Time Warner invests in Hulu in win for cable cord-cutters

The revenue miss appeared to have been cancelled out in investors’ minds Wednesday morning by the announcement of Time Warner’s new stake in Hulu.

Time Warner has bought a 10% stake in Hulu for $583m.

When the Time Warner deal was first touted in November previous year, the US-based company was said to be eyeing a 25% stake, which would have diluted the other owners’ shareholdings to 25%. Those networks will span many categories, including things like Cartoon Network, TBS, TNT, CNN, Adult Swim, and Turner Classic Movies, among others.

Hulu, founded in 2006, has built a name for itself by offering the ability to stream popular shows from broadcast and cable networks, typically the day after they are shown on TV.

Hulu’s new service will compete with other live web TV services like Sling.

However, the investment “underscores Time Warner’s commitment to supporting and developing new platforms for the delivery of high-quality content and great consumer experiences to audiences around the globe”, he said.

Time Warner is joining forces with rivals Walt Disney, Comcast and 21st Century Fox as a shareholder in the video streaming company. Revenues for the quarter came in at $6.95 billion, against the comparable year-ago figure of $7.35 billion. Time Warner is unable to get a seat on Hulu’s board of directors with a 10% stake. Time Warner continues to make sure the Turner networks have the widest possible distribution, but are doing so without compromising too much traditional cable and satellite offerings, and it seems to be paying off.

The company increased its full-year guidance, anticipating earnings per share between $5.35 and $5.45.

Adding Time Warner’s networks to its live streaming service will have decent synergies for Hulu as well.

Excluding items, the company earned US$1.29 per share, compared with the average analyst estimate of US$1.16.

The company says it now expects 2016 adjusted earnings per share from continuing operations to end up between $5.35 and $5.45 – up five cents from its previous forecast. The Hulu alliance also could come in handy – or perhaps even complicate – Time Warner’s own strategy of streaming shows on HBO Now.