Time Warner mulls buying 25% in Hulu for over $1 bn

Time Warner is planning to invest over $1 billion for a 25-per cent stake in Hulu, in a deal that would value the streaming video service in excess of $5 billion, The Wall Street Journal reported yesterday, citing people familiar with the matter.

Media companies The Walt Disney Co, 21st Century Fox, and NBCUniversal Television Group (Comcast), which own one-third each in Hulu, will reduce their stakes to 25 per cent, giving Time Warner an equal 25 per cent, the report said.

Under the terms of the deal, Time Warner would invest cash in Hulu and commit to license content to the streaming service beyond what it has already sold, the report added.

Established in 2007, Hulu is best known for free online access to popular TV shows, though it launched a paid subscription service in July 2010 to expand its offerings to include TV shows from other programming partners like Viacom.

Hulu brings together a large selection of videos from over 400 content companies, including Fox, NBCUniversal, ABC, The CW, Univision, Criterion, A&E Networks, Lionsgate, Endemol, MGM, MTV Networks, Comedy Central, National Geographic, Digital Rights Group, Paramount, Sony Pictures, Warner Bros, TED and more.

Users can choose from current prime-time TV hits such as The Simpsons, Modern Family, Glee, The Office, Jersey Shore, The Daily Show and The Colbert Report; classics like Buffy the Vampire Slayer, The A-Team and Alfred Hitchcock Presents; full episodes and clips from Saturday Night Live.

Hulu's stiffest competitor is Netflix, which has 69.2 million viewers worldwide and 43.2 million in the US, while Hulu has more than 9 million paying customers.

Though Hulu has gained immense popularity, its owners are under increasing pressure from their cable and satellite distribution partners reluctant to pay premium dollars to carry content that is being offered for free on the web.

In 2013, the owners of Hulu abandoned the sale of the online video-streaming site and instead committed to jointly infuse $750 million in order to ensure its future growth. (See: Hulu owners abandon sale, to infuse $750 mn)