Disney Posts Narrower Streaming Loss

Walt Disney Co. said it would make Hulu content available within Disney+ in the U.S. by the end of the year, the latest effort by newly returned Chief Executive Robert Iger to get the company’s streaming business to profitability. 

The Wall Street Journal reports Iger said the company’s major streaming platforms—which beyond Disney+ and Hulu also include ESPN+—would remain available as stand-alone options, but said the upcoming one-app offering would provide greater opportunities for advertisers and make navigating Disney’s various content libraries easier for consumers.

“We also think that it will benefit consumption in general, lower churn, be more attractive,” Mr. Iger said. “It’s just an all-in-one. It’s a bigger platform.”

The move comes as Disney announced it had dramatically reduced its streaming business’s losses in the latest quarter—largely the result of price increases for Disney+—but also reported that Disney+ suffered its first-ever domestic subscriber loss.

Iger also confirmed that Disney has held negotiations with rival Comcast—which owns one-third of Hulu—that he described as “cordial,” over the future of the streaming service.

Hulu’s unusual joint ownership arrangement is the result of Disney’s 2019 acquisition of 21st Century Fox’s major entertainment assets, a deal that boosted Disney’s stake in Hulu from one-third to two-thirds. Under an agreement reached that same year, both Disney and Comcast have the right to force a sale of Comcast’s stake at fair-market value, starting in 2024, with a floor valuation of $27.5 billion for the whole service.

Disney on Wednesday said its direct-to-consumer segment, which includes streaming, lost $659 million in the quarter ending April 1, far less than the $845 million loss that analysts polled by FactSet had anticipated.

Price increases to Disney+ and Disney’s other streaming bundles implemented in December, along with a new ad-supported tier for the service, are starting to show up in the company’s financial results. Average monthly revenue per user, or ARPU—a key metric in streaming—for Disney+ rose to $7.14 in the U.S. and Canada from $5.95 in the previous quarter.

The company also said Disney+ lost 300,000 subscribers in the U.S. and Canada, a number that Mr. Iger described as insignificant—and as a sign that Disney has room to raise prices further.

Income from Disney’s traditional television networks, including ESPN, which send cash to the company’s coffers in the form of carriage fees and advertising revenue, fell significantly to $1.8 billion, from $2.8 billion in the year-earlier quarter. The decline was in line with analyst expectations.

Sales and income increased at Disney’s Parks, Experiences and Products division, to $7.8 billion and $2.2 billion respectively. The second quarter was the first quarter in recent memory without major Covid-19 related disruptions to any of its theme parks, including Disneyland Shanghai, which has been plagued by closures over the last several years.