Reuters Insider - Time Warner Buys 10% Stake in Hulu, Valuing It at $5.8 Billion

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05/08/2016 02:12

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 Source:             Thomson Reuters                                   
                                                                       
 Description:        HBO owner Time Warner has purchased a 10% stake in 
                     Hulu, joining Disney, Fox and Comcast in owning   
                     the streaming-TV service, as they continue to walk 
                     the line between attracting viewers and stemming  
                     cord-cutting. Photo: AP                           
 
 
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Transcript (May be auto-generated)

                 Time Warner is trying to stem the cable cord-cutting tide; the company has 
agreed to pay $583 million in cash for a 10% stake in video service Hulu. The 
move comes as Hulu prepares to launch an online pay TV service early next year. 
The purchase gives Hulu a new valuation of $5.8 billion, triple the amount it 
was worth in 2012. Under the agreement, Time Warner's 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. The new service has 
threatened to further undercut traditional cable providers by offering its 
skinny TV bundle for roughly $40 a month. Time Warner is attempting to walk the 
line between reaching younger viewers while not explicitly encouraging 
cord-cutting. Offering current season content on Hulu was a sticking point for 
Time Warner. The deal makes current season content available for Hulu's cable TV
service which will include live channels and on-demand program but full current 
seasons of shows from Time Warner's networks won't be available on-demand for 
Hulu's existing $7.99 service - that, in contrast, to content from Hulu's other 
owners: Fox, Disney, and Comcast's NBC Universal. The Hulu deal doesn't include 
HBO but talks are ongoing about Hulu carrying the cable channel. Time Warner is 
grappling with subscriber declines as more viewers opt for online streaming. 
Last year, Time Warner launched HBO Now, its stand-alone streaming service for 
the channel featuring popular shows like Game of Thrones. Time Warner also 
started offering streaming subscription services for other brands like Adult 
Swim and it's been licensing to new entrance like DISH Network's Sling TV, 
Sony's PlayStation Vue, and now Hulu. The deal, announced Wednesday for a 10% 
stake, does not give Time Warner a seat on Hulu's board of directors, limiting 
its role to Hulu's strategic decisions. 21st Century Fox and News Corp, which 
owns the Wall Street Journal, share common ownership. Time Warner also reported 
better than expected second quarter earnings on Wednesday despite a 5.4% revenue
drop from a year earlier. The company said the decline was mostly due to a lack 
of blockbusters and a slowdown in its HBO business. HBO rose just 2% after 
climbing 7.7% in the first quarter