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Time Warner announced that it is buying a 10 percent stake in the company Hulu, according to reports. The company plans to spend close to $580 million for a stake in Hulu, which increases Hulu’s valuation to nearly $6 billion. Other companies that joined in the Hulu fray include 21st Century Fox, Disney and Comcast. 21st Century Fox is the former owners of Time Warner.
Time Warner also entered into a deal with Hulu to allow the Cartoon Network, CNN and TBS to stream on Hulu’s new platform that is scheduled to roll out next year. Hulu’s new platform will not prevent customers from watching and ordering movies on-demand. The new platform will offer newer and more original programming.
The deal is Time Warner’s effort to win back former customers who opted for streaming services due to the increasing prices for cable and premium channels. Known as cord cutters, consumers are opting out of bundling packages offered by cable giants such as Time Warner and Cox.
On Wednesday, shares of Time Warner were up more than one percent in premarket trading and Bloomberg News reported the company’s earnings per share were $1.29 versus an expected $1.16 EPS. On the heels of the agreement with Hulu, Time Warner raised its full-year earnings forecast. Bloomberg reported Time Warner’s revenue was down 5 percent to $7 billion compared to this time last year.