Hulu gains Time Warner as stakeholder

Time Warner is buying into Hulu.

The parent company of CNN, TBS, TNT and the Cartoon Network will take a 10% stake in the subscription video streaming service, joining stakeholders The Walt Disney Company (ABC), Comcast (NBCUniversal) and 21st Century Fox, each of which own 30%.

Time Warner paid $583 million for its 10% of Hulu, said Time Warner CEO and Chairman Jeff Bewkes during a conference call Wednesday. That would suggest the private company's current value as nearly $6 billion.

Time Warner (TWX) shares rose 4% Wednesday to $78.97.

Hulu, which launched its on-demand online service in 2008, plans to expand with live streaming networks early next year. Time Warner's Turner networks will be on that platform as well, the companies said.

"We think our networks, or brands and our shows should be available in essentially as many places and as many ways for consumers to get them with VOD (video on demand), etc., as we can," Bewkes said. "This is an additional way to do that. …. It adjoins all the other distribution methods and that is a good thing."

Currently, Hulu charges $11.99 for a monthly commercial-free subscription and a $7.99 monthly fee for limited commercials and access to recently released movies. It has about 12 million subscribers.

Hulu ranks No. 4 among over-the-top video services behind YouTube, Netflix and Amazon, according to research firm eMarketer. The service is expected to grow nearly 12% this year from 59.9 million to 67 million users by the end of 2016.

In addition to Time Warner networks, Hulu's planned live offering is expected to include ABC, the Disney Channel, ESPN, Fox, FX, Fox News and Fox's sports channels. ​Although, Hulu hasn't announced a price for the service, The Wall Street Journal has reported that it would cost $40, citing people familiar with the situation.

Hulu has continued to expand the programs it licenses and creates originally. In addition to South Park, Seinfeld and Empire, Hulu last year resurrected The Mindy Project after it was cancelled at Fox.

In June, the streaming service said it would team with CMT, Lionsgate and ABC Studios to resurrect ABC drama Nashville, which had been cancelled earlier this year after four seasons. Episodes will air on Hulu the day after broadcast on CMT.

Earlier this week, Hulu landed the first four seasons of Homeland, the popular Showtime series starring Claire Danes and Mandy Patinkin.

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