Disney’s (DIS) Bob Iger will inherit quite a mess as he reassumes the CEO position at a company he’s led for 15 years.
“Disney’s problems are more structural than they are with whoever runs the company,” Cowen’s media analyst Doug Cruetz told Yahoo Finance Live.
Cruetz listed several key concerns, including a declining linear business, which has been tied to an increasingly expensive sports business at ESPN, as well as a streaming unit losing money in an ultra-competitive environment.
“I don’t think there’s any magic wand Bob Iger can wave to change that,” the analyst said.
In its most recent fiscal year, losses for Disney’s direct-to-consumer unit, which includes Disney+, Hulu and ESPN+, totaled $4 billion for the year.
The streaming division lost a total of $1.5 billion in the company’s recent quarter, missing expectations and sending shares down more than 10% after results. Shortly after these results, Disney established “a cost structure task force” under former CEO Bob Chapek to help the streaming division meet its profitability goals.
Iger will hold a town hall with employees on Monday morning, Nov. 28, to discuss the company’s future, along with its corporate strategy, according to an internal memo obtained by Yahoo Finance.
Earlier this week, Iger gave investors a taste of what appears to be the first step in that strategy: Fire Kareem Daniel and restructure Disney’s Media and Entertainment Distribution (DMED) division. DMED was one of Chapek’s first big swings as CEO, but the retooling has been billed as a controversial move that has upset longtime veterans and reportedly “confused” workers.
Bob Iger’s legacy ‘on the line’
Iger spent more than four decades at Disney, including 15 years as CEO.
According to the company, the 71-year-old will serve as chief executive officer for two years, with the board’s mandate to “set the strategic direction for renewed growth and to work closely with the board to develop a successor to lead the company to fulfill its mandate.
Cruetz said Iger’s return has felt a bit strange as he’s putting his once squeaky clean reputation on the line.
“I really thought Iger was kind of brilliant to launch Disney+, get all the subs and then step aside and let someone else be in charge of making it profitable, which was always going to be the hardest job,” she said.
“Now he owns it again, so it is [putting] His own legacy is a little at risk here.”
The analyst added that Iger’s return will also complicate the journey of finding a long-term CEO, explaining, “For Iger to come back after a few years and regain control, whoever Disney’s next CEO is, will be looking behind their backs for from day one wondering if I’m really the CEO of the company or if they’re going to be kicked out like Chapek did.”
“It’s not a great position for Disney if they’re trying to find one person who can lead the company successfully, starting in 2024 and beyond,” Cruetz cautioned.
Ultimately, Cruetz said Chapek’s biggest problem is one likely to plague other potential candidates: “He wasn’t Bob Iger.”
Alexandra is a Senior Entertainment and Media Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at email@example.com
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