×

Time Warner is buying 10 percent of Hulu for around $600 million

After months of talks, Time Warner is buying a chunk of Hulu, the Web TV service.

The deal means Time Warner will be partners with existing owners Disney, 21st Century Fox and Comcast's NBCUniversal, and that Time Warner's channels like Turner and CNN will be part of a new pay TV service Hulu wants to launch next year.

Time Warner says it is buying a 10 percent stake in Hulu; a person familiar with the deal says it is putting in around $580 million for that stake, which values the entire company at $5.8 billion.

Read more from Recode:
Moon Express is the first private company to get regulatory approval to land on the moon
Lyft is making a lot of money, but will it be enough to find a buyer?
Drones from Google's Alphabet will take flight soon. But can they outmatch Amazon?

Hulu, which industry sources estimate is losing hundreds of millions of dollars a year, had originally wanted Time Warner to buy as much as 25 percent of the company.

Unlike Hulu's founding partners, Time Warner won't be contributing its programming to Hulu's existing service, which provides access to shows a day after they air. Time Warner has argued that "repeat TV" services like Hulu's basic service, as well as Netflix, detract from the value of its core TV business.

But Time Warner's channels will run on the new live TV service that Hulu has said it wants to launch next year. That service will compete with other live Web TV services like Sling, which already has a licensing deal with Time Warner for channels including TNT and CNN.

Much more important is that the new Hulu service will compete with traditional pay TV programming sold by the likes of Charter and Comcast: That is, this one is different from all of the other web TV packages that people have been trying to put together — because this one is being created by the people who make and sell TV.

Disclosure: Comcast is the owner of NBCUniversal, the parent company of CNBC and CNBC.com.

Disclosure: CNBC parent NBCUniversal is an investor in Recode's parent Vox Media. Recode and NBC have a content-sharing arrangement.