The company’s shares were up 1.58 percent in premarket trading on Wednesday.
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The revenue miss appeared to have been cancelled out in investors’ minds Wednesday morning by the announcement of Time Warner’s new stake in Hulu.
With the investment, Time Warner, which also runs HBO, joins The Walt Disney Company, 21st Century Fox and Comcast/NBCU in the Hulu joint venture.
Time Warner Cable has disclosed a 10% stake in the video streaming service Hulu as the company battles growing competition from Netfilx and Amazon. Revenues were down 5 percent to $7 billion, with a decline at Warner Bros. partially offset by growth at Turner and HBO. 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%.
HBO’s revenue rose 2% to $1.5 billion, reflecting its enduring popularity among TV fans. On an adjusted basis, earnings per share were $1.29, topping the $1.16 predicted by analysts who were polled by S&P Global Capital Intelligence. Time Warner later confirmed it is investing $583 million, which implies Hulu is worth almost $6 billion.
In addition, networks such as TNT, TBS, CNN and Cartoon Network will be available live and on-demand on the live-streaming service that Hulu’s expected to launch next year.
One sticking point that had to be overcome in talks with Hulu’s owners was that Time Warner wasn’t comfortable with the vast amount of current season content made available on Hulu, believing that the availability of such content for a cheap price encouraged more people to cut the cord. Excluding one-time items, income was $1.29, beating analyst expectations of $1.16 per share, according to FactSet.
“The investment in Hulu reflects Time Warner’s continued commitment to supporting innovative digital services that allow consumers to access high-quality content across a variety of platforms”, the company said. Hulu will continue its current offering of ad-supported and ad-free subscription video on demand products to complement both traditional pay TV packages as well as the new streaming service.
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Details about Hulu’s planned live TV service are still slight at this time, though it has been confirmed that it will operate in much the same way as competing services: by streaming over the Internet without any contracts or installations and such.
