Disney Expected to Lose $250 Million on Hulu in 2018



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The content business is an expensive game.
This was evident on Disney’s latest earnings call, when CEO Bob Iger shared the entertainment giant expects more than $250 million in equity losses on Hulu — a major jump from the $100 million in losses the company had previously forecasted.
Disney CFO Christine McCarthy pointed to licensing costs when talking about the mounting losses on the company’s Q1 call on Tuesday… but much of it will get funneled back into Disney, since Hulu pays to license its shows.
“As one of the equity owners, our portion of these incremental costs will largely be recouped by ABC’s program sales, as well as affiliate revenues to some of our various networks,” McCarthy said.
Iger added Hulu is “ramping up their volume” on programming as another cost, and singled out Emmy-winner “The Handmaid’s Tale” as a sign its paying off.
Disney owns a one-third stake in Hulu, which will rise to two-thirds if its Fox deal goes through this year. It’s unlikely Hulu will become Disney’s standalone streaming service, which it plans on launching in 2019, if the deal closes.
Doing the math, with Disney expected to drop $250 million on Hulu, the streaming service’s overall losses for 2018 project to be more than $800 million.
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BTIG analyst Rich Greenfield noted the accelerated rate of Hulu’s losses on Twitter following Disney’s Q1 report. Factoring in its anticipated $800 million in losses this year, Greenfield showed Hulu’s total losses reaching $1.6 billion by Sept. 2018.

Disney $DIS on Q1 call says their 30% share of Hulu losses in fiscal September 2018 will rise 112% — yields all-in @Hulu losses of nearly $1.6 billion ???? ???? pic.twitter.com/fePkLSNCNS
— Rich Greenfield (@RichBTIG) February 7, 2018

Tech leaders are increasingly intertwined with the news business. While some want to support old properties, one set out to destroy a new one. Here they are.

Jeff Bezos – Washington Post
The Amazon founder purchased the Washington Post in 2013 for $250 million in cash. President Trump has called the paper the “Amazon Washington Post.”
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Chris Hughes – The New Republic
The Facebook co-founder purchased The New Republic in 2012, becoming executive chairman and publisher. However, he sold the venerable political magazine to Win McCormack in 2016, saying he  “underestimated the difficulty of transitioning an old and traditional institution into a digital media company in today’s quickly evolving climate.”
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Pierre Omidyar – The Intercept
The eBay founder is a well-known philanthropist who created First Look Media, a journalism venture behind The Intercept. Inspired by Edward Snowden’s leaks. Omidyar teamed up with journalists Glenn Greenwald, Jeremy Scahill and Laura Poitras to launch the website “dedicated to the kind of reporting those disclosures required: fearless, adversarial journalism.”
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Peter Thiel
The PayPal co-founder doesn’t own a news organization, but he makes this list because he essentially ended one — Gawker — proving once again the power of an angry billionaire. Thiel secretly bankrolled Hulk Hogan’s sex-tape lawsuit against Gawker Media because he was upset that the website once outed him as gay. Hogan won the defamation lawsuit against the site that sent its parent company into bankruptcy, and  Gawker.com is no longer operating.
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Mark Zuckerberg – Facebook
OK, so Facebook isn’t technically a news organization… yet. However, the company is preparing to launch its much-anticipated lineup of original content later this summer, and there are also signs that it’s on the verge of becoming an even bigger media platform.
Campbell Brown, Head of News Partnerships at Facebook, confirmed last week it’s developing a subscription service for publishers willing to post articles directly to Facebook Instant Articles, rather than their native websites.
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Tech is increasingly intertwined with news, for better or worse

Tech leaders are increasingly intertwined with the news business. While some want to support old properties, one set out to destroy a new one. Here they are.

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