Bob Iger’s Second Act at Disney: Navigating Challenges in the Streaming Era

Iger’s second term has been anything but smooth sailing, writes Meg James in the Los Angeles Times.

In his second term as CEO at Disney, Bob Iger has encountered a plethora of challenges, marking a stark contrast to his previously successful 15-year leadership. This period has been characterized by organizational difficulties, financial strains, and growing dissatisfaction among fans, presenting a turbulent chapter in Iger’s career, writes Meg James in a Los Angeles Times analysis article.

One significant concern has been the underperformance of Disney’s film sector with lackluster box office returns for major releases like The Marvels. Additionally, strikes by screenwriters and actors have added to the industry’s unrest. The once-celebrated acquisitions of Pixar, Marvel, and Lucasfilm, key drivers of Disney’s creative engines, are now under scrutiny due to these lackluster performances.

Financial woes have compelled Disney to implement significant job cuts, totaling 8,000 positions, and embark on a cost-cutting mission. This is in response to address a decline in traditional TV revenues. The potential sale of ABC and collaboration with financial partners for ESPN suggests a strategic redirection in the face of evolving industry dynamics. Disney’s stock price, trading at half its value compared to three years ago, reflects the company’s struggles. The situation has attracted activist investors like Nelson Peltz and former Marvel chairman Isaac “Ike” Perlmutter. An earlier proxy fight this year underscored the growing discontent among shareholders.

The shift to the streaming era, which Iger initiated in 2017 with the launch of Disney+, has brought its own set of opportunities and challenges. Despite the platform’s growth, Disney has incurred substantial losses in its streaming ventures, totaling $10 billion over the past four years. Competitors like Warner Bros., NBCUniversal, and Paramount Global have intensified the streaming wars.

The decline of linear television, accelerated by the rise of streaming services, has significantly affected Disney’s revenue from monthly programming fees. For instance, ESPN, once distributed to over 100 million U.S. homes, now has a reduced reach of fewer than 70 million. The transition to streaming led to a 10-day blackout of Disney channels on Charter’s Spectrum cable service, highlighting the friction associated with this shift.

Iger’s ambitious move into streaming has seen varied outcomes. While Disney+ has gained a substantial subscriber base, reaching 112 million subscribers by September, it still strives to meet its target of 230 million subscribers by 2024. The COVID-19 pandemic further complicated matters, leading to closures of theme parks, , shutdowns of movie theater, and challenges for ESPN in the absence of live sports.

There’s also criticism that the push to continuously supply content to streaming platforms has strained Disney’s studios, affecting the quality of iconic brands like Marvel, Pixar, and Star Wars. Visual effects (VFX) artists on Marvel productions, in particular, have voiced concerns about burnout and long working hours.

In response to these myriad challenges, Iger acknowledges the need for a strategic shift. The plan includes making fewer films, but with a focus on maintaining high standards. Disney plans to spend $25 billion on programming in the next fiscal year, $2 billion less than the previous year.

Initially intended to be a two-year stint, Iger’s contract was extended by Disney’s board through 2026 to ensure continuity during this transformative period. Finding a successor remains a critical challenge, with former top deputies Kevin Mayer and Tom Staggs returning as consultants to assist in strategic planning.

While Disney has shown financial improvement, with streaming losses narrowing, the path forward remains challenging. Iger faces the task of guiding Disney through the streaming transition, preparing ESPN for a direct-to-consumer approach, and staying relevant to a younger audience.

Source: Los Angeles Times