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

For nearly three years, Bob Chapek had a plan to disney: Bob Iger’s plan.

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

After taking over as CEO, Chapek changed Disney’s corporate structure to better align with a streaming-centric world. Iger disagreed with the way 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, this strategy worked. Disney shares surged during the pandemic even as theme parks closed and movies were banned from theaters. Investors applauded streaming services that lost money as long as they showed hypergrowth.

But as interest rates rose and Netflix’s customer growth plateaued earlier this year, the music came to a halt. Disney+ added 12.1 million subscribers this month and shares fell. Much of this narrative shift was actually Disney’s own initiative, as Chapek (and other media executives) pushed for profitability rather than subscriber growth. Part of that change was Disney’s realization that it was unlikely to hit its goal of 230-260 million Disney+ subscribers by 2024. Chapek lowered that bar in August. Disney shares have fallen almost 40% this year.

Of course, while Iger said Disney was all about streaming, the reality was that it wasn’t, and it still isn’t. Disney retained ESPN as the kingpin of the wiring harness. Now, just like in 2019, ESPN’s major sporting events (its main show “Monday Night Football,” for example) can only be seen on cable.

Now, Disney’s board has turned to Iger to come up with a new plan — or at least pick a new leader who has one — over the next two years at least. Reorganizing the company to put “more decision-making back in the hands of our creative teams,” as Iger noted in his memo to employees yesterday, is an easy and necessary first step. But this is more of a process change than a strategic change.

Iger’s biggest challenge will be deciding which Disney assets should be sold or divested in the coming years, said Rich Greenfield, an analyst at LightShed Partners. It wouldn’t be easy for any CEO, but it certainly won’t be easy for Iger, who built modern Disney with purpose. He orchestrated deals to buy Pixar, Marvel, Lucasfilm and much of 21st Century Fox.

Iger has had many opportunities in the past to get rid of cable networks, including ESPN, or broadcaster ABC and its owned-and-operated affiliates, or Hulu. He has never done it in the past, but Greenfield said he thinks he will have to do it now.

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

Greenfield recommended parting ways with ESPN or drastically cutting costs, including transferring NBA broadcast rights renewals, which will be renegotiated in 2023. He also said he would try to sell Hulu to Comcast rather than to pay Comcast $9 billion or more for the other 33. % of participation in the streamer.

It’s also possible that Iger could hand those decisions over to a successor again. If he decides his role is purely a transitional CEO, he could focus on finding the next Disney leader and allowing that person to make the big calls over the next two years.

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

Iger could have left at sunset, and he chose to return – even after publicly saying “you can’t go home anymore”.

It’s probably 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 didn’t work. Iger is going to have to make tough decisions.”

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