The First Item On Iger’s Agenda: Controlling Streaming Costs

in Disney, Movies & TV

Bob Iger

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Returning CEO Bob Iger must show investors of The Walt Disney Company a different side to his management style as he returns to lead Disney by cutting costs and restoring profits in just two years after spending cash left and right for acquisitions of a streaming business in his prior tenure.

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Disney’s board of directors surprised shareholders in the late evening on Sunday by announcing the departure of Chief Executive Bob Chapek and appointing Iger to a two-year contract to return the company to growth.

The most pertinent priority could be Disney Plus, the streaming service Iger led in creating in 2019. The losses within the streaming segment have more than doubled in the last reported quarter to $1.5 billion.

Streaming has become a hindrance to bottom-line profits as The Walt Disney Company spends heavily on content to attract subscribers, testing investor patience and contributing to a 40% slide in its shares this year.

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Credit: ESPN+

Wall Street analysts at MoffettNathanson said, “Disney Plus could probably do better with fewer end-state subscribers made up of super fans willing to pay high RPU (rates per user), which would generate much higher margins.”

They also pointed to ESPN as another target for deep cost cuts, including a review of all the upcoming sports rights as the network loses cable subscribers. Activist investor Dan Loeb’s Third Point had also pushed a potential spinoff of ESPN when it invested in the company earlier this year, even though it later backed off the idea.

The question moving forward is if Bob Iger will be able to re-create the magic he did in his first term as Walt Disney Company CEO. Is he up to the task?

Let us know your thoughts. Do you believe Bob Iger has what it takes to turn around Disney?

 

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