Disney’s streaming efforts are already losing more than $1 billion

Losses in streaming will likely surge in the early days of the venture, as content and technology costs spike, said Rich Greenfield, an analyst at BTIG. Disney has also yet to assume control of another 30 percent of Hulu, part of its $71.3 billion deal for the majority of 21st Century Fox. If Disney were to acquire Comcast’s 30 percent stake in Hulu, that would further increase operating losses.

“Streaming requires a strong stomach for losses, especially as you are playing catch-up,” Greenfield said in an interview.

Disney is hoping that, over time, millions of paying customers will subscribe to Disney+ for its new original content and library of Disney movies and TV shows. Pricing hasn’t been disclosed. Netflix, which announced its quarterly earnings on Thursday, has 139 million global subscribers and just informed them that it’s raising prices by 13 percent to 18 percent.

Disney announced its acquisition of a majority stake in BAMtech (formerly owned by Major League Baseball) in 2017, so its report for 2018 is the first to show consolidated earnings results for the company.

Streaming is a hard place to make money, even for Netflix. While the company consistently posts positive operating income, it has burned cash for years, raising new debt and spending the revenue it generates on new content. Netflix could spend well over $10 billion for movies and shows in 2019, according to some analyst estimates.

Disney’s media networks, which include ESPN, ABC, Disney Channel and others, brought in $7.3 billion in operating income for 2018. Investors will be paying close attention to that number as streaming becomes a bigger focus and consumers are given another lower-cost entertainment option in the move away from traditional cable.

“I think Wall Street is at least accepting of the fact that we’re doing this, that it’s the most important thing we’re doing,” Iger told Barron’s in an interview published earlier this month. “And while I won’t say they’re cheering us on, they’re definitely giving us the room to prove that we can do it.”

Disclosure: Comcast is the parent company of NBCUniversal and CNBC.

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