WSJ: Hulu Losing $30 Million Quarterly21 Dec, 2012 By: Erik Gruenwedel
Hulu CEO Jason Kilar reportedly is asking corporate parents News Corp. and The Walt Disney Co. for $200 million in additional funding to help the online repurposed video site acquire content and expand operations internationally.
Citing sources familiar with the situation, The Wall Street Journal reported the funding request is double the amount News Corp. and Disney typically contribute annually to Hulu, which they co-own with Comcast. At the same time, the request underscores a growing divide between News Corp. (which owns WSJ) and Disney on how they envision Hulu evolving.
Since its launch in 2007, Hulu has grown in size and popularity, including bowing subscription video-on-demand service Hulu Plus, which now has more than 3 million subs. News Corp. would like to morph Hulu into a SVOD platform while Disney prefers a free, ad-supported service.
Regardless, increased competition among SVOD services requires upping the ante for third-party and original content. Netflix leads the pack by a significant margin, spending about $2 billion in 2012 on content compared to $500 million by Hulu. Amazon doesn’t disclose its content spend for Prime Instant Video, but Netflix CEO Reed Hastings in the SVOD pioneer’s most recent fiscal results speculated Amazon’s SVOD service has fewer subs than Hulu Plus.
With Amazon upping content spending dramatically this year, it undoubtedly lost millions doing so, speculated Hastings.
Meanwhile, Disney, in its most recent fiscal year result, revealed “higher equity losses at Hulu,” which the media giant said was driven by “increased programming and marketing costs; partially offset by higher advertising and subscription revenues."
Translation: Hulu’s quarterly operating loss was around $30 million, according to WSJ. And Hulu recently borrowed $338 million to fund the $200 million buyout of Providence Equity Partners' 10% stake, and a $134 million equity-compensation payout to employees — which included $40 million to Kilar.