From the Journal:
Iger returned for his second stint as CEO to a changed #media business and impatient shareholders. He is under pressure to ensure The Walt Disney Company’s #streaming business reaches profitability in the final quarter of its current fiscal year, after racking up more than $11 billion in losses in its first four years.
Disney’s acquisition of Fox Corporation #entertainment assets for $71.3 billion was supposed to supercharge its #streaming efforts, bringing in lucrative franchises like “Avatar” and “The Simpsons,” but the company has been slow to monetize much of the library of shows and characters it purchased, and is already selling off parts of key properties it got in the deal. That transaction also saddled Disney with more than $14 billion in Fox debt and a bigger portfolio of declining cable #TV networks.
“There are just no easy solutions today,” said Peter Murphy, former head of Disney’s strategic planning department, a kind of advisory board for the company set up by Eisner in the 1990s. “Disney wants to be a high-growth, tech-oriented company but they still have one foot firmly planted in the Old #Hollywood, Old Broadcast, Old Cable world.”
Meanwhile, Disney’s movie studios, which form its creative engine, are sputtering. Fans are fed up with endless Marvel sequels, and live-action remakes of classic animated films have disappointed at the box office.
Much of Iger’s second tenure as CEO has been spent exploring, but not executing on strategic plans. Iger flirted with the idea of offloading traditional TV assets, but recently tempered expectations of any such deal. ESPN has had talks with #sports leagues about offering them stakes in the network in exchange for assets, such as the National Football League (NFL)’s subscription-streaming service and the NBA’s League Pass package. So far no deal has emerged.
For investor Nelson Peltz, Iger’s actions so far—from job cuts, to cost savings and strategic reviews—are inadequate.
Last week, Trian Fund Management, L.P. said in a securities filing that it has nominated Peltz and Jay Rasulo to Disney’s board, and called for changes including “Netflix-like” 15% to 20% profit margins for Disney’s streaming business as well as clarity on the returns for planned effort to launch a direct-to-consumer ESPN product.
This time, Peltz has financial help from former Marvel Entertainment chairman Isaac “Ike” Perlmutter, who played a key role in Disney’s rise as a superhero movie juggernaut.
Now, Iger must face off with Roberts—this time, not as a seller, but as a buyer of Comcast’s one-third stake in the streaming service Hulu, which is majority owned by Disney.
The final chapter of Iger’s Disney story is still being written. He may very well prevail in the activist battle, forge deals that fortify Disney’s streaming business and return some magic to moviemaking. Iger’s famed know-how in developing hit franchises out of Disney’s intellectual property will be put to the test.
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