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By Shalini Ramachandran And Amol Sharma 

Hulu is seeking to sell a stake to Time Warner Inc. as part of a deal that would value the streaming-video service at more than $5 billion and advance its efforts to compete with Netflix Inc. and Amazon.com Inc., according to 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 would likely involve the current owners, who own one-third each, to draw down their stakes to 25%. One of the people familiar with the discussions said the talks aren't advanced.

For Hulu, such a deal would help the company 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 $750 million into Hulu after taking it off the sales block in 2013. Over the past 18 months, Hulu has become an aggressive buyer of library and original programming, increasing its content outlays from $600 million in 2014 to $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." Disney reported that a Hulu-driven equity loss hurt operating income at its broadcasting unit in the quarter ended Oct. 3. Still, Disney and Fox have touted the long-term value of building up Hulu.

In the conversations with Time Warner, the companies are valuing Hulu at $5 billion to $6 billion, the people familiar with the matter said.

21st Century Fox and Wall Street Journal-owner News Corp were part of the same company until 2013.

Keach Hagey contributed to this article.

Write to Shalini Ramachandran at shalini.ramachandran@wsj.com and Amol Sharma at amol.sharma@wsj.com

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(END) Dow Jones Newswires

November 12, 2015 16:18 ET (21:18 GMT)

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