Bob Iger, chairman and CEO of The Walt Disney Company, pauses during a speech during the Economic Club of New York event in Midtown Manhattan on October 24, 2019 in New York City.
Drew Anger | Getty Images
For almost three years, Bob Chapek had a plan Disney: Bob Iger’s plan.
“We are all in [on streaming]”,” Iger said in April 2019when he unveiled Disney+, the company’s flagship streaming service that now has more than 164 million subscribers worldwide. Ten months later, Iger announced that he would step down as CEO, with immediate effect.
After taking over as CEO, Chapek shifted Disney’s corporate structure to better suit the world of streaming. Iger didn’t agree with the way he did it, but the general idea of building Disney+ by spending billions on new content was in line with Iger’s strategy. For a while, this strategy worked. Disney stocks rose during the pandemic, even as theme parks closed and movies were kept out of theaters. Investors cheered on money-losing streaming services as long as they showed hyper-growth.
But as interest rates rose and Netflix’s customer growth stagnated earlier this year, the music stopped. Disney+ added 12.1 million subscribers this month and stock tanked. Much of this shift in narrative was actually Disney’s doing, as Chapek (and other media executives) pushed profitability over subscriber growth. Part of the shift was Disney’s realization that it was unlikely to reach its goal of 230 million to 260 million Disney+ subscribers by 2024. Chapek lowered this bar in August. Disney shares are down nearly 40% this year.
Of course, while Iger said Disney was all-in on streaming, the reality was that it wasn’t and still isn’t. Disney stuck with ESPN as the cornerstone of the cable bundle. Today, as in 2019, ESPN’s major sports events (such as its flagship “Monday Night Football”) can only be viewed on cable.
Now Disney’s board has turned to Iger to come up with a new plan — or at least pick a new leader who has one — for at least the next two years. Reorganization of the company so that “more decision-making is returned to the hands of our creative teams”, as Iger noted in his memo to employees yesterday, is an easy and necessary first step. But it’s a process change rather than a strategic one.
Iger’s biggest challenge will be choosing which Disney assets to sell or spin off in the coming years, said Rich Greenfield, an analyst at LightShed partners. That wouldn’t be easy for any CEO, but it especially won’t be easy for Iger, who built the modern Disney on purpose. He orchestrated deals to buy Pixar, Marvel, Lucasfilm and much of 21st Century Fox.
Iger has had many opportunities in the past to divest from cable networks, including ESPN or the ABC broadcast channel and its owned-and-operated affiliates, or Hulu. He’s never done that in the past, but Greenfield said he thinks he’ll have to now.
“Bob Iger should sit down this weekend and make a list of the assets that Disney wants to keep and those that he wants to get rid of,” Greenfield said. “What is Disney going to look like in the next five years? What are the assets we need to have? That has to come first and every other decision follows the answer.”
Greenfield recommended either spinning off ESPN or dramatically cutting costs, including handing over the renewal of broadcast rights to the NBA, which will be renegotiated in 2023. said he would try to sell Hulu to Comcast than paying Comcast $9 billion or more for the remaining 33% stake in the streamer.
It’s also possible that Iger could again project those decisions onto a successor. If he decides his role is purely an interim CEO, he could focus on finding Disney’s next leader and allow that person to make the big calls over the next two years.
But that was never Iger’s style. He he has postponed retirement three times in the past keep the job. Now he’s back again.
Iger could have driven off into the sunset and decided to come back – even after publicly saying, “You can’t go home anymore.“
This is probably a sign that he has ideas for moving Disney forward.
“The old plan cannot be the new plan,” Greenfield said. “That plan didn’t work. Iger will have to make some tough decisions.”
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