After telling CNBC in July that Disney’s linear networks “may not be core” to the company, CEO Bob Iger downplayed potential sales of the assets in a town hall with employees on Tuesday.
“I did not think everyone would run with a story that everything is being sold, which is not the case,” Iger said, emphasizing that no decisions have been made.
He noted that Disney Entertainment co-chair Dana Walden and ESPN chairman Jimmy Pitaro have been looking “really hard at their businesses to make them more efficient.”
“As is the case with all of our businesses, which we must do in order to basically serve shareholders, is we look at the future of all of our business with an eye towards are these businesses going to grow?” Iger added. “Will they stay the same or will they possibly decrease in value? And if so, what should we do about it?”
Walden said that the company’s linear channels are “very deeply embedded” in its streaming strategy.
“[Audiences] want to watch live shows, sports, live events — they want to watch them in time period, and the place you can do that, for the most part is on linear channels,” she said. “The notion of a communal event still exists largely on linear.”
Tuesday’s event, which was moderated by ABC News anchor David Muir in New York at the New Amsterdam Theatre, marked the company’s second town hall since Bob Iger’s return in November 2022, which followed the ouster of his successor-turned-predecessor Bob Chapek.
While acknowledging that he knew that the entertainment giant faced “a myriad of challenges,” Iger admitted that there were “many more of them than I expected.”
“I won’t say that it was easy, but I’ve never second guessed the decision to come back, and being back still feels great,” he added. “I talk about optimism being an extraordinarily important trait of a leader, because no one wants to follow a pessimist. But I also believe that hopeless optimism doesn’t do anybody any good. I have, I think, real reason—and we have real reason as Disney—to be optimists, and it starts with the fact that we’re Disney. And Disney, as you know, is a brand unto itself, but it’s also an umbrella company that houses many assets and many great brands. So, reason to be optimistic No. 1 is that.”
While Iger has spent much of the last year trying to fix the company’s issues, he believes Disney has “just emerged from a period of a lot of fixing to one of building again” and plans to spend the next year building the “modern version of the Walt Disney Company.”
Moving forward, one of Iger’s top priorities is turning ESPN into a fully direct-to-consumer platform. ESPN chairman Jimmy Pitaro said Tuesday that the company is currently doing market research, looking at “things like timing, things like price point” and reiterated the offering’s 2025 launch target.
“Our mission is to serve the sports fan anytime, anywhere,” he added. “So, if you want to continue to access ESPN in the traditional way through cable or satellite, you’ll be able to do that even once we take it over the top.”
While Pitaro said Disney is “in market talking to potential partners, looking through lenses like technology, marketing, and then also content,” Iger emphasized that the company is “fully prepared” to go it alone if need be, but said doing so without partners could be more “challenging.”
Iger and parks chief Josh D’Amaro also touted the company’s recent plans for a $60 billion investment in Disney’s theme parks over the next decade.
“We stood up on the stage just several weeks back in front of an investor community and said we are going to invest $60 billion in the next 10 years into this business because we believe in it,” D’Amaro said. “We’ve seen what it’s done. We see the impact that it has on our guests and fans around the world. We’ve got so much space to play with. Disneyland for example, Walt’s original theme park, we still have enough room to build another Disneyland there if we choose to do that. So many stories to continue to tell, so many new places to go. So, we’re, we’ve come a long way in the last few years but incredibly excited about the future.”
When asked about Disney’s recent weak box office performance, Iger reiterated that one of the reasons he believes it’s “fallen off a bit” is that the company was making too much.
“I think when it comes to creativity, quality is critical, of course, and quantity in many ways can destroy quality,” he continued. “Storytelling, obviously, is the core of what we do as a company.”
Disney Entertainment co-chairman Alan Bergman said that the company would focus on quality over quantity and expressed excitement about next year’s slate, which includes “The Omen” prequel, “Inside Out 2,” and “Deadpool 3.”
“We obviously want to build our studio back to making not only great films consistently but [to] our preeminent status in the business,” Iger added.
Disney leadership’s remarks come as activist investor and Trian Fund Management founder Nelson Peltz, who called off a proxy fight in February, has launched a renewed push for a board seat at the House of Mouse, in which he’s expected to ask for multiple board seats to increase accountability, an individual familiar with the matter told TheWrap.
The effort is backed by former Marvel Entertainment chairman Ike Perlmutter, who was let go from Disney during its layoffs and has granted Trian sole voting power over his shares in the entertainment giant.
According to a 13D filed with the U.S. Securities and Exchange Commission on Tuesday, Trian has upped its Disney stake to 7.3 million shares during the third quarter of 2023, compared to 6.42 million shares during the second quarter. The filing also discloses another 25.57 million Disney shares listed as an “other investment discretion.”
Meanwhile, activist investor ValueAct Capital is reportedly building a “significant stake” in Disney. CNBC’s Activist Spotlight reported that the San Francisco-based firm began buying Disney stock during the Writers’ Guild of America and SAG-AFTRA strikes and that the company is one of its largest positions. It values Disney’s theme parks and consumer products division alone in the low 80s per share. The report adds that ValueAct has been in a dialogue with Disney’s management and is still growing its position.
In November, Disney beat Wall Street expectations for its fourth quarter of 2023 and announced an additional $2 billion in planned cost cuts, up from its previous target of $5.5 billion.
In addition to the review of its linear networks and DTC ambitions for ESPN, Disney is also slated to buy Comcast’s minority stake in Hulu for at least $8.61 billion. The company will complete an appraisal process in 2024 to determine the asset’s full value and plans to launch a beta version of a combined Disney+ and Hulu app offering in December, before an official rollout in early spring 2024.
Disney stock, which fell to multi-year lows earlier this year, has rebounded to around $92 apiece as of Tuesday’s trading session.
