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Bob Iger announces marketing cuts at Disney+ to increase profitability

Walt Disney Co. CEO Bob Iger said marketing spending for flagship streaming service Disney+ is too high and will be cut as the company seeks to turn a profit in that business by the end of its fiscal year .

Disney will invest in technology so the streaming platform can “send highly personalized messages to customers when we suspect they are at risk” of disinterest, Iger said Wednesday at a media investment conference curated by MoffettNathanson.

Reporting expressions of interest to subscribers who have stopped engaging with a platform is something Netflix Inc. was “brilliant at,” he said.

After years of focusing on subscriber growth since the launch of the Disney+ service in 2019, the world’s largest entertainment company is cutting costs to break even. Disney expects the direct-to-consumer streaming business, which includes Hulu and ESPN+, to have double-digit profit margins in the future, Iger said, although he declined to specify a time frame. Earlier in May, Disney reported that the streaming unit’s losses narrowed to $18 million in its fiscal second quarter, compared to a loss of $659 million in the previous quarter.

Yet these are the stocks that fell the most in a year and a half after the results were released. Disney gave a tepid outlook for streaming subscriber growth in the current quarter and said park visits are expected to slow from peak post-Covid levels.

Iger said at the investment conference that the parks business would “see good growth” in the long term, but reiterated that the division’s double-digit growth in recent years would not last.

Disney also recently won city approval for an expansion of its original Disneyland resort in California, Iger said. That site was making about $100 million a year in profit when Iger became CEO in 2005 and today makes “well over a billion dollars,” he said.

Disney shares were little changed at $105.50 in New York trading Wednesday morning.

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