Time Warner, the entertainment giant that owns HBO and Warner Bros Pictures, has purchased a 10% stake in the streaming service Hulu.
Privately owned by a consortium of old-school TV players including 21st Century Fox, NBCUniversal and Disney, Hulu’s ad-supported business model has begun to look increasingly attractive to TV and movie producers as an increasing number of TV viewers cut the cord on cable subscriptions.
The Time Warner stake in Hulu is valued at $583m, according to Variety, citing sources, which would put the value of the business at nearly $6bn. Time Warner has been cautious in providing its shows and movies to so-called over-the-top services, where content is delivered over the internet; Netflix airings of its products are typically several years or seasons behind its television offerings.
In the past, Time Warner CEO Jeff Bewkes has been critical, even dismissive of Netflix, saying the service cannibalizes traditional television’s two revenue streams – cable subscriptions and advertising fees.
Bewkes heaped praise on the ad-supported Hulu, which will add the company’s channels to a new package that simply streams TV networks, ad load and all: “The inclusion of Turner’s networks in Hulu’s new streaming service furthers our efforts to allow consumers to engage with and enjoy our brands across a wide range of platforms and services,” Bewkes said.
Netflix, which saw its June stock gains wiped out after a disappointing July earnings report, has failed to expand internationally at a pace that pleases shareholders. In large measure, the company has put its hopes in international expansion of its user base, which could allow it to grow large enough to justify its multibillion-dollar off-the-books content licensing commitments.
With the support of its owners, Hulu airs episodes of many broadcast TV shows the day after they’re distributed over cables and airwaves. As Netflix shifts its spending patterns away from third-party producers and toward its own original series in an effort to maintain a more consistent library of series and films, Hulu owners may have an opportunity to increase its share of Americans abandoning traditional cable for less expensive options.
