Skip to main content

Iger Sees More Investment After Gaining Hulu Control

Once The Walt Disney Co. gets control of Hulu, it intends to ramp up programming and possibly increase subscription prices.

On Disney’s earnings call with analysts, CEO Bob Iger stressed that direct-to-consumer products will be a big priority for the company.

Last year, Disney launched ESPN+, which now has more than a million subscribers, it plans to launch the newly named Disney+ late next year and when it closed its acquisition of assets from 21st Century Fox, it will own 60% of Hulu. (Iger said that transaction appears likely to close sooner than expected.)

Related: Disney Earnings Jump Despite Cable Network Unit Decline

Disney CFO Christine McCarthy told analysts that investment in direct-to-consumer will cost the company $100 million in earnings in the fiscal first quarter.

In response to a question, Iger said that Disney intended to increase investment in Hulu, “notably on the programming side.”

He said that he expected the greater TV production capability the company will have after it absorbs Fox’s studio assets will fuel Hulu with additional programming.

Related: European Commission Clears Disney-Fox With Some Conditions

Between FX, Fox Searchlight, ABC and Freeform, "we think we have an opportunity if we create the TV studio we aim to create . . . we're going to have an engine at the company that will be able to supply a Hulu with a lot of high-quality content, that is the goal," Iger said.

Hulu will focus more on “general entertainment” while Disney+ focuses on family fare, he said.

Iger said that there appeared to be some elasticity in the pricing of Hulu, so there may be an “opportunity to increase pricing there.”

Iger said that Hulu has attractive demographics, with viewers of off-network shows on Hulu averaging about 20 years younger than than when they first air on broadcast.

Those younger demographics, combined with Hulu’s ability to target individual subscribers, gives it an attractive advertising proposition that he called underappreciated.

Hulu losses rose to more than $300 million in the quarter, according to reports from Disney's partners.

Disney will give investors and analysts a first look at the Disney+ interface at an investor conference in April.

Iger laid out some of the programming the company will be creating for Disney+ under the Disney, Pixar, Marvel, Star Wars and National Geographic banners.

“There will be a constant pipeline of exclusive new content,” he said.

Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.