How Bob Iger Has Fixed Disney’s Worst Problems

What a difference a year makes!

In October 2023, I wrote an article about how Bob Iger was facing Disney’s worst problems.

As the recently returned CEO of The Walt Disney Company, Iger was still struggling.

I described Iger as “in danger of collapsing under their weight.”

Now, I can sincerely report that this is no longer the case.

Here’s how Bob Iger has fixed Disney’s worst problems in 2024.

The Collapse of Television and Film

I probably don’t need to remind you about Disney’s miserable 2023 with regard to movies and television.

At one point, Iger was ready to wash his hands of Disney’s Linear Networks and sell them.

Perceived as a dying medium, broadcast television remains a solid revenue generator for Disney, but it’s slowing down.

Some have described cable channels as on the brink of collapse, something I find a bit hyperbolic.

Still, even ardent supporters of the media – and there aren’t many of those left – would admit viewership totals have plummeted.

However, Iger spoke with his team about the current state of media, especially regarding broadcast vs. streaming.

What he discovered is one of the strange truths of media consumption right now.

Due to the age gap between streaming viewers and conventional broadcast fans, there’s minimal overlap.

At this point, most consumers stream, but everyone has a preference, with many older fans staying loyal to linear.

Iger recognized this and developed a strategy to use broadcast and streaming in parallel, thereby keeping both.

The new process has proven much more financially rewarding, as we’ll discuss more in the next section.

As for Disney’s movies, Iger instructed his staff to adopt a “less is more” approach, which has worked wonders.

Disney’s marketing team can focus more on each individual reference, providing all the films with a better chance to succeed/excel.

The most glaring examples are Inside Out 2 and Deadpool & Wolverine, two of the top 20 global blockbusters ever.

However, the positive results are also noticeable with titles like Kingdom of the Planet of the Apes and Alien: Romulus.

Those two franchise reboots have grossed $750 million while costing only $240 million to make.

And Disney has two more blockbusters to go: Moana 2 and Mufasa: The Lion King.

High Debt and Incoming Expenses

Whenever you hear a Wall Street investor discuss Disney, one of the first complaints they list is the company’s high debt.

Even those who believe this argument is overstated – and I fall in that camp – know that the pandemic caused problems.

In 2017, Disney’s long-term debt was only $17.084 billion, a modest amount for a company its size.

When Disney purchased the Fox assets, Comcast interfered with the bidding.

Comcast raised the price of those assets to the point where Disney had to bid $19 billion more than intended to win.

The company could have easily handled that amount, as demonstrated by how its debt at the end of fiscal 2019 was $38.129 billion.

A few months later, COVID-19 shut down most Disney businesses, leading to an increase in debt.

By 2021, Disney owed $48.54 billion. Former Disney CEO Bob Chapek barely made a dent in that number.

When Disney fired him in November 2022, the company’s debt load was $45.299 billion.

Iger has quickly chipped away at that total. During Disney’s most recent quarter, its long-term debt had dropped to $39.524 billion.

I know I just threw a lot of numbers at you. So, please allow me to reduce it to basics.

When Disney reports its earnings for fiscal 2024, its long-term debt will likely be lower than it had been before the pandemic.

That’s like a Master’s class in long-term debt management.

Also, we should remember that Disney paid Comcast $8.16 billion for Hulu and restored stock dividends, which makes the feat all the more impressive.

Presuming nothing untoward occurs, Disney is about four years away from having the same long-term debt as in 2017.

You’ll notice this accounting feat at the parks, as it’s the primary reason why Disney can afford to expand.

The Loss of Allies

Something I mentioned last year was that Iger lost many of his allies during Chapek’s tenure.

As an insular executive, Chapek didn’t trust outsiders and carefully crafted a small inner circle to run Disney.

This practice alienated several Iger allies who left the company, which was the point from Chapek’s perspective.

The most famous instance occurred when Zenia Mucha left Disney.

A master of messaging, Mucha crafted Iger’s public persona and amplified all his achievements.

Chapek really could have used someone like that, as poor communications ultimately played a hand in his departure.

Still, when Iger returned, he didn’t know who to trust, as he’d lost confidence in Disney’s then-Chairman of the Board, Susan Arnold.

The two had a falling out and didn’t speak for an extended period, and that only changed when Arnold offered Iger his old job.

So, when the executive returned to Disney, he found himself alone at the worst possible time.

Activist investor Nelson Peltz and Iger’s old frenemy, Isaac Perlmutter, were plotting to win multiple seats on Disney’s Board of Directors.

Iger needed allies, powerful ones who could withstand the threat of two billionaire opponents.

Lacking enough internal firepower, Iger imported new allies.

First, the CEO snagged Hugh Johnston to become Disney CFO.

This hiring was crucial since Johnston had previously repelled a Peltz takeover attempt.

Then, Iger pushed his friend Mark Parker for the role of Chairman of the Board, replacing Arnold.

Simultaneously, Iger enticed James Gorman and Sir Jeremy Darroch to join the Board.

Suddenly, Iger had three strong allies on the Board, including the Chairman, plus a proven CFO.

The Chapek Mistakes

Last year, I enumerated several of the holes that Chapek unintentionally dug for Disney.

Iger was the one left holding the bag for all that nonsense. So, he had to clean up his successor’s mess.

Of course, Iger is far from innocent here since he had chosen his successor.

Still, some of Chapek’s issues stood out, most notably the Direct-to-Consumer division.

This business lost $1.4 billion in a single quarter, which would be $5.6 billion for a full year.

There are maybe three businesses in the world who can afford those sorts of losses, and Disney most assuredly isn’t one of them.

So, Iger’s first task was to stop the bleeding with Disney’s streaming services.

During Disney’s most recent quarter, only seven quarters after it fired Chapek, Direct-to-Consumer turned a profit. That’s mythic.

The job he did here is one for the history books. Seriously, college professors will teach entire classes about it.

Then, we have the other debacle Iger fixed. Chapek infamously engaged in a blood feud with Florida’s governor.

The outcome of this feud was that Florida rebranded the Central Florida Tourism Oversight District (CFTOD).

Few expected this matter to resolve itself, especially during an election year, but that’s precisely what happened.

The CFTOD hired a longtime Disney ally, and the parties brokered a deal for a 15-year development plan.

If anything, that was an even bigger triumph for Iger…and you and me. It guarantees that Disney World theme park expansion is coming soon!

Love him or hate him, Bob Iger had a really good year, y’all.

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Feature Photo: Deadline