In another sign that major TV content providers are looking to bypass traditional pay-TV distributors and go direct to viewers, Time Warner has purchased a 10% stake in Hulu and plans to have its Turner-owned networks participate in Hulu's upcoming live streaming service.
Time Warner Inc. (NYSE: TWX), which has reportedly been angling for months to become an equal stakeholder in Hulu LLC , announced the investment this morning in a joint press release with Hulu. With the 10% stake, which is reportedly worth about $580 million, Time Warner will join Hulu's other three big Hollywood owners -- Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s NBCUniversal LLC , Walt Disney Co. (NYSE: DIS) and 21st Century Fox .
But the latter three conglomerates, which formerly each held a 33% stake in Hulu, will continue to be larger shareholders. So Time Warner apparently will not fulfill its ambition to become an equal stakeholder, at least not yet. Time Warner and Hulu did not disclose financial terms of the deal beyond the 10% stake.
Notably, the investment pact will also allow Hulu to carry Time Warner's Turner family of networks on the new live streaming service that the OTT provider is planning to launch early next year. The Turner portfolio of networks includes TNT, TBS, CNN, Cartoon Network, Adult Swim, truTV, Boomerang and Turner Classic Movies. Hulu will have the right to offer all eight networks both live an on-demand on its new streaming service. (See Hulu Eyes Cable-Like Bundle – Report.)
Hulu, which already offers both ad-supported and ad-free subscription VoD (SVoD) services, intends to use the live streaming service to compete against such "skinny bundle" OTT services as Dish Network LLC (Nasdaq: DISH)'s Sling TV offering. Hulu also aims to ratchet up the competition with such major rivals in the OTT market as Netflix Inc. (Nasdaq: NFLX), Amazon.com Inc. (Nasdaq: AMZN) and Google (Nasdaq: GOOG)'s YouTube Inc. .
Privately owned Hulu, which has been growing steadily along with the rapidly expanding OTT market, revealed in May that it was closing in on 12 million SVoD subscribers in the US. It boasts an annual growth rate of more than 30%.
— Alan Breznick, Cable/Video Practice Leader, >Light Reading