Iger needs to work. Here are his top priorities going forward, now that he is back aboard for the next two-years for a corporate reset.
Iger has privately been vocal about his dislike of Chapek’s reorganization of Disney, which took power away from content executives and gave it to Kareem Daniel, a longtime Chapek ally and the head of the newly-formed Disney Media and Entertainment Group (DMED). Daniel was shown the door unceremoniously on Monday. He oversaw content budgeting and planning, as well as handling data, technology, and sales functions.
Chapek and Daniel marketed the structure as liberating creative executives. They just had to make something good and DMED will figure out how and where to put it. Insiders complained about the silo, which caused unnecessary bottlenecking at crucial junctures. It became more difficult to obtain the green light for projects even if they were developed internally. The process also became increasingly cumbersome.
Multiple sources told us that Daniel, an engineer by trade, was without creative experience. His appointment also irked more experienced executives, like Peter Rice, the veteran Fox exec who took over all of Disney’s TV operations after the 2019 Fox acquisition — until Chapek abruptly canned him this past June.
Monday’s announcement by Iger was clear: he is going to undo everything Chapek has done. “It is my intention to restructure things in a way that honors and respects creativity as the heart and soul of who we are,” He told his staff via a memo sent internal and shared with them. “As you know, this is a time of enormous change and challenges in our industry, and our work will also focus on creating a more efficient and cost-effective structure.” Creativity is the first priority
Since Disney+’s launch in 2019, streaming has become a major priority for the company, with every business unit – including National Geographic, Walt Disney Animation Studios, Pixar, Marvel Studios and Lucasfilm – funneling major projects to the direct-to-consumer platform. The company invested $32 billion in content during fiscal 2022. Chapek stated this during the company’s May earnings call. ““We’re very carefully watching our content cost growth.”
But it didn’t seem that way. However, Disney+ gained 12.1 million new subscribers during the third quarter ended Sept. 30. For 164.2 million subscribers, nearly $1.5 Billion was lost by the streaming unit, which is twice what it earned a year ago. Worse, Chapek said that Disney+ wouldn’t achieve profitability until 2024, “assuming we do not see a meaningful shift in the economic climate.” (Recession? (Recession?
There needs to be a reason for people to return to Disney+ (and Hulu and ESPN+) and it can’t be because there’s a new “Star Wars” Every six weeks, a Marvel or Marvel series. Iger will need to find a strategy that works, combining the need for fresh, groundbreaking series with a greater emphasis on the company’s deep (and largely ignored) catalog. There are many titles in the library that need to remain on Disney+. There’s no other streaming platform with the variety and depth of Disney’s.
Now is the time to get out of your vault.
In the most recent quarter ending Sept. 30, Disney’s operating income declined 14% to $1.4 billion. This was due to a decline in broadcasting revenue and lower earnings at ABC, Disney and other Disney-owned television stations.
Even ESPN, once one of Disney’s crown jewels, was hit by another wave of cord-cutting, leaving many analysts to wonder if Disney should have sold the sports network off years ago, when it was still highly profitable. TV network revenue also shrank 5% to $6.3 billion — a reminder that linear television is on the decline in both viewership and revenues.
Analysts expect Iger to pursue a different approach that could include some radical shifts — even selling off assets like ESPN or linear television networks like ABC or ABC Family. “Iger has made public comments recently on the secular challenges in the linear TV ecosystem, which coupled with accelerating linear subscriber declines, could signal a potential openness to reevaluate strategic alternatives,” Jessica Reif Ehrlich, analyst at Bank of America, stated in Monday’s note to investors.
In his short tenure, Chapek managed to infuriate both Wall Street and the company’s super-loyal consumer base. Chapek shut down nearly all the Disney Stores, although some are still around. This cut off a significant revenue stream and killed a legacy product that promoted every Disney film, series and attraction.
When COVID-19 shuttered the parks worldwide for months and docked the company’s many cruise ships, Chapek seized the moment to implement an ungainly reservation system and to repeatedly hike prices. In fact, prices for tickets rose again this year with Walt Disney World prices climbing an additional 12%. Chapek also introduced many add-ons during his tenure, including “Genie+,” A $25 per-day service that optimizes your time in the parks. “Lightning Lane” You could also skip the line by paying a single fee of up to $25 and then walk on to a ride. FastPass had the exact same goal but was free, so this fee-based model has replaced it. At Chapek’s Walt Disney World, micro-transactions are everywhere. They add up. This has led to poor guest satisfaction.
Iger will be tasked with restoring good will at the theme parks, and Wall Street is also expecting a change in Iger’s approach to pricing. “Bob Chapek’s decision to restructure the Media and Entertainment Distribution segment (centralized budgetary power for content and distribution) and heavy emphasis on raising price across the organization (e.g. Theme Parks and DIS+) could be areas where Iger deviates,” Ehrlich wrote.
There is damage to be undone, starting with fallout from Chapek’s public insult of Scarlett Johansson in 2020. A moment of corporate insaneness, the studio made the accusation. “Black Widow” Actress of “callous disregard” Because she was suffering from COVID, she sued the studio because it switched her movie to streaming. The two parties reached an agreement.
Pixar also was offended by Chapek’s release of three of its movies“Soul,” “Luca” And “Turning Red”They were exclusive to Disney+ and could easily have been blockbusters on the big screen.
And then there’s the other creative talent including the thousands of Imagineers that Chapek either fired or forced into retirement because of his move-to-Florida mandate, including Joe Rohde, the man behind Disney’s Animal Kingdom. And he alienated still more with his fumbling response to Florida’s “Don’t Say Gay” Bill which led, among others, to employees organizing a large one-day strike.
The company’s creatives are already overjoyed at Iger’s return — but he has to commit to the culture that he once fostered. “I don’t think I’ve ever been so happy,” Twitter Josh Gad is Olaf’s voice In the “Frozen” Films and an actual Disney Legend
For his final act, Iger may eyeball a deal to end all deals — like a merger with Apple, This country has cash reserves of $48.3 trillion. While Apple has been notoriously shy about acquisitions, and a Disney deal could draw regulatory opposition, some insiders believe Iger would jump at the opportunity to merge Apple’s superior technology with Disney’s powerhouse (and family-friendly) content. “He’d encourage it,” One former Disney top executive said that selling Disney would not only cement his legacy as a leader of the company, but also make it more valuable. “the last CEO of Disney.”
This is his memoir for 2019. “The Ride of a Lifetime,” Iger floated the notion that Steve Jobs, the former CEO of Apple (and Pixar founder), would welcome a Disney-Apple merger. “I believe that if Steve were still alive, we would have combined our companies, or at least discussed the possibility very seriously,” He wrote.
Iger may be able to sell Disney within the next two-years, but he needs to still run it.
And succession has been a black mark on Iger’s otherwise remarkable legacy as CEO. He groomed possible successors for years only to abandon them: Jay Rasulo, former CFO, and Tom Staggs, the short-lived COO, left in 2015. Kevin Mayer, who was responsible for Disney+’s successful launch, left in 2016. To his disgrace, he chose Chapek. The bench is now even smaller since Chapek defeated Rice, a former Fox executive who was head of content TV programming. This move was widely regarded as an attempt to eliminate a possible rival.
Many people have speculated that Disney might be the one to solve the problem. If it were to buy Candle Media (run by Staggs and Mayer), the company could gain a CEO and a President. The strategy paid off in the 80s when Michael Eisner, Frank G. Wells and the rest of the management team transformed the family business into a global giant. According to one Disney historian, it might not be possible for one person to do the job. The deal would have another major perk: Disney would also get a ton of great content, including Reese Witherspoon’s Hello Sunshine.
Granted, a 10-figure acquisition could be a challenge for the current Disney, which is already weighed down with $46 billion in long-term debt from its Fox acquisition — and has been expected to buy out Comcast’s minority stake in Hulu within the next few years. Due to rising interest rates and inflation, media mergers also have slowed down this year.
At the very least, we can all hope for a bloodless succession — you know, the type of thing you’d see on a Disney+ show.
This report was contributed by Sharon Waxman, Lucas Manfredi and Lucas Manfredi.
