why CEO Bob Iger has lost the “magic” – Corriere.it

It’s a story about which a film could be written, and undoubtedly someone will. 72-year-old Bob Iger tells friends he’s not having much fun with his new “tenure” as Disney CEO. 2023 was a difficult year: the dispute with the governor of Florida and aspiring president of the United States Ron DeSantis, streaming floundering, investor impatience, the actors’ strike that adds to that of Hollywood screenwriters and slows down new productions. Disney fired CEO Bob Chapek, Iger’s successor, home last November. Many did not agree Chapek’s vision: he wanted to maximize streaming revenue, but underestimated the importance of constantly reminding the world of the “magic” of the Disney worldthanks to which you can create new stories.

The return of Bob

The company brought back its former leader Bob Iger, the legendary Hollywood CEO who led Disney’s 2005-2020 acquisition of Pixar, Marvel and Lucasfilm, spent more than $70 billion on the crown jewels of 21st Century Fox, and launched the Disney+ streaming service. There had been an immediate rally in shares following the announcement, but eight months later the magic hasn’t returned. The stock is down 12% from last year. Upon returning, Iger met with employees and promised to applause to restore power to creatives and suspend spending cuts, but soon realized that there were major problems with streaming and traditional TV. The traditional TV business has been in decline for years: it once brought in a third of Disney’s profits, and includes ESPN (the world’s most watched sports network) and a series of channels from Freeform to Disney Channel.

The bet on streaming

Already in his previous mandate, Iger made the transition from TV to streaming. This is why it invests heavily in content before the launch of Disney+ in 2019 – from “The Mandalorian” to The Simpsons – in order to compete with Netflix. The idea was to grow streaming at a low price, gain millions of subscribers, get to have such market power that it would gradually move the general public to the new platforms, then increase the price per subscription so that we could produce the content that viewers want to see. But that’s not exactly what happened. Robbie Whelan del Wall Street Journal He explains that Iger “talks to friends and tells them how tired and how much more messed up the current situation is than he believed. This came as a shock to many as they had always seen Iger as a limitless source of energy and enthusiasm, as well as a commitment to the company and the Disney brand.”

Historical changes

Some of the problems – according to observers – derive from mistakes by the company, others from historical changes in the media landscape and the entertainment business. In the first quarter of last year, Disney lost $1.5 billion in streaming, which had supported the company during the pandemic when theme parks (which have not returned to past levels anyway) and cinemas were closed. This loss came as a shock to investors who have been promised for three years that Disney+ will start making profits from September 2024 but are beginning to doubt it. The number of subscribers hardly grows any more, while spending on content remains very high. Disney spent $32 billion on content last year, nearly double Netflix’s amount to produce and acquire rights to shows and movies. This is partly due to the fact that Disney produces content for multiple platforms: film studios, streaming services, TV networks such as ESPN, ABC and Disney Channel.

Renovation

One failure was seeing a cricket rights deal in India fall through. Then there are the problems of Pixar, once the undisputed champion of children’s animation with titles like Toy Story, which now faces competition from Universal’s Minions and Super Mario. In January some of Disney’s shareholders, starting with Nelson Peltz who wanted to join the board of directors and was hinged on his friend Ike Perlmutter (former president of Marvel and one of Disney’s major shareholders), rebelled. One of the issues Iger criticizes is Disney’s billions of dollars in debt over the Fox deal, even though it brought the company “Avatar” and tens of thousands of Indian subscribers. Iger halted the riot, temporarily, saying he plans to cut spending by $5.5 billion and eliminate 7,000 jobs to streamline the company. “He told them that presumably the stock will go up, pay dividends again and everyone will be happy,” Whelan explains on the Wall Street Journal.

Long times

Last week, Iger gave an interview to CNBC in which he explains that Disney will sell some traditional TVs. Giant news story: Iger began his career at ABC News in 1974 on one of those networks he could now sell. Whelan explains it as if the CEO was “selling the house he grew up in.” Iger has extended his contract and will remain until 2026: he explained that “the problems are so numerous and so great that they cannot be solved in two years”. On the one hand, he became the face of the evil “studios” in the eyes of the actors on strike: after Iger called the demands “unrealistic”, the union leader Fran Drescher recalled that he earns “78,000 dollars a day”. On the other hand, there are the impatient investors who, in the absence of results, will return to the attack: fixing things in the dream factory may take time and Wall Street does not seem ready to wait.

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