NEW YORK (AP) Time Warner is taking a 10 percent stake in streaming television service Hulu.
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Time Warner, long rumored to be a potential partner for Hulu, on Wednesday announced it had acquired a 10% stake in the video service best known as a repository of recently-aired network shows.
Time Warner has agreed to pay $583 million for the stake acquisition, thereby valuing Hulu at $5.8 billion.
Time Warner reported a slightly higher-than-expected uptick in revenue last quarter, as subscription revenue rose at its Turner Broadcasting unit and HBO. In an effort to stem the tide, Time Warner a year ago launched HBO Now, its stand-alone streaming service for the channel featuring popular shows such as Game of Thrones.
Hulu now offers on-demand streaming of many popular TV shows the day after they’re broadcast.
The investment also gives Hulu additional funding as it prepares to roll out a new live-streaming service, which is slated for early next year.
Time Warner had been negotiating its investment in Hulu for some time and said Wednesday that TNT, TBS, CNN and Cartoon Network would be part of a live-streaming service that Hulu is expected to launch early next year. Time Warner is joining other equity stakeholders including Disney, 21st Century Fox and Comcast’s NBC Universal. It remains unclear if that will be an entirely new service or an extension of Hulu’s current form.
That’s a plus for customers who want to subscribe to Hulu’s live service, rumored to cost around $4o per month.
“This investment from Time Warner marks a major step for Hulu as we continue to redefine television for both consumers and advertisers”, added Hulu CEO Mike Hopkins. The consensus estimate now stands at $5.39 per share. HBO is also a subsidiary of Time Warner, but the announcement makes no mention of HBO. The media and entertainment giant now expects its 2016 full-year adjusted EPS from continuing operations to be in the range of $5.35 to $5.45. Hulu already has a deal with CBS to carry Showtime for an extra fee, while HBO has a similar arrangement with an online TV service called Sling TV.
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Through its stock repurchase program, Time Warner bought back approximately 29 million shares of common stock worth roughly $1.6 billion from the beginning of the year through the end of the second quarter.
