Telsey Advisory Group Managing Director Tom Eagan believes Time Warner's investment is well-timed to broaden the reach of its TV shows.
"It guarantees them carriage or licensing on Hulu. It also gives them an equities stake in the appreciation of that service," Eagan said on CNBC's "Squawk on the Street."
Eagan thinks it is possible for Time Warner and Hulu to do a hybrid promotion. Without knowing the total number of over-the-top HBO subscribers, however, he believes it is difficult to know whether there is an opportunity for growth.
"CBS came out and had a million CBS 'All Access' subscribers and that positively surprised folks. HBO over-the-top better have at least a million subscribers," Eagan noted.
The difference between the cable TV and over-the-top businesses cannot be understated for Eagan who believes that today's world of entertainment content is about growing affiliate fees to get better negotiations, not growing the amount of content. Eagan does like Time Warner for its success in three trending areas.
"They have sports at Turner, they make TV shows at Warner Brothers and they have impressive over the top content at HBO," Eagan added.
Separately, TheStreet Ratings team rates Time Warner as a "buy" with a ratings score of A-.
This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that TheStreet Ratings team rates. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, notable return on equity and attractive valuation levels. TheStreet Ratings feels its strengths outweigh the fact that the company shows weak operating cash flow.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: TWX