Time Warner Just Made Hulu the Skinny Bundle to Beat

The streaming service’s upcoming live TV offering will now include CNN, TNT and Cartoon Network (and maybe HBO)

Time Warner dropped a bombshell during its Wednesday earnings, announcing that it would be acquiring 10 percent of Hulu for $583 million, joining the streaming service’s other backers, Fox, Disney and Comcast. More importantly, as part of that deal, Hulu’s forthcoming live internet TV service will carry all of its Turner cable networks.

Adding those channels, which include CNN, TNT (the home of many NBA playoff games and March Madness) and potentially HBO — completes a big missing piece in Hulu’s live TV service that should elevate it to pole position in the race to provide a happy home for the millions of cord-cutters who are disappointed with the current alternatives.

Even though Hulu’s streaming service is yet to announce a start date — or even a name — today’s news should immediately make it the most intriguing option on the market, and potentially, the promised land for so many cord-cutters who thought the grass was greener without cable, only to find the landscape a lot more barren than expected.

Dish Network’s Sling TV offers packages starting as low as $20 per month, but has been dogged by reports of streaming quality issues since its inception. One reason is that America’s cable pipes can deliver a lot more video volume than the current Internet infrastructure can, but people who want to watch their favorite show in crystal clear HD don’t care about all that.

Sling’s basic package also includes just 28 channels and no broadcast networks, while its $25 offering includes only Fox and NBC among the big four. It also forces subscribers to choose between a $20 plan, including Disney’s ESPN networks, and a $25 plan that includes Fox channels.

Sling has a menu of supplementary offerings, including several regional Spanish-language add-ons for $5 and HBO for an additional $15 a month, but at that point, the draw of a cheap, skinny bundle becomes a lot less skinny and cheap. And while Sling continues to add subscribers (although it is yet to cross the 1 million mark), it’s barely made a dent in the continued bloodletting from Dish’s traditional satellite business, which just reported the largest quarterly decline in its history.

Sony’s PlayStation Vue offers a bigger menu of channels than Sling, including pricey regional sports channels, but it’s more expensive and until recently required a PlayStation 3 or 4 to use. And until March, it was only available in seven major markets. Vue’s basic tier starts at $30 a month and includes at least 55 channels (offerings depend on location), but the big four broadcast networks are only available live in the original seven markets, where the same package costs an extra $10 a month.

Hulu, however, has plenty of advantages its competitors don’t: It already has a 12 million strong subscriber base for its existing streaming video on demand service, which includes a library of shows from its backers as well as well-regarded original series such as “The Path.” A live streaming would be an easy upsell for those customers, especially if HBO is included. (Time Warner confirmed there are talks for the premium channel, which has its own $15 a month streaming offering.)

And as Recode’s Peter Kafka pointed out, it’s the first streaming bundle created by “the people who make and sell TV.” While competitors are trying to peel off cable subscribers by selling discounted a la carte items, Hulu is working directly with the chefs to create something that will complement, not cannibalize its most important customers — while filling a gaping hole in the market for disaffected cord-cutters.

Hulu’s live offering is hardly complete — it still doesn’t have CBS, America’s leading broadcast network by viewership, which could be a deal breaker for devoted NFL fans — but it looks like it will offer a wide array of popular channels for a competitive price. Also, there are four giant content companies with a significant interest in making it work.

While Hulu itself is estimated to be losing hundreds of millions of dollars a year, the infusion of cash from Time Warner — which values the company at $5.8 billion — should help.

And if Hulu capitalizes on its opportunity to become the preferred home for millions of unhappy ex-cable customers, it could give the embattled cable TV industry the last laugh. The disrupted becomes the disrupter.