Time Warner Buys 10 Percent Stake in Hulu for $583 Million

Time Warner buys a 10 percent stake in Hulu for $583 million, becoming a part owner along with Disney, Comcast NBCUniversal and Fox. The

Subscription News: Time Warner Buys 10 Percent Stake in Hulu for $583 Million

Source: Time Warner

Time Warner announced that it is buying a 10 percent stake in streaming video provider Hulu for $583 million, reports Variety. Time Warner is in good company with Hulu’s other owners: Walt Disney Company, 21st Century Fox and Comcast NBCUniversal, each of whom now own 30 percent of Hulu. The Wall Street Journal estimates the value of Hulu at $5.8 billion, triple what the company was worth in 2012.

As part of the deal, Turner will bring its cable networks to Hulu’s new live-streaming TV service which will launch sometime next year – TNT, TBS, Cartoon Network, CNN, Adult Swim, truTV, Boomerang and Turner Classic Movies. The channels will be available live and on-demand. The deal does not, however, give Time Warner a seat on Hulu’s board of directors, limiting its input on strategic decisions, says the Wall Street Journal.

Subscription News: Time Warner Buys 10 Percent Stake in Hulu for $583 Million

Source: Hulu

“This investment from Time Warner marks a major step for Hulu as we continue to redefine television for both consumers and advertisers. Our two companies have long enjoyed a productive relationship – which includes the availability of past seasons of popular Turner shows on our current SVOD offerings – and we are very proud that Turner’s networks will be included in our planned live streaming service,” said Hulu CEO Mike Hopkins about the deal.

This partnership will help Hulu expand its bundle of live broadcast and cable networks, so that it can compete with similar, smaller OTT services like Sling TV and PlayStation Vue now offering live TV in bundled packages. The deal will also help Hulu compete against Netflix, its biggest rival, as it acquires original shows, cuts licensing deals and expands it service, says Variety.

In an earnings call with analysts, Time Warner chief executive Jeff Bewkes said the investment in Hulu will “increase our company’s exposure to the secular growth in over-the-top,” according to the Wall Street Journal.

According to Deadline Hollywood, Bewkes said the deal “leaves us free to support fully other traditional and broadband-delivered distribution platforms,” and “there’ll be a number of additional virtual [pay TV] services” that will be “great for consumers and for our industry-leading brands.”

Insider Take:

Subscription News: Time Warner Buys 10 Percent Stake in Hulu for $583 Million

Source: Hulu

This deal is great for Hulu as a subscription company trying to launch its own streaming video service. Hulu will benefit from the financial backing of Time Warner, and it will enjoy access to the Turner networks. This will give the company a competitive advantage over other OTT services, and could perhaps attract niche audiences among the cord cutters and cord nevers, as well as traditional cable customers like fans of Turner Classics.

As the OTT market continues to blossom, we anticipate larger SVOD players like Hulu and Netflix with mega-deals like this will be the clear winners. They’ll have the resources and relationships to provide exclusive content and attractive packages for subscribers, while smaller players will have to work harder to attract and retain their niche audiences.

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