The streamer agreed to sell a 10 percent stake in its business to Time Warner in a $583 million deal, freeing up cash to back its forthcoming live TV streaming service.
In its early days, Hulu’s complex corporate ownership was a point of ridicule as industry observers waited for it to fail. Now the streaming service is adding a fourth owner to the mix to prop up its position as it prepares to take on the cable industry.
Hulu on Wednesday agreed to sell a 10 percent stake in its business to Time Warner in a $583 million deal that values the streaming service at $5.8 billion. Simultaneously, the media conglomerate has agreed to an affiliate pact that will make its channels available on Hulu’s forthcoming live TV streaming service.
The long-awaited deal means that Time Warner will join existing Hulu owners Walt Disney, 21st Century Fox and NBCUniversal in the service, which is expected to launch next year. It’s a move that Hulu CEO Mike Hopkins called “a major step” for the company, which will now be able to offer customers access to live feeds from Time Warner-owned networks like CNN, TNT and TBS.
Hulu has been exploring the launch of a live television bundle for the better part of the year, inking early agreements from its owners for the service, which is targeting a price point of about $40 a month. It’s all part of Hopkins’ vision to transform Hulu from a destination for next-day TV — a product that has so far attracted about 12 million U.S. subscribers, about a quarter of Netflix’s domestic base — into an entertainment destination that offers something for everyone, from original series to on-demand shows to live programming.
The deal gives Hulu a cash infusion — its first since 2013 when its owners agreed not to sell and invested $750 million to help it take on the competition — as it builds out the new service.
Meanwhile, some observers are questioning Time Warner’s motivations for the deal, especially following CEO Jeff Bewkes’ recent comments that he would hold back his content from streaming services like Hulu — and competitors Netflix and Amazon — in order to extract more value from its traditional window. “It obviously would have been ideal to sell their channels into the venture and not have to absorb the losses [of an investment],” says BTIG media analyst Rich Greenfield.
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