Has Bob Iger Improved Disney Since His Return?

On Thursday, July 13^th, Bob Iger will appear on CNBC to discuss the latest news surrounding The Walt Disney Company.

As a master of public relations, Iger’s interview will probably go well and reassure investors about Disney’s future.

However, as I mentioned in Disney Headlines, Iger’s approaching the eight-month anniversary of his triumphant return to Disney as its CEO.

Has Iger actually made the company better during his second tenure, though?

Has Disney improved under Bob Iger? Let’s talk it through.

Fixing the Chapek Problem

Disney’s Board of Directors made a change at CEO because Bob Chapek simply hadn’t gotten the job and probably wasn’t going to do so.

As I wrote a few months ago, Chapek should never have been Disney CEO.

The former Disney leader never loved the act of storytelling the way that the CEO should.

Chapek proudly proclaimed that Disney had transitioned into a digital company.  

Since Iger’s return, he has repeatedly described his business as based in storytelling. That’s not a coincidence.

While I’m not one to bury Chapek’s performance the way many do, he was always going to be the wrong choice.

In February 2020, Iger did the math and realized that Disney needed a numbers-focused person to make the calls. So, he transferred leadership to Chapek.

That move backfired, and the only way to fix it in the short term required Iger to un-retire.

With that single decision, Iger fixed the Chapek Problem. And he deserves credit for that. Not enough people are willing to admit and correct their mistakes.

That’s only a smart part of running Disney, though. So, let’s evaluate where Iger stands on several other systemic company issues.

The Florida Feud

First, let me state the obvious. If somebody is standing in a bar next to you and they suddenly punch you, you’re getting in a fight. There’s no avoiding it.

Sometimes, your only options are all terrible, and you’re left picking the best of a bunch of bad ideas.

That’s how I would describe Disney’s side of the Florida Feud.

Since the opening day of Disneyland, cast members have honored the primary tenet of Walt Disney himself when he said:

“To all that come to this happy place, welcome.”

Tolerance has remained Disney’s mantra since then. When a questionable Florida law made cast members feel unwelcome, they asked Chapek to speak.

While Chapek waited far too long, he eventually became one of many business leaders to denounce the legislation.

However, Florida Governor Ron DeSantis singled out Disney for a weird fight.

I always equate it to a Larry Miller joke, which was, “You’re so drunk that you punch the guy at the end of the bar just because you don’t like his face.”

In the process, DeSantis attacked his state’s golden goose, the main reason why it’s a tourist destination.

Iger didn’t work at Disney at the time, but he went out of his way to say that he would have defended his cast members.

Since Iger’s return, he has proven absolutely fearless in the face of the governor’s weirder and weirder reactions.

Iger outflanked the governor’s staff and later sued, positioning Disney to reclaim the rights it’d lost.

Nobody in their right mind believes Chapek would have performed as well in the same situation.

In simple mathematical terms, Iger > DeSantis > Chapek.

The Disney+ Dilemma

On Tuesday, July 11^th, news broke that Disney could sell Star India.

Disney's India business is on the rocks:
– Expected to lose 8-10m streaming subs this Q
– FY23 EBITDA down 50% from $200m in '22
– Likely will lose money FY24
– Disney has met w/ bankers about a sale or JV
Huge #SCOOP by @jtoonkel @jbflint @laurenthomas https://t.co/NObyDbBj9p

— Robbie Whelan (@RWhelanWSJ) July 11, 2023

And as staggering as this sentence is to type, I swear to you that it all comes back to cricket.

As I chronicled last June, Disney faced an impossible choice. It could renew all IPL Cricket rights for several years, or it could save billions.

I’m talking literal billions here, as the streaming side of rights cost $2.6 billion. Meanwhile, Disney paid $3 billion for conventional broadcast rights.

So, Disney spent $3 billion on cricket…to get less. Iger acquired those valuable streaming rights in the Fox transaction.

At the time, everyone expected Disney to monetize the subcontinent via Disney+ Hotstar. That plan faded due to poor revenue.

For whatever reason, the residents of India (and Indonesia, Malaysia, and Thailand) never fell in love with Disney+ content.

These subscribers were solely in it for the cricket matches. When Hotstar lost those, Disney+ worldwide subscriber numbers fell.

Now, reports suggest that eight-to-ten million Hotstar subscribers may have canceled this past fiscal quarter due to the absence of cricket.

While Chapek made the call on ceding cricket rights, his overall handling of Disney+ was questionable at best.

After Disney fired Chapek, reports surfaced that he hid some digital losses to make the division’s performance appear stronger than it was.

Iger finds himself cleaning up after Chapek. Thus far, I’d describe his performance as exemplary.

As I previously mentioned, in a matter of months, Iger found methods to reduce Disney streaming losses by more than half.

Still, Disney+ is Bob Iger’s baby, and it’s a money loser thus far.

Also, I’m wondering whether we’ll get more bad news about Disney’s streaming services on Thursday or during next month’s quarterly earnings report.

Iger’s been better than Chapek, but better isn’t good.

Disney at the Cineplex

Film performances represent one of the most challenging, nuanced conversations we can have.

What few people realize is that many movies aren’t just terrible. They’re not profitable during theatrical release, either.

Instead, the monetization often occurs after a title debuts in theaters thanks to a series of revenue windows.

During the 1990s and early 2000s, everybody at the studios ate well due to the strength of VHS and DVD sales.

Movies worked as the marketing phase for most titles. Later, the studios would get rich from selling the same films on home video.

After that, the studios would earn more money thanks to pay cable deals with companies like HBO and Showtime.

Later, those SAME films would attain even more income via cable and later network television airings.

In short, you made a movie once and then kept earning paychecks from it forever.

The advent of Netflix as a streaming service disrupted that high-margin revenue stream.

People no longer needed to pay for HBO and Showtime to watch great movies.

Similarly, Netflix offered enough content that customers could cut cable, too.

To his credit, Iger recognized this trend early and created an entire Netflix competitor, the biggest one, out of thin air.

As we just mentioned, making money from Disney’s streaming services has proven challenging.

Meanwhile, Chapek, in a panic, undercut the theatrical release window to secure more Disney+ subscribers.

Now, Iger has been tasked with restoring Disney’s theatrical schedule, which hasn’t gone smoothly.

That’s because Disney’s 2023 film lineup faced pandemic-related setbacks, which led to massive budget overruns.

Titles like The Little Mermaid and Elemental have performed better than anyone realizes, but they’re not on a level of past Disney hits.  

Iger will fix this in time, but he’s effectively trying to make a U-turn on a double-decker bus.

Disney at the Parks

I’ve got nothing but good news here.

Chapek was running the theme park division into the ground, and we all knew it.

Whenever Chapek needed money, all he had to do was push the shiny Price Increase button, and the parks would print millions of dollars for him.

Tourists noticed each and every one of those price increases, though. Thankfully, Iger did as well.

Disney’s CEO hasn’t run away from the fact that he felt Chapek raised the price too much.

Iger wants Disney vacations to remain affordable for all, and we’re all in his debt here.

More than any other issue I’ve listed here, the theme parks are where Iger has shined since his return.

Yes, we just had a July 4^th hiccup that has earned a disproportionate amount of headlines.

Here’s MickeyTravels agent Jennifer McCormick brilliantly explained this issue during a Fox35 Orlando interview on Monday:

To a larger point, theme park attendance is never linear. We track trends over time, and then we try to interpret why tourists behaved as they did.

Meanwhile, Disney park strategists spend their days trying to lessen attraction wait times as much as possible.

So, they just experienced a highly successful July 4^th week. For their trouble, they now have to defend lower wait times at the parks, which was their goal!

The whole thing is wild. Still, Iger’s theme park prowess is the gold standard, and he appears to have trained Josh D’Amaro well.

Disney’s theme parks will remain in excellent hands as long as these two are making the decisions.

Final Thoughts

When Bob Iger returned, Disney fans couldn’t help but imagine him flying in on a magical unicorn. He was the hero we needed to rescue us from Chapek.

What we’ve learned since then was that the pandemic-related problems and the self-inflicted wounds caused by Chapek were extreme.

Disney was in more peril than any of us realized, and it would be in dire straits right now if not for Iger.

I haven’t even touched on side issues like Nelson Peltz’s activist investor war or Christine McCarthy’s sudden absence.

Disney has experienced more upheaval since March 2020 than it had at any point since Roy Disney fought Michael Eisner in the early 2000s.

Iger cannot fix everything overnight, and forward progress isn’t linear by nature.

Still, I’m more than a little bit curious about the timing of Iger’s CNBC appearance.

If he’s trying to get out ahead of something, everything I just said here could prove moot.

I suspect Iger is more interested in persuading investors of his company’s core strength…but after the past few years, nothing would surprise me.

Feature Image: Washington Post illustration; Jordan Strauss/Invision/AP; iStock

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