Media streaming service Hulu is looking to sell a stake to Time Warner.
Hulu is currently jointly owned by Walt Disney, Comcast and 21st Century Fox, who have one-third stake each. According to The Wall Street Journal, all these three companies will sell their stakes in a way that will bring the down their holding to 25 percent each and the remaining 25 percent will be sold to Time Warner.
"Hulu is seeking to sell a stake to Time Warner Inc. as part of a deal that would value the streaming-video service at more than $5 billion and advance its efforts to compete with Netflix Inc. and Amazon.com Inc., according to people familiar with the matter," reports The Wall Street Journal.
Experts suggest that Hulu will benefit from such a deal that will help the company to compete aggressively with rivals such as Netflix by offering more content to subscribers. The Wall Street Journal cites sources familiar with the matter and reports that as part of the deal, Time Warner will invest cash in the streaming service.
Warner Bros. studio that produces many TV programs for some of the major cable and broadcast companies is owned by Time Warner. The company's Turner Broadcasting department also includes some popular channels like TruTV, Cartoon Network, TBS and TNT. Moreover, HBO is also owned by Time Warner.
In the last one and a half year, Hulu has been aggressively buying original programming and library. The content outlays of Hulu have increased to $1.5 billion in 2015 in comparison to just $600 million in 2014.
Hulu's stakeholders have also announced that the streaming service will continue to invest in content, which will give long-term benefits to Hulu.
People familiar with the latest discussions suggest that Hulu has been valued between $5 billion and $6 billion.
In April this year, Hulu announced that it had more than 9 million paying subscribers, which is far low in comparison to Netflix that has 69.2 million subscribers worldwide, which includes 43.2 million in the U.S. alone, at the end of Q3 of 2015. The latest deal with Time Warner may help Hulu to expand its user base in the near term.
