Time Warner has accused Hulu of hurting TV networks and accelerating cord-cutting by offering current episodes of TV shows.
The media giant has been in discussions with the Hulu, which is currently owned by firms including Walt Disney, 21st Century Fox and Comcast, over a possible 25 per cent equity stake for the last few months. However, negotiations have reportedly staggered due to Hulu’s practice of releasing new episodes of TV shows.
Hulu has differentiated itself from other streaming services by offering the latest episodes for shows such as Fox’s 'Empire' and ABC’s 'Quantico'. The model differs from that of Netflix and Amazon which typically release entire seasons after they have aired on TV.
Time Warner is understood to have told Hulu that it wants to end the practice because it essentially nullifies TV's main advantage over streaming services and undercuts revenue from TV which still makes up the majority of the firm's revenue and profit.
The talks illustrate the headache facing media companies when it comes to Hulu. By strengthening the service its owners can compete with the likes of Netflix and work towards creating a model which can offset the losses of cord-cutting. However mirroring the TV model will leave TV with nothing to offer over streaming and would only lure more cord-cutters.
One possible adaptation to Hulu’s approach would be to place all current seasons of shows behind a paywall only accessible to pay TV subscribers, something which it already does for some cable shows such as 'Suits'.
The call to curb current episodes coming to Netflix is not a condition for the investment however Wall Street analysts believe Hulu’s current season deals are a significant part of its value and appeal so it may be reluctant to change that.