Disney Headlines for February 19th, 2023
Disney’s popularity remains nearly identical to two years ago. Also, Bob Iger is eyeing not one but two potential paychecks.
We will talk about these stories and Super Bowl commercials in the latest batch of Disney Headlines.
Did Disney’s Popularity Take a Hit Last Year?
A certain segment of the media works hard to persuade people that The Walt Disney Company isn’t the same.
Negative headlines assail Disney on a weekly, sometimes daily basis. In particular, 2022 seemed especially disastrous.
Even fans of Bob Chapek – and there had to be at least a few of them – would acknowledge that he wasn’t the most polished CEO.
Chapek’s indecision with Florida’s Don’t Say Gay bill somehow infuriated both sides of the political aisle.
Then, we had all the theme park price increases and the debate about the cost of Star Wars: Galactic Starcruiser.
Disney played defense for most of 2022 before the Board of Directors grew tired of all the nonsense. At that point, they fired Chapek and restored Bob Iger as CEO.
Surely, all this turmoil impacted the overall perception of Disney as a company, right? Weeeeeeeeeell….
The answer is…little, if any.
Fortunate just released its annual list of World’s Most Admired Companies. As usual, Disney snagged its typical spot in the top ten.
In fact, Disney has proven remarkably steady on this list. For 2023, Disney finished in sixth place behind Apple, Amazon, Microsoft, Berkshire Hathaway, and JP Morgan Chase.
Fortune describes Disney as the most admired media and entertainment company in the world…for the 20th straight year!
The publication describes Apple and Amazon as tech companies instead.
Disney has proven remarkably steady with its rankings on the Most Admired list, which indicates that fans readily brush off any and all criticism.
Here are Disney’s rankings for the past ten years:
Disney has finished in the top six for eight straight years, a stunning feat.
Does Bob Iger Want a Fresh Start?
On Monday, MickeyBlog’s Justin Hermes covered something I’ve discussed here in the past.
Bob Iger shocked the industry last week when he appeared live on CNBC and suddenly stated that he was open to selling Hulu.
You can watch the essential portion of the interview here:
Notably, Comcast claims CNBC as one of its corporate holdings.
Folks, Iger might as well have grabbed a megaphone and yelled, “MAKE ME AN OFFER, COMCAST!”
That’s an unexpected turn after Iger spent a portion of Disney’s quarterly earnings call speaking of the advantages of vertical integration in media broadcasting.
As Justin Hermes references, Disney currently owes Comcast a payment of roughly $10 billion – or possibly more – for its one-third ownership of Hulu.
If the reverse occurs with Disney selling to Comcast, Bob Iger gets $20 billion to remove from the balance sheet.
The stray thought that has arisen in popularity suggests that Iger may not stop there. He may pull a Ted Turner, so to speak.
During the 1980s, Turner and Kirk Kerkorian passed around the MGM/UA film library. Each one took the assets they wanted from the transaction.
Turner populated the Turner cable network media empire with programming from this transaction.
Disney just bought $71 billion in Fox media assets. Iger doesn’t need all of them. He can package the ones he doesn’t like into a larger sale of Hulu.
Similarly, Iger could strip these assets for Disney’s benefit before selling them.
For example, he could sign a hundred-year licensing contract to stream these entities.
Then, he could sell them to someone else, having gotten what he needed from the deal.
Hulu, ESPN, and Money
The ESPN side of this conversation is equally tantalizing. There’s a belief that Disney may yet sell ESPN to the highest bidder.
Yes, Disney just reorganized to turn ESPN into its own pillar out of the three foundational divisions at the company.
Even so, the televised sports business model is evolving at a rapid, somewhat unpredictable pace.
As the CNBC reporter mentions, Disney pays $1.4 billion yearly for a nine-year extension on NBA rights. That deal expires soon.
Forecasts call for the price to double or possibly soar even higher for the next NBA licensing agreement.
Meanwhile, a new kind of sports streaming has started gaining in popularity. Without going into specifics, it prioritizes smaller sports and more localized coverage.
Everyone expects ESPN to soar in value as gambling becomes a bigger part of the streaming experience.
However, when Disney bought Fox, it gained several regional sports networks. Disney sold high on those networks, which it had to divest anyway.
Since then, a different company, Bally’s Diamond Sports, has nearly collapsed due to paying for a product that has since lost most of its value.
The same thing could possibly occur if Disney sells ESPN soon. It could be selling high.
I’d expect a Hulu sale to earn $20 billion on its own. With some Fox assets, that value could soar to $30 billion or more, depending on what’s included.
As for ESPN, my gut instinct would value the property at $10-$15 billion. With gambling entities involved, that number could soar if a bidding war breaks out.
TL: DR
Is Iger contemplating a full reboot on Disney’s streaming structure? What could he do if he suddenly had that much money off the balance sheets?
I suspect that idea proves tantalizing, especially with services like HBO Max and Peacock struggling so much that I’d describe them as distressed assets.
Disney’s Super Bowl Approach
Historically, film studios have utilized the Super Bowl as a launch platform for upcoming releases.
While the supporting data has remained suspect, studios have believed that having 100+ million eyeballs on a trailer is worth the hefty cost of a Super Bowl ad.
Strangely, some of the films advertised during the Super Bowl turned into box office duds anyway. Not every trailer sells a film, after all.
Sometimes, we all watch a trailer, laugh at it, and then make a mental note to avoid that film at all costs.
Still, Disney has proven quite successful with its Super Bowl ads.
For example, Disney dominated with popular trailers for Captain Marvel and Avengers: Endgame during the 2019 Super Bowl.
Expectations were obviously high this past Super Bowl Sunday, but Iger and his team went in a different direction.
Yes, we received a new trailer for Guardians of the Galaxy Vol. 3. However, the only other Disney-related trailer was for Indiana Jones and the Dial of Destiny.
Instead, Disney spent its money on a commercial that reminded viewers of the company’s core values. Here’s the ad:
After mere seconds, Disney reinforced many of its recent decisions involving the value of representation.
In watching the whole thing, I felt as proud to be a Disney fan as I have been in ages.
That’s smart advertising. Better yet, it reinforces why Disney remains among the most admired companies.
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