Wed | Sep 20, 2017

Time Warner invests in Hulu

Published:Friday | August 5, 2016 | 8:00 AM
This June 27, 2015, file photo, shows the Hulu logo on a window at the Milk Studios space in New York. (AP Photo/Dan Goodman, File)

In another win for cable cord-cutters, Time Warner has become the latest media company to invest in streaming service Hulu.

The move could boost the viability of an online TV service that Hulu is expected to launch next year as an alternative to cable TV.

Sony and Dish already operate online TV services, while Apple has expressed interest in one, according to published reports. None of those companies, however, have the networks themselves as full partners or owners the way Hulu does.

Time Warner Inc, which owns HBO, TNT and TBS, took a 10 per cent stake in Hulu for US$583 million, in another step blurring the lines separating cable TV from Internet video services. Hulu's other equity stakeholders already include the parent companies of ABC, Fox and NBC - Walt Disney Company, 21st Century Fox and Comcast's NBCUniversal.

Time Warner said on Wednesday that its networks, such as TNT, TBS, CNN and Cartoon Network, will be available as part of Hulu's upcoming online TV service. But the companies did not specify which Time Warner shows will be added to Hulu's current offering of on-demand shows.

It's also not known how HBO will fit in with either offering. Hulu already has a deal with CBS to carry Showtime for an extra fee, while HBO has a similar arrangement with an online TV service called Sling TV.

Hulu, founded in 2006, has built a name for itself in offering the ability to stream popular shows from broadcast and cable networks, typically the day after it's shown on TV. Hulu also creates its own shows, including comedies like Casual and Difficult People. Together with Netflix, Hulu has made it easier for people to drop cable or satellite TV services completely. Current seasons of many hit shows are available for streaming.

Access to live sports has been difficult without cable, though. But some of Time Warner's networks have been strong in that area, and by including those channels in a live-streaming service, Hulu makes cord-cutting even more viable.

Nomura analyst Anthony DiClemente said signing up Time Warner turns the Hulu live offering into a more "robust" product with all four big media conglomerates on board.

More competition soon

Time Warner's deal with Hulu comes almost a month after Comcast said that it's adding Netflix to its X1 set-top boxes, another move from a traditional media titan collaborating with a streaming-media site.

There also may be more competition soon, as United States regulators are weighing new requirements that would require the TV industry to allow technology companies such as Google and Apple to sell cable boxes, too. Those boxes have become a major source of revenue for cable providers, generating more than US$200 per year in leasing fees in the typical US household.

If cable boxes are sold by technology companies, they will likely feature more Internet applications, stepping up the pressure on incumbent providers to adapt.

New York-based Time Warner Inc also announced Wednesday that net income for the April-July quarter fell two per cent to US$952 million, or US$1.20 per share, from US$971 million, or US$1.16 per share a year ago. Excluding one-time items, income was US$1.29, beating analyst expectations of US$1.16 per share, according to FactSet. Revenue fell five per cent to US$6.95 billion, missing analyst expectations of US$7.06 billion.

The company attributed the revenue decline to weakness at Warner Bros, offset by growth at Turner and HBO. It boosted full-year adjusted profit outlook to a range of US$5.35 to US$5.45 per share. Its prior guidance was for US$5.30 to US$5.40 per share. Analysts polled by FactSet expect US$5.39 per share.

- AP