Making a bet on the future of streaming video, Time Warner bought a 10 percent stake in Hulu, both companies announced today.
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The deal doesn’t include Time Warner crown jewel HBO, and it doesn’t put any on-demand shows from the company on Hulu’s Netflix-like service of TV repeats and originals. The Hulu investment is a good opportunity for Time Warner to move more aggressively into streaming, but it’s also an investment in a competitor.
Time Warner Chief Executive Officer Jeff Bewkes said during a conference call on Wednesday that his company won’t have an active role in Hulu – and owning 10% and not having a board seat “reduces complications around governance”. The content will be available live and on-demand on Hulu’s new live-streaming service for set-top and mobile devices, scheduled to debut early next year, which is created to compete with MVPD’s low-priced “skinny bundle” offerings.
That means Adult Swim, Boomerang, Cartoon Network, CNN, TBS, TNT, TruTV, and Turner Classic Movies are all coming to Hulu’s live streaming service. That stake doesn’t equal the stakes of Hulu’s current investors 21st Century Fox Inc., Walt Disney Co. and Comcast Corp’s NBCUniversal. Time Warner continues to make sure the Turner networks have the widest possible distribution, but are doing so without compromising too much traditional cable and satellite offerings, and it seems to be paying off.
Time Warner’s net income fell to $951 million, or $1.20 per share, from $971 million, or $1.16 per share, a year earlier. Its 2Q revenue decreased 5.39% to $6.952 billion from $7.348 billion in the second quarter of 2015, as revenue increase in Turner segment was offset by the weak performance of Warner Bros segment. In a separate affiliate deal announced Wednesday, Hulu will carry Time Warner’s channels in its upcoming live TV service. Elsewhere, revenue from the company’s top networks like the Turner division, home to CNN, climbed 6.5%, while revenue at its premium channel HBO grew 2%.
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There also may be more competition soon, as US regulators are weighing whether to require the TV industry to allow technology companies such as Google and Apple to sell cable boxes, too.
