HBO and Warner Bros owner Time Warner has bought a 10 per cent stake in the TV streaming service Hulu and lifted its profit forecast after reporting higher-than-expected quarterly earnings today.
Time Warner's Turner arm has also signed a separate affiliate agreement for its full suite of networks to be carried on Hulu's live-streaming service, which is slated to be launched next year.
The Game of Thrones maker did not disclose how much it paid for the Hulu stake, though Reuters reported it had paid around $580m (£437m) in cash.
Revenues were down five per cent to $7bn in the second quarter ended 30 June, driven down by a 19 per cent revenue drop at Warner Bros to $2.7bn.
This was primarily due to lower videogames, home entertainment and TV licensing revenues.
Revenues at Turner increased six per cent to $3bn, due to increases of 11 per cent in subscription revenues and six per cent in advertising revenues. Turnover at HBO rose two per cent to $1.5bn.
Operating income fell one per cent to $1.8bn due to decreases at Warner Bros and HBO.
Earnings per share (EPS) reached $1.20, while adjusted EPS was $1.29 for the quarter, up from $1.25 in the same period of last year.
Shares were up 1.8 per cent to $77.13 at the time of writing in US morning trading.
Why it's interesting
The company said it expects adjusted profit for the year of $5.35 to $5.45 per share, up from its previous forecast of $5.30 to $5.40 on today's results.
Time Warner has led the way with Primetime Emmy nominations in the first half of the year. It received 148 in total, more than any other company, which was led by HBO's whopping 94 nominations "setting the pace for the industry".
The fall in Warner Bros revenue is also attributable to a one-off boost in the second quarter of last year, when the second-cycle syndication of "The Big Bang Theory" and the subscription video-on-demand licensing of Seinfeld launched.
The company said it had "gained momentum" in its film offerings with recent successes such as Central Intelligence and The Conjuring 2, and that anticipation was "running high" for the upcoming comic-book movie Suicide Squad.
What Time Warner said
Chairman and chief executive Jeff Bewkes said:
We had a strong first half of 2016, which puts us ahead of our original goals for the year. Our performance reflects the creative excellence resulting from investments we've been making in the very best content.
At the same time, we're capitalizing on new distribution opportunities to take advantage of the growing demand for high-quality video content around the world.
A strategic streaming expansion and better-than-expected revenues bode well for the next half.