Time Warner announced this morning that it has acquired a 10 percent stake in the streaming service Hulu for just under $600 million. The acquisition has been rumored for months, although earlier reports suggested that Time Warner might attempt to procure as much as 25 percent of the company.
The move is good news for Hulu, which needs an influx of money not only to beef up its original content offerings, but to continue paying to license the content of other networks so that the service can remain competitive with Amazon and Netflix. That might be easier with Time Warner onboard since that company owns HBO, TNT, TBS, CNN, the Cartoon Network and Adult Swim, among others, and already has carriage deals in place with all of the major cable networks. As part of the deal, in fact, Time Warner has already stated that it would make TNT, TBS, and CNN available to Hulu for live viewing and video on demand. That could be seen as a blow to SlingTV, since the availability of TNT, TBS, and CNN is a big selling point for the service, which seeks to lure cord cutters away from cable with their own bundle of streaming channels. In fact, Hulu had already made inroads to compete against SlingTV before this deal.
What does all of this mean for the average television viewer? It’s a mixed bag. On the one hand, Time Warner clearly doesn’t want Hulu eating into its cable business. In fact, last month Netflix paid The CW Network (owned by Time Warner) a huge sum to license streaming rights to its programming, previously owned by Hulu. Hulu aired episodes of The CW’s programming the next day. Netflix is offering entire seasons, but only after the season has completed its run on The CW. This is what Time Warner likely prefers — and will push for on Hulu — because it’s less likely to draw away potential cord-cutters who want to watch Arrow, The Flash, or Crazy Ex-Girlfriend as soon as they air. Many cord cutters had, in fact, relied on Hulu for the immediate availability of CW offerings (including myself).
On the other hand, this is a way for Time Warner to hedge its bets. If cable collapses — and an increasing number of Americans are cutting the cord — Time Warner has skin in the new game. The future of television probably won’t be that different than the past. Streaming services will continue to bundle network offerings, only viewers can watch on their phones, iPads, Rokus, and Fire TVs, etc., instead of through a cable box.
Indeed, the existing state of television is complicated and convoluted for the cord cutter who still likes to watch a lot of television. More and more networks are offering stand-alone services or licensing their content exclusively to Netflix, Amazon, or Hulu, which makes it nearly as expensive as cable to watch a variety of programs from a variety of networks. Time Warner and Hulu teaming up provides an opportunity to streamline this transition by bringing a huge bundle of cable networks to one streaming service. If Time Warner can’t hang on to its quasi-monopoly in cable, Time Warner wants to be able to continue its quasi-monopoly in streaming. With Time Warner and Comcast already owning over 70 percent of new internet subscribers, it also makes perfect sense for Time Warner to own part of one of the biggest services provided through the internet.