Time Warner acquires 10% stake in Hulu

Time Warner has acquired a 10-per cent stake in Hulu, becoming the fourth major media company to back an online alternative to traditional TV in the latest sign of how entertainment companies were responding to changing consumer preferences.

The company said yesterday that it would pay $583 million for its minority interest in Hulu, which valued the 9-year-old Santa Monica joint venture at nearly $6 billion.

Current owners Walt Disney Co, Comcast Corp's NBC Universal and Rupert Murdoch's 21st Century Fox would each maintain a 30-per cent stake in the internet streaming service that had been adding to its programming to better compete with industry leader Netflix and the Amazon.com.

According to commentators, the move would give a further push Time Warner's subscription video-on-demand programming. It comes as traditional media companies look to keep up with changes in consumer behaviour, including cord-cutters who had canceled their cable subscriptions in favour of Web TV services like Netflix. They want to turn Hulu into a more viable competitor to Netflix, which boasted 47  million subscribers.

Commentators say, the deal provided a much needed cash infusion for Hulu, which was not yet profitable despite boasting 12 million subscribers in the US.

Time Warner's investment is expected to help Hulu which will next year launch a live-streaming service.

Sony and Dish already operated online TV services, and even Apple was reported to be interested. None of the companies, however, could boast of networks themselves as full partners or owners the way Hulu did.

Time Warner said yesterday that its networks - including TNT, TBS, CNN, Cartoon Network, Adult Swim, truTV, Boomerang and Turner Classic Movies would be available live and on-demand as part of Hulu's upcoming online TV service.

"Consumers clearly want innovative interfaces. They want more robust on-demand capabilities and they expect a greater variety of content packages," said Time Warner CEO Jeffrey Bewkes in a call with investors. "And we want to support services that do just that."