Time Warner Acquires 10% Stake in Hulu; Q2 Earnings Beat, Forecast Raised

hulu-logoMedia giant Time Warner Inc (NYSE:TWX) on Wednesday posted market-beating Q2 earnings results, but the bigger news coming out of the report was the disclosure of the company’s 10% stake in streaming media provider Hulu.

Hulu Acquisition Overshadows Earnings

Hulu, which offers subscribers access to hundreds of television shows, and to a lesser extent, movies, is a joint venture between Disney, 21st Century Fox, and Comcast. Now Time Warner has joined the mix of “old media” firms with an ownership stake in the new media company.

Expect to see an increasing amount of Time Warner’s content on Hulu in the near future, including live streaming. From the press release:

Turner’s powerful entertainment, sports, news and kids networks including TNT, TBS, CNN, Cartoon Network, Adult Swim, truTV, Boomerang and Turner Classic Movies will be available live and on-demand on Hulu’s new live-streaming service, which is slated to launch early next year. With no set-up costs or installation, Hulu’s new service will offer an intuitive and personalized interface, and instant access to live and on-demand content, across hundreds of living room and mobile devices.

Continuing:

Jeff Bewkes, Chairman and CEO of Time Warner said, “Our investment in Hulu 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.”

Mr. Bewkes continued: “We’re also excited to join Hulu’s other owners in launching a new consumer-friendly package featuring leading networks that will deliver more value to audiences and complement Hulu’s core SVOD offerings. The inclusion of Turner’s networks in Hulu’s new streaming service furthers our efforts to allow consumers to engage with and enjoy our brands across a wide range of platforms and services.”

Mike Hopkins, CEO of Hulu, said, “This investment from Time Warner marks a major step for Hulu as we continue to redefine television for both consumers and advertisers. Our two companies have long enjoyed a productive relationship – which includes the availability of past seasons of popular Turner shows on our current SVOD offerings – and we are very proud that Turner’s networks will be included in our planned live streaming service.”

TWX Lifts Forecast as Q2 Earnings Rise

Time Warner reported second quarter net income of $952 million, or $1.20 per share, compared with $971 million, or $1.16 per share, in the year-ago period. Excluding items, adjusted profit was $1.29 per share.

Revenue fell 5.4% from last year to $6.95 billion.

On average, Wall Street analysts expected lower EPS of $1.16, albeit on higher revenue of $7.06 billion.

Looking ahead, the company lifted its full-year profit outlook to a range of $5.35 to $5.45 per share, up from a prior forecast of $5.30 to $5.40. Analysts are looking for $5.39 per share for the year.

Other interesting notes from the release:

  • Revenue at Warner Bros. film studio plunged over 19%.
  • Turner and HBO segments saw strong revenue growth.

Time Warner shares rose $1.89 (+2.49%) $77.67 in Wednesday morning trading. The stock has gained over 20% year-to-date, more than three times the return of the benchmark S&P 500, which rose 5.87% in the same period.

TWX-08-03-2016

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