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Time Warner buys 10 percent of Hulu for $5.8 Billion

by Bharath ChowdaryAugust 4, 2016

Time Warner, the media giant that owns HBO, CNN and Warner Bros., said Wednesday that it bought a 10% stake in Hulu to broaden its video streaming distribution, following a dip in second quarter net income stemming from declining television licensing revenue and home video sales.

Its partnership with Hulu, a video company that competes with Netflix, calls for Time Warner’s “full suite of networks to be carried on Hulu’s live-streaming service” that will be launched next year, Time Warner CEO Jeff Bewkes said in a statement.

Time Warner’s 10 percent stake, at a $5.8 billion valuation for Hulu, precedes a planned introduction of Hulu’s live-streaming service next year. That feature will distinguish it from rivals like Amazon and Netflix, which trades at a higher multiple of sales than Hulu does based on its new investment.

time-warner-logo

For now, only shows from the Turner networks will be available, though there are discussions about adding ones from Time Warner’s HBO, home to the hit “Game of Thrones.”

Time Warner said Wednesday that its channels—including TNT, TBS, CNN, Cartoon Network and Turner Classic Movies—will be available live and on-demand on Hulu’s new cable-style online video service, set to launch early next year.

Hulu’s new service, confirmed in May, could further undercut traditional cable providers by offering its “skinny” TV bundle for roughly $40 a month.

Much more important is that the new Hulu service will compete with traditional pay TV programming sold by the likes of Charter and Comcast. That is, this one is different from all of the other web TV packages that people have been trying to put together — because this one is being created by the people who make and sell TV.

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