The 2024 Changes Disney Made to Quiet Critics
Everyone is doing a postmortem about Disney’s victory in staving off an activist investor.
Many of these evaluations miss the point, though. At one time, the outcome of this battle was far from certain.
Here’s a list of changes Disney made to quiet critics and win the needed votes.
The Movie Overhaul Deal
As part of its attempt to win the vote, The Walt Disney Company liaised with many of its most valued investors.
Some were friends, while others were grudging frenemies, people who don’t love Disney but do love money.
Disney also reached out to a few purely antagonistic entities because enemies will happily say things that friends won’t.
During this listening tour, Disney spent up to nine figures procuring the votes, but it also had to make concessions.
For starters, someone had to fall on the sword for Disney’s mediocre 2023 box office campaign.
As discussed here, 2023 wasn’t the nightmare box office campaign critics would suggest.
In fact, Disney arguably earned more per movie than any of the major players in the studio system.
Still, Indiana Jones and the Dial of Destiny, Wish, and The Marvels lost a lot of money.
Someone had to take the blame for that, and Sean Bailey ultimately paid the price.
Bailey is among the most successful studio bosses of the past half-century, so he’ll be fine, just as Amy Pascal was after Sony fired her.
Disney made this move not because of anything Bailey had specifically done wrong. Instead, it was a concession to investors.
In reality, Bailey’s track record is the gold standard, but we live in a world where people can openly question Kevin Feige’s success.
Hot takes don’t come any hotter than that one, but it’s just another day on the job for people like Bailey.
The Public Comments Deal
After Iger’s big win, he took a victory lap on CNBC, Nelson Peltz’s favorite channel.
While Iger undeniably gloated, he also reiterated some comments he’d made during the 2024 Annual Shareholder Meeting.
Specifically, Iger acknowledged the following:
“Infusing messaging as the sort of number-one priority in our films and TV shows is not what we’re up to. They need to be entertaining…”
Now, that’s a blatant lie on its own, but it’s not with additional context.
Iger later added, “But, generally speaking, we need to be an entertainment-first company, and I’ve worked really hard to do that.”
Folks, Walt Disney himself infused his films with messages.
That’s precisely why they have resonated for generations and stood the test of time.
Disney’s never gonna give up on messaging. However, Iger heard all the criticism about the company being too heavily involved in politics.
So, he was smart enough to say this, even if it’s, at best, a half-truth.
Disney never willingly jumps into the culture wars. Instead, biased outsiders pull Disney into the headlines.
But Iger did something else to address the investors’ request…
The Reedy Creek Deal
We probably won’t find out what really happened with Reedy Creek for years to come.
I know that investigative reporters are asking hard questions, but they’re also dangerous.
Some people involved with the Central Florida Tourism Oversight Committee (CFTOD) have their fingers in other pies.
Those pies could impact the outcome of a Presidential election. So, nobody’s talking right now and won’t for a while.
Still, we can draw three undeniable conclusions from the timing of the Reedy Creek compromise.
The first is that Ron DeSantis is landlocked in Florida right now, forcing him to make the most of a situation he doesn’t want to be in.
With the governor’s national political aspirations dead in the short term, he’s sleeping in the bed he made in Florida…and it’s a mess.
DeSantis needed a deal, and so did some CFTOD members. They were about to testify video under oath.
That testimony was scheduled for the day after the agreement announcement.
Ergo, the timing suggests that they really didn’t want to testify.
Then, we have the Disney side of things, where the compromise came a week before the Annual Shareholder Meeting vote.
Disney may have needed to make this deal to garner votes from heavily invested shareholders. It was a winning headline the company needed.
Which of these three aspects matters the most? That’s in the eye of the beholder, but everyone involved had a reason to settle.
After Disney worked this deal, it won the vote and quieted critics. So, there’s that.
The Sports Hulu Deal
Another sticking point with investors was the lack of clarity regarding ESPN’s future.
Honestly, there’s a strange divide about that topic between Disney and Wall Street.
Disney believes in the future of live sports so much that it has locked up contracts into the 2030s.
No joke, you’ll watch the NCAA championship game on ESPN in 2031. It doesn’t even matter which championship you want.
Disney locked up all those rights to ensure that future college sports fans will always need ESPN.
Frankly, that move was a masterstroke, as many of those fans grew up in a post-cord-cutting environment.
Alas, many of the investors on Wall Street are dinosaurs who haven’t turned into fossil fuels yet.
They care only about how Disney will handle ESPN’s impending revenue loss from its Linear Networks division.
While that’s a small part of Disney’s future, it’s one the company can’t forget because Wall Street WON’T SHUT UP ABOUT IT!
So, we get the so-called Sports Hulu deal to maintain a skinny bundle.
In layperson’s terms, that’s the streaming version of a cable television package.
This one will only include linear channels owned by Disney, Warner Bros. Discovery, and Fox.
When Disney’s over-the-top version of ESPN launches, the Sports Hulu service may seem duplicative.
Still, it’s a strong example of the tenet, “What Wall Street wants, Wall Street gets.”
The Video Game Deal
Finally, we have the most overdue of Disney changes.
During Bob Chapek’s brief (yet somehow too long) tenure as Disney CEO, he envisioned the future of Disney as the metaverse.
Since then, the metaverse has proven less popular than back acne. So, Disney ditched those plans and fired everybody.
That step does nothing to change the fact the video game industry should reach $282 billion in revenue in calendar 2024.
Disney needs a cut of that, and Josh D’Amaro knew it. Alas, when Iger returned, he apparently had no idea.
People had to show him graphs and charts, which hurts my gamer heart…but it’s true.
Eventually, Iger realized what even the fossils on Wall Street understand.
Disney needs a stronger presence in the gaming industry. So, Iger cut a check for a piece of Epic Games.
That’s a doubly smart deal since Epic owns the Unreal Engine as well.
In the short term, Disney and Fortnite’s developers will collaborate to create an exclusive gaming universe.
This game will work parallel to Fortnite and feature Disney characters/realms.
We’re discussing Marvel, Star Wars, animated characters, and more.
Presuming the project goes as anticipated, it should be extremely lucrative.
Just as importantly, it will finally give Disney a foothold in the video game industry, an idea I’ve been championing for years.
I’ve called for Disney to purchase some video game companies on multiple occasions.
Epic is a good one, and I’m happy to see that Wall Street agrees with me on the point (for once).
Final Thoughts
The Epic deal, in particular, wouldn’t exist without the activist investor battle.
So, in a weird way, we have an 81-year-old man, Nelson Peltz, to thank for Iger, a 73-year-old man, finally turning to gaming.
In a nutshell, that’s how Wall Street works. Old people tell each other what their great-grandkids are doing.
As Disney fans, we benefit from the chaos of it.