Tags: disney | video | streaming | april | investor

Disney Losing Over $1B in Streaming

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Friday, 18 January 2019 06:06 PM

Walt Disney Co.'s stake in Hulu and its ownership of BAMtech reportedly led to a loss of more than $1 billion in the latest fiscal year.

Meanwhile, Disney said it will show off its highly anticipated Disney+ streaming service at an April 11 investor meeting, providing a peek at a platform that will challenge Netflix Inc. head on.

The service, which will include original movies and TV shows from Disney’s Marvel, Pixar and other brands, is scheduled to debut later this year. It will be a third, more family-focused streaming service, on top of Disney’s existing ESPN+ and Hulu, which will soon be majority owned by the Burbank, California-based entertainment giant.

Among traditional media companies, Disney is making the biggest bet on streaming and monthly subscriptions. The company will soon complete the $71 billion purchase of 21st Century Fox Inc.’s entertainment assets, which will bring in more film and TV franchises it can exploit in theaters, on TV and online.

After that deal was announced in late 2017, Disney reorganized its business to create a stand-alone direct-to-consumer division for streaming.

In a filing Friday, the company provided details on how that business and all of Disney’s divisions would have looked under the new structure for the past three years.

Disney’s direct-to-consumer division, for example, lost $738 million on revenue of $3.4 billion for the fiscal year that ended Sept. 29.

Disney also said in the filing that its investment in Hulu was the primary contributor to a $580 million loss in equity investments in the fiscal year that ended Sept. 30, CNBC reported. 

Disney also lost $469 million in its direct-to consumer-segment, largely from BAMtech, the streaming technology that powers ESPN+ and other over-the-top services, CNBC said.

That's more than $1 billion associated with streaming, the area where CEO Bob Iger is focusing his attention. 

Those numbers reflect the company’s investment in new content and technology, without the full benefit of subscription revenue from the new streaming service still in development and ESPN+, which was introduced in April.

Disney executives have been preparing investors for what might be a transitional year, due to investments in the new services. Chief Financial Officer Christine McCarthy said in November that costs associated with ESPN+ would reduce profit by $100 million in the just-ended fiscal first quarter.

On a conference call with investors Thursday, Netflix Inc. Chief Executive Officer Reed Hastings said an onslaught of new streaming services from Disney, AT&T Inc. and others doesn’t concern him because U.S. consumers spend a billion hours a day watching video.

“They have great content,” Hastings said of Disney. “We’re excited for their launch, and maybe they grow over a couple years to 50 million hours a day, but that’s out of the billion.”

Material from Bloomberg and Reuters has been used in this report.

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Disney has rejiggered its business segments for earnings reporting to make room for the new unit housing its global streaming operations.
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2019-06-18
Friday, 18 January 2019 06:06 PM
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