The Walt Disney Co. provided investors a more detailed look at its investment in building a direct-to-consumer business in financial documents filed today with the SEC. The company re-cast Disney’s results for the past three fiscal years to align with the new corporate structure created with last March’s re-organization.
While the numbers aren’t new (this isn’t a restatement of earnings), the filing more clearly spells out the losses connected with Disney’s investments in Hulu and BAMtech, the technology that underlies the ESPN+ and forthcoming Disney+ streaming services. The latter is expected to launch later this year.
Disney’s direct-to-consumer businesses, together with its international channels, incurred $738 million in losses in fiscal 2018, more than double the previous fiscal year’s losses of $284 million.
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The company’s share of losses in Hulu deepened in fiscal 2018, when Disney booked $580 million in red ink. The Burbank entertainment giant, which jointly owns the streaming service along with Fox, Comcast and WarnerMedia, said the losses reflect the streaming service’s increased spending on programming and marketing that was partially offset by growing ad and subscription revenue. Disney doesn’t break out how much money it received from Hulu in in programming license fees.
In fiscal 2017, Disney’s portion of Hulu’s losses was $421 million.
The Burbank entertainment giant similarly incurred losses from its decision to acquire a majority stake in BAMtech for $1.58 billion in August of 2017.
Disney has not been shy about spending aggressively to position the company for the future, in which consumers increasingly access content through streaming services. That was one of the major factors cited in its decision to acquire much of 21st Century Fox’s film and television business — a $71.3 billion deal that will yield high-quality content to populate Disney’s direct-to-consumer services.
“Our top priority is fully leveraging our global brands and great content to create world-class direct-to-consumer entertainment,” said Disney chairman and CEO Robert A. Iger in a statement. “We have the structure and management in place to drive growth in our DTC business, and our acquisition of 21st Century Fox further enhances our ability to deliver significant value to consumers and shareholders.”
Disney said it will discuss its direct-to-consumer business in greater detail at Disney Investor Day on April 11. It’ll likely be something Iger discusses during the company’s next earnings call set for February 5.
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