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Credit: Qilai Shen/BloombergIn a recently published piece by Fortune, correspondent Shawn Tully had some harsh words for Walt Disney Company CEO Bob Iger.
To be short, it has been a tough couple of years in Burbank, California. The Walt Disney Company is down a whopping 50% since trading at its all-time high in March 2021 and has been on a downward spiral since then. Granted, it’s also been a rough 18 months for the equity market, but Disney’s underperformance can primarily be attributed to some of the company’s missteps.
Over the last few years, many Disney Park fans have blamed Walt Disney Company’s former CEO, Bob Chapek, for the Theme Park and entertainment giants’ downfall. Walt Disney World Resort and Disneyland Resort Guests were never fans of him, especially after the launch of controversial programs such as Genie Plus and Lightning Lane.
Contrary to popular belief, however, investors on Wall Street have had different opinions. Just recently, Fortune published an article laying out how Disney’s CEO Bob Iger was the one to blame for Disney’s recent misfortunes.
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According to Fortune correspondent Shawn Tully, he would go on to state that “Disney’s poor performance, both in earnings and in stock price, arises from flubbing the most basic value equation in finance: It hugely increased capital, but made a lot less money than before it piled on the new debt and equity. From the close of FY 2018 to FY 2022, Disney increased its book equity base mainly through goodwill added from the Fox deal and retained earnings by $37 billion while also growing its debt by $26 billion. Yet despite the $63 billion in fresh capital marshaled to support the streaming drive, adjusted net earnings fell from $10 billion to $3.1 billion.”
Most of the debt was racked up under Bob Iger’s watch.
Tully also said that Iger made three significant missteps in his first iteration as the company’s chief Mouseketeer. In addition to overpaying for Fox’s assets, Disney attempted to grow its streaming service Disney Plus without any focus on making it profitable, and Iger’s ultimate selection of his first successor, Bob Chapek, who took over the post.
Even though Chapek was disliked and made some questionable decisions, the pieces Bob Iger left him with put him in a tough spot.
Who do you think is to blame for Disney’s poor performance?