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Hulu Is Losing More Money Than It Did Last Year

Image Source: Hulu.

Hulu is up against some big competition. Netflix (NASDAQ:NFLX) is the leader in streaming video on demand, and Amazon isn't far behind anymore. Both have nearly 50 million subscribers in the United States -- one of the two markets in which Hulu operates. Hulu, by comparison, has just 12 million subscribers between the U.S. and Japan.

As Hulu spends to keep up with its bigger competitors, it continues to lose money for its owners. In fact, it's losing more this year than the year before. Comcast (NASDAQ:CMCSA) reported an increase in losses associated with its ownership of Hulu during the first half of the year, from $24 million in 2015 to $65 million in 2016.

The loss had accelerated sharply in the second quarter, up more than threefold, to $40 million. Those losses show up in the results of Hulu owners Comcast, Disney (NYSE:DIS), Twenty-First Century Fox (NASDAQ:FOX), and newest investor Time Warner (NYSE:TWX).

Here's what Hulu might be spending so much money on.

The Epix catalog

During the second half of last year, Netflix decided it wouldn't renew its contract with Epix, which holds the rights to films from Lionsgate, MGM, and Paramount Pictures. Hulu picked up the contract starting Oct. 1. While financial details weren't released, considering the high-profile titles in Epix's catalog, it likely cost quite a bit.

The relative value of the Epix catalog for Hulu, however, is arguably significantly larger than it was for Netflix. Netflix decided to focus on producing original films instead of renewing its contract with Epix. It also has several exclusive-rights contracts directly with studios, including its deal with Disney that went live in...