For Hulu, it is the best of times, but also the worst of times. The upside is that the company—which is currently co-owned by Disney, Comcast and 21st Century Fox—is a strong competitor to Netflix, and looks like a smart bet on the future of over-the-top services. The downside, however, is that even as media companies like Time Warner (TWX) are looking to buy into it, they are also pressuring Hulu to change the way it does business.
There have been reports for some time that Time Warner—which owns the Warner Brothers movie studio, Turner Broadcasting, and HBO—is in talks to acquire a 25% stake in Hulu, and that the company is prepared to spend as much as $2 billion in order to do so.
This would be good news for Hulu, since it would provide more cash to help the service compete with Netflix (NFLX), whose $40-billion market value makes it substantially larger. And it would be good news for the current owners of Hulu, since they could sell some of their shares and thus monetize their investment.
But even as it contemplates an investment in Hulu, Time Warner is also trying to get the streaming service to fundamentally change its approach. And there’s a risk that if Time Warner is successful, it could actually cripple Hulu, or at least substantially decrease its value for some users (like Netflix, Hulu has also been investing in its own original content, but existing shows are still a big draw).
Here’s when Netflix’s original shows are on:
Hulu appeals to cord-cutters—who are giving up their cable subscriptions in growing numbers —because they can watch current episodes of TV shows from a variety of networks without having to subscribe to an expensive cable package. But that’s exactly what Time Warner (TWX) hates about it. And as a Wall Street Journal story points out, this has made negotiations between the two companies somewhat complicated.
On the one hand, Time Warner would really like to own a stake in Hulu, in part because it would make an effective hedge against cord cutting and Netflix. But at the same time, the media conglomerate would also really like Hulu to stop showing current season episodes of its TV shows, because that eats into its pay-TV revenue.
One option for Hulu is to put Time Warner shows behind a separate pay wall, the way it does for some shows from other providers such as the USA Network. But each barrier placed in front of the content reduces the likelihood of someone watching it.
Get Data Sheet, Fortune’s technology newsletter
In a sense, investing in Hulu would be a side bet by Time Warner on its own cannibalization by streaming services. But it’s clear that the corporation also wants to pursue its own pay-TV model, which is aimed at holding on to as many existing viewers as possible through “TV Anywhere” services and other more flexible approaches to cable. In other words, it wants to preserve “the bundle.”
An investment by Time Warner is supposedly not contingent on Hulu removing current seasons and episodes of the network’s shows, according to the Journal story. But it’s hard to see how putting $2 billion into a company and becoming a 25% owner wouldn’t give Time Warner even more muscle to put behind its argument.
The risk for both Time Warner and Hulu is that if the former is successful in those attempts, it could ultimately reduce the value of its investment in the latter. Like many existing media entities, Time Warner is in the uncomfortable position of having to try and suck and blow at the same time—to preserve its existing business, but also invest in things that are cannibalizing that business. Not an easy thing to do.