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Disney Expects Increased Hulu Losses Going Forward

9 Nov, 2017 By: Erik Gruenwedel

Media giant launching 'ESPN Plus' subscription streaming service in early 2018

The Walt Disney Co. Nov. 9 said it expects upwards of $100 million in additional losses at Hulu in the next fiscal year. Disney co-owns the subscription streaming video service with 21st Century Fox, Comcast and Time Warner.

Citing costs associated with the launch of online TV service Hulu Live, Disney expects to absorb 70% of the increased losses in the first quarter of fiscal-year 2018.

Hulu, which lost CEO Mike Hopkins to Sony Pictures Television, has significantly increased content spending on original programming — reportedly about $2.5 billion. 

Fox Nov. 8 disclosed a $62 million loss on Hulu in regards to its 30% stake in the SVOD service.

Speaking on the fiscal call, CEO Bob Iger said Hulu’s profit & loss (P&L) impact remained positive to the company in the 2017 fiscal year — driven in part by offsetting investment costs with licensing fees.

“We’ve had growth to the bottom line from 2016 to 2017,” he said, adding early results from Hulu Live have been encouraging.

“We’ve seen some nice numbers there. It will be a significantly valuable business for us,” Iger said.

Separately, Disney will launch ad-supported “ESPN Plus,” its first branded standalone SVOD service, next spring. The service will feature a new app with authenticated and standalone access.

Late next year, Disney will also launch a branded over-the-top platform featuring original and catalog content. It will be similar to Disney Life in the U.K., featuring largely content from Marvel, Lucasfilm and Pixar.

Iger said the service would be priced "substantially below" Netflix and could include content from ABC TV, in addition to third-party sources. ABC and Freeform programming will also be sold to Hulu.

“OTT is vital to the future of our media businesses,” said the executive. “Our goal is to be a viable player in the direct-to-consumer space.”

Meanwhile, Disney said home entertainment revenue was comparable with the prior-year period. Indeed, Disney releases Moana, Beauty and the Beast and Rogue One: A Stars Wars Story remain the top-selling combined DVD/Blu-ray Disc titles in 2017, according to The-Numbers.com.

Finally, Disney refused to comment on media speculation it was considering acquiring Fox film and TV production assets.


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