Another major development in the ever-growing world of internet streaming services has occurred. The Wall Street Journal is reporting that Time Warner has bought a stake in Hulu, leading to a rise in the value of the company to $5.8 billion. Time Warner now has a 10% stake in Hulu, for which Time Warner paid $583 million dollars. Though this gives Time Warner a significant share in the company, it does not provide them with a seat on the board of directors. This will also limit the companies input on strategic decisions the company makes (including marketing).
The Wall Street Journal is also reporting that this new evaluation is triple what the Hulu corporation was worth in 2012. The partnership is also going to be beneficial to Time Warner whose earnings have dropped significantly in the past year. The company reported a drop in revenue from 7.35 billion to 7 billion. Profits for Time Warner also dropped to 952 million from 971 million over the previous year.
Hulu confirmed that it would begin offering its new cable services on May 4th of this year, but talks of Time Warner and the partnership began in November of 2015. The release of the cable services will come sometime early next year. Time Warner is joining companies partnering and/or working alongside with Hulu, including Walt Disney, 21st Century Fox, and Comcast. Unlike these other companies, Time Warner’s content will only include the current season of television, and will not be available to those subscribed to the $7.99 a month services or the $11.99 commercial free option. The channels provided will include TNT, TBS, CNN, Cartoon Network, and Turner Classic Movies. Pricing of the premium cable service will be set around $40.
The new partnership and new services Hulu is providing will definitely give the company a competitive edge. Competing against other online streaming services like Netflix and Amazon Prime has definitely had an impact on Hulu’s business. It will be interesting to see what other streaming sites do to compete with Hulu’s modifications.