Disney is counting on Bob Iger to make tough choices about TV and streaming

Bob Iger, chairman and chief executive officer of The Walt Disney Company, pauses as he speaks during an Economic Club of New York event in Midtown Manhattan on October 24, 2019 in New York City.

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For almost three years, Bob Chapek has had a plan to Disney: Bob Iger’s plan.

“We are all in [on streaming]”Iger said in April 2019, when he introduced Disney+, the company’s flagship streaming service, which now has more than 164 million subscribers worldwide. Ten months later, Iger announced he would step down from the position of CEO, effective immediately.

After taking over as CEO, Chapek shifted Disney’s corporate structure to better align with a streaming-centric world. Iger didn’t agree with how 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 that strategy worked. Disney shares have soared during the pandemic even as theme parks have closed and movies have been kept out of theaters. Investors cheered money-losing streaming services as long as they showed hypergrowth.

But when interest rates soared and Netflix customer growth leveled off earlier this year, the music stopped. Disney+ added 12.1 million subscribers this month and shares plummeted. Much of this shift in storytelling was actually the work of Disney itself, as Chapek (and other media executives) pushed for profitability over subscriber growth. Part of that shift was Disney’s awareness that it likely wouldn’t reach its goal of 230-260 million Disney+ subscribers by 2024. Chapek lowered that bar in August. Disney shares are down nearly 40% this year.

Of course, while Iger said Disney was all in for streaming, the reality was that it wasn’t, and still isn’t. Disney kept ESPN as the core of the cable package. Today, just like in 2019, ESPN’s major sporting events (its main broadcast “Monday Night Football,” for example) can only be viewed on cable.

Time for a new plan

Now, Disney’s board has turned to Iger to come up with a new plan — or at least to pick a new leader who has one — for at least the next two years. Retooling the company to put “more decisions in the hands of our creative teams,” as Iger noted in his note to employees yesterday, is an easy and necessary first move. But it is more a process change than a strategic one.

Iger’s biggest challenge will be choosing which Disney assets should be sold or spun off over the next few years, said Rich Greenfield, partner analyst at LightShed. This wouldn’t be easy for any CEO, but especially it won’t be easy for Iger, who built modern Disney with a purpose. He orchestrated deals to buy Pixar, Marvel, Lucasfilm and most of 21st Century Fox.

Iger has had plenty of chances in the past to step away from cable networks, including ESPN, or broadcast channel ABC and its owned-and-operated affiliates, or Hulu. He’s never done it in the past, but Greenfield said he thinks he’ll have to do it now.

“Bob Iger should sit down this weekend and make a list of the assets he wants Disney to keep and the ones he wants to get rid of,” Greenfield said. “What will Disney look like in the next five years? What are the resources we need to have? That has to come first, and every subsequent decision follows the answer.”

Greenfield recommended either abandoning ESPN or drastically cutting costs, including moving to the renewal of NBA broadcasting rights, which are to be renegotiated in 2023. He also said he would try to sell Hulu to Comcast rather than pay Comcast $9 billion or plus for the remaining 33% stake in the streamer.

It is also possible that Iger could once again entrust these decisions to a successor. If he decides that his role is purely a transitional CEO, he could focus on finding the next Disney leader and allow that person to make the big calls over the next couple of years.

But that was never Iger’s style. He has delayed retirement three times in the past to keep his job. He now he’s back again.

Iger could have ridden off into the sunset and chose to return, even after publicly saying “you can’t go home.”

This is likely a sign that he has ideas on how to move Disney forward.

“The old plan can’t be the new plan,” Greenfield said. “That plan wasn’t working. Iger is going to have to make some tough decisions.”

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