Hulu is seeking to sell a stake to Time Warner Inc. in a deal that could value the streaming video company at more than US$5 billion.
The stake purchase is also expected to bolster Hulu efforts to compete with Netflix Inc. and Amazon.com Inc., the Wall Street Journal reports, citing people familiar with the matter.
The companies have been in talks about Time Warner becoming an equal stakeholder in Hulu alongside Walt Disney Co., 21st Century Fox Inc. and Comcast Corp.
Such a deal is likely to involve the present owners which own one-third each, drawing down their stakes to 25 percent.
Hulu is trying to take on Netflix and broaden its content offerings.
Under the terms that have been discussed, Time Warner would invest cash in Hulu and commit to license content to the streaming service beyond what it already has sold, the people said.
Hulu’s interest in bringing Time Warner on board is about “long-term strategy”, one of the people said.
Time Warner owns the Warner Bros. studio, which produces TV programming for all major broadcast and cable networks, and its Turner Broadcasting unit includes channels such as TNT, TBS, Cartoon Network and truTV.
Time Warner also owns HBO.
The current owners committed to injecting US$750 million into Hulu after taking it off the block in 2013.
Over the past 18 months, Hulu has become an aggressive buyer of library and original programming, increasing its content outlays from US$600 million in 2014 to US$1.5 billion this year, according to estimates from Nomura Securities.
In Disney’s latest quarterly earnings conference call, Disney chief operating officer Thomas Staggs said Hulu will keep stepping up its investment in content, which will “continue to increase their losses in the near term.”
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