Time Warner Inc. has agreed to pay $583 million for a 10 percent stake in Hulu.
The deal values Hulu at $5.8 billion, tripling the company’s asset value from 2012. Time Warner Inc. reportedly limited its investment, and settled for a non-controlling interest in the SVOD company, to limit regulatory concerns.
The programming conglomerate will also contribute its cable channels — which include TNT, TBS and CNN — to Hulu’s new live-streamed service when it debuts next year. Speaking today alongside Time Warner CEO Jeff Bewkes during the company’s second-quarter earnings call, HBO CEO Richard Plepler said his unit has had “constructive conversations” about including HBO in the live Hulu, as well.
Time Warner, however, will not be contributing its channels to Hulu’s existing SVOD platforms. The conglomerate has expressed concerns that SVOD distribution is cutting into its linear viewership.
“The investment in Hulu reflects Time Warner’s continued commitment to supporting innovative digital services that allow consumers to access high-quality content however they want it across a variety of platforms,” Time Warner said in its earnings release.
Time Warner Inc. had been reportedly kicking the tires on Hulu since last year, looking for entry ways into the over-the-top marketplace that do not involve Netflix.
The conglomerate is under pressure to recapture television viewership lost from the pay-TV ecosystem. But Bewkes has made clear recently that Time Warner doesn’t want to accomplish this goal by further enriching Netflix, a company that now has a similar market capitalization to Time Warner.
The conglomerate joins Hulu co-owners 21st Century Fox, Walt Disney Co. and Comcast/NBCUniversal in the SVOD venture.
For the second quarter, Time Warner said its revenue declined 5 percent to $6.95 billion.