Hulu losses drag Disney as DTC push approaches | Major Businesses | Business
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Gearing up for its major push into the DTC arena in 2019, Disney has revealed detailed financial information regarding its recently formed direct-to-consumer and international business segment, showing significant losses for its Hulu undertaking.
hulu 15 august 2017
In publishing a Form 8K , Disney said it was recasting financial results for the past three fiscal years to reflect the recent reorganisation of Disney’s business segments. Disney has a 30% stake in the Hulu and will now going forward report its and subsidiary ESPN’s investments in the over-the-top service in its DTCI line rather than in Media Networks which had been the case.

The 8K form showed that TV and subscription video-on-demand distribution and other revenue increased $392 million due to higher ABC program sales driven by increased revenue from programmes licensed to Hulu and higher sales of Grey’s Anatomy and Black-ish. Additionally, the current financial year included the sales of Luke Cage, Daredevil and Jessica Jones compared to the prior-year sales of The Punisher and The Defenders.

Yet the figures also showed that in the Direct-to-Consumer & International business line, losses from equity investees increased $159 million from a loss of $421 million to a loss of $580 million primarily due to a higher loss from investment in Hulu. The higher loss at Hulu was said to be driven by higher programming, labour and marketing costs, partially offset by growth in subscription and advertising revenue.
The 8K filing also revealed that overall segment operating loss increased $454 million, to $738 million due to the consolidation of the BAMTech DTC business #axzz5dKFJ6t00 and a higher loss from Hulu, partially offset by growth at International Channels.

Commenting on the publication of the and the general strategy ahead, Disney chairman and CEO Bob Iger insisted that the company had the structure and management in place to drive growth in its DTC business, “Acquiring BAMTech enabled us to enter the DTC space quickly and effectively, as demonstrated by the success of ESPN+. The service surpassed one million subscribers in its first five months and continues to grow as it expands its content mix, all of which bodes well for our upcoming launch of Disney+. The ability to connect directly with millions of Disney, Pixar, Marvel, and Star Wars fans creates tremendous opportunities for growth.”