Time Warner Buys Chunk of Hulu for $583M

The deal will make Time Warner channels available to viewers who have been cutting the cable and satellite TV cord.
Matthew HellerAugust 3, 2016

Time Warner is joining other major media companies by investing in Hulu, a move that will make its cable channels available on a new Hulu live-streaming service.

The companies announced Wednesday that Time Warner will acquire a 10% stake in Hulu and channels such as TNT, TBS, CNN, and Cartoon Network will be aired live and on-demand on the new service, which is slated to launch next year.

Terms of the deal were not disclosed but published reports said Time Warner is paying $583 million. Hulu’s equity owners already include The Walt Disney Company, 21st Century Fox, and Comcast but, unlike those companies, Time Warner won’t be contributing programming to Hulu’s existing service.

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“Our investment in Hulu underscores Time Warner’s commitment to supporting and developing new platforms for the delivery of high-quality content and great consumer experiences to audiences around the globe,” Time Warner CEO Jeff Bewkes said in a news release.

Time Warner last year moved into video streaming by launching the stand-alone HBO Now service. With the Hulu deal, The Wall Street Journal said, it is “attempting to carefully thread the needle in trying to reach younger viewers while not explicitly encouraging cord-cutting.”

“Established media companies have been scurrying to adapt to changes in consumer behavior by developing alternatives to traditional pay-TV packages,” the Los Angeles Times said. “They hope to appeal to consumers who have been canceling or delaying signing up for bundles of channels provided by traditional cable and satellite-TV providers.”

The Times also noted that the deal will help Hulu to compete with industry leader Netflix by beefing up its supply of high-quality programming.

According to the WSJ, a sticking point in the companies’ negotiations was that Time Warner “wasn’t comfortable with the vast amount of current season content made available on Hulu, believing that the availability of such content for a cheap price encouraged more people to cut the cord.”

Hulu’s new service will compete with other live web TV services like Sling. “This investment fits our strategy like a glove,” Bewkes said in an earnings call.