Time Warner discloses a 10 percent stake in Hulu.

Even Time Warner Has Realized That Cord Cutters Are the Future

Even Time Warner Has Realized That Cord Cutters Are the Future

Moneybox
A blog about business and economics.
Aug. 3 2016 4:24 PM

Even Time Warner Has Realized That Cord Cutters Are the Future

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The way of the future? Actress Sarah Gadon attends the premiere of Hulu original series 11.22.63, in Westwood, California, on Feb. 11.

Valerie Macon/AFP/Getty Images

Time Warner is about to give consumers a bit more reason to cut the cord. The cable-network giant revealed on Wednesday that it had spent $583 million on a 10 percent stake in Hulu and had agreed to provide programming to the $40-a-month online TV service that the streaming company plans to launch early next year. Per the deal, Time Warner networks like Turner Classic Movies, Cartoon Network, CNN, TNT, and TBS will be available live and on-demand on Hulu’s new service—a service that will now be even more appealing to consumers looking to give up on their cable bundles.

The online streaming market is currently dominated by giants like Netflix and Amazon Prime, but it’s clear that Time Warner is trying to insert itself more into the game—just not too far. The company wants to open up a new revenue stream without cannibalizing its current one.

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By investing in Hulu and making its current-season content available on Hulu’s soon-to-debut cable-TV service, it could gain an online market it wasn’t reaching before—but it might also cut into its own traditional cable revenues. Other companies are also rolling out bundle offerings to entice consumers with an opportunity to cut the cord without losing all their television programming. The Dish Network has Sling TV, AT&T has the U-Verse package, and Comcast offers a “skinny bundle” of TV and broadband.

None of which, of course, has been lost on Time Warner, whose entrance into the online market has been extremely slow. Time Warner launched HBO Now last year to appeal to individuals no longer interested in paying for premium channels on top of a traditional cable subscription. Since then the company has been offering streaming subscription services for some of its other popular brands, like Adult Swim. The Hulu investment is a good opportunity for Time Warner to move more aggressively into streaming, but it’s also an investment in a competitor.