Disney’s Top Priorities That Bob Iger Should Address in 2023

in Disney, Disney Parks, Movies & TV

Bob Iger

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This year presents a fresh start for The Walt Disney Company to address many of the mistakes made during previous Disney CEO Bob Chapek’s reign. Current Disney CEO Bob Iger has had several issues fall on his shoulders since he took over as the CEO back in November.

Iger interviewed by ABC
Credit: ABC News

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Since 2022, Disney has seen a plummet in stocks, about 45%, which is the worst performance the media giant has seen in almost 50 years. This is a huge contrast compared to March 2021, with share prices peaking at about $202 as Disney saw a huge boost in Disney+.

Now, Disney is struggling with certain segments, many of which were damaged by COVID-19 and the slow return to a new normal. This includes dramatic price increases at the Disney Parks, as well as a struggle to make a profit in certain streaming divisions.

World of Color - One, nighttime spectacular coming to Disney California Adventure
Credit: Disney Parks Blog

A new story from Yahoo! Finance listed five questions that Bob Iger should address in 2023. These areas include streaming, Hulu, ESPN, the Parks, and the next CEO.

How can you make Disney’s streaming business profitable?

Disney is bleeding money through its streaming services. In the most recent fiscal year, Disney’s direct-to-consumer segment of the company, which houses streaming services like Disney+, Hulu, and ESPN+, had $4 billion in losses. This was mainly due to the cost of producing content, especially as Disney increased this budget to $33 billion, an increase of $8 billion in 2022.

Disney officials presenting Disney plus
Credit: Disney

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Disney leadership expects these losses to shrink by roughly $200 million in the first fiscal quarter of 2023, gaining profitability in the 2024 fiscal year. This is expected to be reached by continuing the layoffs and hiring freezes started by Chapek last year. In a recent Town Hall meeting, Iger confirmed that this freeze would continue.

In addition to the hiring freeze, Iger had also announced some major restructuring of Disney’s Media and Entertainment Distribution (DMED) sector, which included the firing of Kareem Daniel, former chairman of DMED.

Disney+
Credit: Disney

Will Disney buy Comcast’s stake in Hulu?

Part of the issues with streaming involves Hulu. Disney owns two-thirds of this platform, while Comcast’s NBCUniversal owns the rest. An agreement was reached in 2019 in which the minimum guaranteed equity value for Hulu was set at $27.5 billion. However, Comcast could make Disney buy out its stake in the streaming platform starting in January 2024.

According to Jeff Shell, CEO of NBCUniversal, Hulu is worth a lot of money, as it is being sold on a full control basis. This is why some analysts think Disney should sell its stake in Hulu to help offset some of the exorbitant costs of streaming, focusing instead on high-quality, family content rather than trying to please everyone with a wider scope of content.

Hulu
Credit: Hulu

Other industry experts say Disney has a choice to make: focusing on several streaming services with a more specific strategy for Disney+, or combining all its streaming services (Disney+, Hulu, and ESPN+) into a giant platform.

Should Disney keep or spin off ESPN?

ESPN is another network and streaming service that media analysts debate whether or not Disney should be involved. Some say that Disney should sell ESPN, as it could evolve into other business ventures, like sports betting.

espn plus
Credit: ESPN+

Disney is already in the process of spinning off ESPN, which includes launching ESPN as an a la carte streaming service. However, some analysts are calling this a bad move, as ESPN has the potential to grow into a larger business, especially via the internet.

Disney’s Linear Networks segment, which also includes ESPN, amounted to $8.52 billion in the most recent fiscal year. ESPN provides a large chunk of Disney’s cash flow, helping the company to be able to go the direct-to-consumer route and combat streaming losses.

espn+, disney+, hulu
Credit: Disney

Will the Chapek-era price hikes at the Parks be reversed?

One major pain point for Disney consumers is the high prices at the Parks. For example, Disney World’s prices for single-day and multi-day tickets were raised on December 8. Besides the Park tickets, other programs like the Annual Pass, Genie+, and other purchases made within the Park increased as well.

This did not go over well with consumers, who were angry with then-CEO Bob Chapek for instituting this increase. Chapek had claimed that the increase would “boost revenue and limit overcrowding.” However, it’s been reported that Bob Iger was even surprised by the steep cost increases.

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Credit: Disney

Though Disney did fairly well in the latest quarter, it still missed some expectations in revenue from the Parks, Experiences, and Products division. This revenue, projected at $7.59 billion, actually was $7.43 billion. Operating income for this was estimated at $1.9 billion but ended up being $1.51 billion.

Although it may not be possible for the prices at the Parks to be reduced to pre-pandemic and inflation levels, perhaps the 2023 increases will be reduced.

Who will be Disney’s next CEO?

Bob Iger’s new reign as CEO is set for about two years from when he was reinstated. This gives Disney enough time to find and name a replacement CEO. Some of the rumored frontrunners for this coveted position include internal candidates Dana Walden, Disney General Entertainment Content Chairman; Alan Bergman, Walt Disney Studios Chairman; and Josh D’Amaro, Disney Parks, Experiences and Products Chairman.

Bob-Chapek-and-Bob-Iger
Credit: CNBC

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Some other possibilities include Kevin Mayer and Tom Staggs, who left Disney in 2020 after Iger eventually chose Chapek as CEO instead. The pair currently run Candle Media, and some question if Iger would go as far as purchasing the media company to bring back Mayer and Staggs.

However, Iger’s return as CEO could have negative impacts on the future of this long-term role, as whoever is named the next CEO may constantly be looking over their shoulder, wondering if they would receive the same fate as Bob Chapek.

What do you think of these areas for Bob Iger to address? What else would you add to this list?

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