at almost $6 billion and sets the stage for the company’s move into live TV streaming next year.
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. Time Warner did not disclose the details of the purchase price, but reports by the tech website ReCode suggest it could be close to $580m. Warner Bros. revenue declined to $2.7 billion from $3.3 billion, while Intersegment eliminations amounted to -$183 million, an improvement from the year-ago quarter’s -$215 million.
Variety said Time Warner is paying $583 million for its slice of Hulu.
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Excluding special items, earnings of $1.29 per share beat the analysts’ average estimate of $1.16. And total revenue for the quarter fell by 5%, to $7 billion. However, adjusted earnings per share came in at $1.29. Analysts polled by FactSet expect $5.39 per share.
