Content deals bite as Hulu losses sting Disney for $250m

Hulu’s successes in acquired and original programming are coming at a cost.

Hulu backer The Walt Disney Company revealed its share of the losses at the US subscription VOD service would be US$250 million.

Twelve months ago, Disney predicted losses of US$100 million from the service, highlighting a significant increase in costs.

Fox’s latest earnings also showed a hit from losses at Hulu. The company’s share on the on-demand service’s quarterly losses grew by 30% year-on-year to US$108 million.

Disney is set to pick up 21^st Century Fox’s stake in Hulu through its deal for the latter’s entertainment assets, which means the Mouse House will be majority owner with a 60% stake.

Currently, Disney has 30%, Fox has 30%, Comcast has 30% and Time Warner has 10%.

The losses Hulu is shouldering are primarily linked to deals it has done with its parent companies, Disney CFO Christine McCarthy said on a call with investors.

“As one of the equity owners, our portion of these incremental costs will largely be recouped by ABC’s programme sales, as well as affiliate revenues to some of our various networks,” she added.

What Disney plans to do with its majority ownership is up for debate, with the Mouse House planning to launch its own global SVOD service. It may choose to keep Hulu as its primary US streaming service, or sell to Comcast or another third party.

However, Disney CEO Bob Iger yesterday pointed to Hulu’s success with original series such as The Handmaid’s Tale, which became the first SVOD commission to win the best drama gong at the Emmys.

This week, Hulu ordered 13x11mins kids toon Bravest Knight, which producer Big Bad Boo Studios is billing as the first kids show with an LGBTQ+ lead.

Hulu currently has more than 17 million subscribers, adding more than Netflix in its past two quarters.