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Hulu is going to be big and profitable, according to Disney’s chief strategy officer

Kevin Mayer says Disney will invest in Hulu once it takes over.

Kevin Mayer, chief strategy officer for Walt Disney
Kevin Mayer, chief strategy officer for Walt Disney
Asa Mathat

Hulu loses a lot of money — nearly a billion dollars last year, a figure that will likely nearly double this year.

But Hulu, which had three bosses as part of a joint venture, will get just one boss soon: Disney. And according to Disney’s chief strategy officer, Kevin Mayer, the company plans to put more money into the service.

“It takes an investment for sure, and we’re happy to undertake that,” he said at the Code Media conference in Huntington Beach, Calif. “There’s going to be a big, profitable service.”

That’s a pretty bold plan, especially since Hulu had been a good news/bad news thing for its owners. Bad news: It lost money, and the three main owners had to account for that loss on their balance sheets. Good news: Each partner also technically made money, since they were selling license rights to Hulu.

Seen that way, Hulu could be considered an accounting play that allowed the big media companies to experiment with online streaming.

But that status changes after Disney buys Fox, giving Disney control of Hulu as well as having to own 60 percent of its losses.

Hulu may also no longer get NBC* shows in the future, since NBC owner Comcast may not want to continue licensing its shows to Hulu after it’s majority owned by Disney. It means the end of Hulu as we know it.

Mayer says that won’t change the strategy for Hulu, a key part of Disney’s plan to sell more of its shows directly to consumers.

Disney will also offer a $4.99-a-month ESPN streaming service next month that features a lot of ancillary sports content and not the big, important stuff you see on regular EPSN, like NFL games. Lastly, Disney will launch a family-friendly streaming service in 2019 that will include films from Disney’smajor studios: Pixar, Marvel and Lucasfilm.

That means pulling some of its films off of Netflix, but Mayer insists Disney isn’t trying to kill Netflix.

“I’m a big fan of Netflix,” he said. “They’ve done well in the marketplace. What we’re doing is not kill Netflix, but serve consumers. We think we can serve consumers better.”

Mayer’s point is that all TV businesses will have to find a way to start selling stuff directly to consumers as cord cutting continues. If big media companies can’t rely on the pay TV distributors, it will have to sell the content directly via streaming.

Disney, as one of the largest media franchises around, still has the deep pockets to affect big change in the media industry. Mayer, who has been seen as a possible successor to CEO Bob Iger, will be a key part of that plan.

In the meantime, there is a job opening right now: head of ESPN. John Skipper stepped down in December citing substance abuse problems.

Asked if he would want that job, Mayer replied: “I’m going to do what Bob has me doing, happily.”

* NBCUniversal is a minority investor in Recode parent company Vox Media.

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