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    Disney’s Iger Returns to Familiar Stage, but With Different Challenges

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    The company reports quarterly earnings on Wednesday, and Wall Street is expecting it to lay out a new streaming strategy and operating structure.When it comes to reporting quarterly earnings, Robert A. Iger is an old pro. He has done it 58 times as Disney’s chief executive. But the next one, scheduled for Wednesday, will require him to give a performance for the corporate ages.“It has to be an impactful, meaningful, tone-setting, agenda-changing day,” said Michael Nathanson, an analyst at SVB MoffettNathanson who has followed Disney for 18 years.Another veteran Disney analyst, Jessica Reif Ehrlich of BofA Securities, agreed. “I don’t know that we’re going to see answers to everything, but Iger’s overall messaging is going to be critical,” she said.So, no pressure.On Wednesday, Mr. Iger will publicly face Wall Street and Hollywood for the first time since he came out of retirement to retake the reins of a deeply troubled Disney. In late November, the Disney board fired Bob Chapek as chief executive and rehired Mr. Iger, 71, who ran the company from late 2005 to early 2020. He is also contending with Nelson Peltz, the corporate raider turned activist investor. Mr. Peltz, 80, whose Trian Partners has amassed roughly $1 billion in Disney stock and is fighting for a board seat for himself or his son, wants the world’s largest entertainment company to revamp its streaming business, refocus on profit growth, cut costs, reinstate its dividend and do a much better job at succession planning.Most of those things were in motion at Disney before Mr. Peltz started his proxy battle, and analysts expect Mr. Iger to provide updates on at least some fronts on Wednesday.More on the Walt Disney CompanyLabor Tensions: Unions that represent about 32,000 full-time workers at Disney World said that members had voted overwhelmingly to reject the company’s offer for a new five-year contract.Splash Mountain’s Closure: As Disney takes steps to erase the racist back story of the Walt Disney World ride, some are claiming to be selling water from the attraction online.Return to Office: Starting on March 1, the Walt Disney Company will require employees to report to the office four days a week, a relatively strict policy among large companies.Pricing Policies: After complaints by visitors about the costs at its domestic theme parks, Disney revised policies related to ticketing, hotel parking, ride photos and annual passes.How are the content pipelines to Disney’s streaming services (Disney+, Hulu and Disney+) going to be managed? At 6:30 a.m. on his first day back, Mr. Iger ousted Disney’s top streaming executive and ordered a restructuring of a restructuring that Mr. Chapek had put into place.For months, Disney has been talking about cost cutting and layoffs. Where are they? “This can’t drag on,” Ms. Ehrlich said. “It’s not good for company morale.” (Speaking of morale, some Disney employees have been circulating a petition to protest Mr. Iger’s decision last month to require everyone to report to the office four days a week.)Shareholders are increasingly worried about the decline of Disney’s traditional television business, which includes ABC and 15 cable networks, led by ESPN, Disney Channel, FX, Freeform and National Geographic. Disney’s cable portfolio has held up better than those owned by some rival companies (notably NBCUniversal), but Americans have been cutting the cable cord at an alarming pace — total hookups declined by a record 6.2 percent from October to December.“We need an honest and appropriate view of the future of Disney’s television business,” Mr. Nathanson said. “Is there an asset change? Does spending change? Under Chapek, the messaging was never very clear.”Even in decline, traditional television remains Disney’s largest business, delivering $8.5 billion in operating income in the fiscal year that ended in October.Disney and other old-line media companies are facing a simple equation that has proved astoundingly difficult to solve: Profit from traditional television is declining at a faster rate than streaming losses are moderating. In Disney’s case, traditional television earnings are expected to decline by $1.6 billion in 2023, while losses from streaming will abate by only about $900 million, according to Mr. Nathanson.In November, Disney said that losses from its streaming portfolio totaled $1.5 billion from July through September, compared with $630 million a year earlier.But Mr. Chapek, who led the company’s November earnings call, reiterated a promise that Disney+ would turn a profit by next October. Wall Street has been skeptical of that assertion, and Mr. Iger may revise it on Wednesday, along with guidance that Disney+ would have 215 million to 245 million global subscriptions by 2024. Disney+ currently has about 164 million worldwide.Companies always try to put the rosiest spin possible on numbers when talking to analysts, shareholders and the news media on quarterly earnings conference calls. But the upbeat tone struck by Mr. Chapek in the November session did not sit well given the numbers that Disney was reporting. Along with widening losses in streaming, Disney had disappointing profit margins at its theme park business and missed Wall Street’s overall expectations for both revenue and net income, a rarity for the company. (When one senior Disney executive privately told Mr. Chapek before the call that his planned remarks were too positive, he called her Eeyore, the gloomy donkey from “Winnie the Pooh.”)Mr. Iger will undoubtedly highlight some of Disney’s recent achievements. “Avatar: The Way of Water,” released by Walt Disney Studios, has generated $2.2 billion worldwide since it arrived in theaters on Dec. 16. Disney received more Oscar nominations last month (23) than any other company. Over the end-of-year holidays, Disney’s theme parks were gridlocked, easing fears about consumer belt-tightening.“Despite the macro headwinds, the parks still feel incredibly strong,” Ms. Ehrlich said.But Mr. Iger will also need to contend with a lackluster set of overall numbers, at least if analysts’ forecasts are correct. Analysts are expecting per-share earnings of about 79 cents from Disney, down from $1.06 for the same period a year ago, and revenue of $23.4 billion, up from $21.8 billion a year ago.Analysts polled by FactSet estimate that Disney+ will have 163 million subscribers, a slight erosion from the previous quarter.Mr. Iger will probably not directly address Mr. Peltz’s proxy battle, unless an analyst prods him about it. Disney has already made its position clear, saying in a Jan. 17 securities filing that Mr. Peltz had “no strategy, no operating initiatives, no new ideas and no plan.” In a fresh eruption late last week, Trian said there was an “urgent need” for Disney shareholders to drop Michael B.G. Froman from the company’s board and give the seat to Mr. Peltz or his son. In response, Disney aggressively defended Mr. Froman, a senior Mastercard executive and former U.S. trade representative who has been a Disney director since 2018.Some prominent analysts have taken Disney’s side.“He hasn’t made a good enough case for why he needs a seat on the board,” Mr. Nathanson said, referring to Mr. Peltz.Richard Greenfield, a founder of the LightShed Partners research firm, was one of Mr. Iger’s most ardent critics during his previous tenure at Disney — so much so that Mr. Iger blocked him on Twitter and refused to take questions from him on earnings calls. Mr. Greenfield, however, recently published an aggressive defense of Disney titled “Disney Would Be Wise to Keep Peltz Off the Jedi Council.”Perhaps Mr. Iger will take a question from Mr. Greenfield on Wednesday. More

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      Disney+ Added 7.9 Million Subscribers Last Quarter

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      Disney+ added 7.9 million subscribers in the most recent quarter for a total of 138 million worldwide, the company announced Wednesday, helping it avoid the streaming slowdown that has lately tanked the stock price of Netflix.Like most media companies, Disney’s stock has been pummeled in the wake of Netflix’s announcement last month that it had lost 200,000 subscribers in the first three months of the year and that it expected to lose two million more this quarter. After years of applauding media companies for losing billions on streaming, investors are now applying pressure to find a path to profitability.The release of films like Pixar’s “Turning Red” helped Disney+ attract subscribers in the first quarter, which ended April 2. Shares of Disney were down about 3 percent in after-hours trading following the earnings announcement.Disney’s results are a bit of good news for Bob Chapek, the chief executive, who has been dealing with a public relations crisis stemming from the company’s response to Florida school legislation that, among other things, restricts classroom discussion of sexual orientation and gender identity. (Disney is the state’s largest private employer.)The company initially refrained from speaking out against the bill publicly but reversed itself after an internal revolt. Mr. Chapek then denounced the legislation, which earned him the ire of conservatives, including Florida Gov. Ron DeSantis. Last month, Republican lawmakers in Florida revoked a 1967 law that allowed Walt Disney World to function as its own quasi government. In the wake of the uproar, Geoff Morrell, who joined Disney in January as its most senior government relations and communications executive, resigned last month.Revenue at Disney increased 23 percent compared with last year, to $19.2 billion, but missed analyst expectations. Disney said it took a hit from a decision to pull some of its content back from other distributors in favor of its own channels, which meant a reduction of $1 billion in licensing revenue as part of a trade-off to grow its direct-to-consumer business.Disney reported earnings per share of $1.08, missing analyst expectations of $1.17.Disney’s theme parks unit came roaring back from a year ago, when the Covid-19 pandemic stunted in-person attendance. Revenue in the division doubled compared with the same period last year, with a new line-skipping system driving increases.As streaming services look for more subscribers, India is shaping up to be an important market. Deep-pocketed media companies are preparing to bid for rights to show cricket matches from the popular Indian Premier League. Disney currently has the rights to stream the matches on its Hotstar service, which it acquired in its 2019 megadeal with 21st Century Fox. Losing those rights could be a blow. However, Mr. Chapek has said that Disney can reach its subscriber targets even if it does not retain those rights.On a call following the earnings announcement, Mr. Chapek said that Disney would eventually become more aggressive about moving major live sports onto the ESPN+ streaming service. The cash generated by the lucrative portfolio of ESPN cable channels currently makes that untenable, so the company is taking a measured approach to sports streaming, Mr. Chapek said.“What we’re doing is sort of putting one foot on the dock if you will, and one foot on the boat,” Mr. Chapek said.Mr. Chapek also responded to an analyst question about the lack of new Disney movies that have opened in the Chinese theatrical market, where the company has had an uneven record in recent years. Mr. Chapek said that Disney films were performing well without help from moviegoers in China, pointing to the success of “Doctor Strange in the Multiverse of Madness.”“We’re pretty confident that even without China — if it were to be that we continue to have difficulties in getting titles in there — that it doesn’t really preclude our success,” Mr. Chapek said. More

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      Disney Says It Hopes Florida Anti-LGBTQ Law Is ‘Struck Down’

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      Moments after Gov. Ron DeSantis of Florida signed an anti-L.G.B.T.Q. bill into law on Monday, Disney released a statement condemning it and saying that its “goal as a company is for this law to be repealed by the legislature or struck down by the courts.” Disney employs roughly 80,000 people in the Orlando area.Labeled by opponents as “Don’t Say Gay,” the law restricts classroom instruction on sexual orientation and gender identity. It also gives parents an option to sue a school district if they think the policy has been violated.This month, Disney was criticized by many of its employees for refusing to take a public stand against the legislation, leading to a series of moves from the company’s chief executive, Bob Chapek. Mr. Chapek broke the company’s silence and stated Disney’s opposition; apologized repeatedly; paused political giving in Florida pending a review; and created a task force to develop an action plan for Disney to be a more positive force for the L.G.B.T.Q. community, including through its content for families. He is going on a listening tour at Disney workplaces, both domestically and overseas, this week.On March 9, Mr. Chapek told shareholders at Disney’s annual meeting that he had called Mr. DeSantis to “express our disappointment and concern” about the bill. “The governor heard our concerns, and agreed to meet with me and L.G.B.T.Q.+ members of our senior team in Florida as a way to address them,” he said.Mr. DeSantis responded with defiance, promptly deriding the company as “Woke Disney” in a fund-raising email to supporters. On Monday, as he signed the bill, Mr. DeSantis said: “I don’t care what Hollywood says. I don’t care what big corporations say. Here I stand. I’m not backing down.”The hosts of the Academy Awards on Sunday made fun of the legislation during their opening stand-up routine.In its statement on Monday, Disney added that it was committed to the national and state organizations working to overturn the law. “We are dedicated to standing up for the rights and safety of L.G.B.T.Q.+ members of the Disney family,” the company said, “as well as the L.G.B.T.Q.+ community in Florida and across the country.” More

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      Disney to Reveal Plans to Turbocharge Streaming Offerings

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      #masthead-section-label, #masthead-bar-one { display: none }What to WatchBest Movies on NetflixBest of Disney PlusBest of Amazon PrimeHoliday TVBest Netflix DocumentariesAdvertisementContinue reading the main storySupported byContinue reading the main storyDisney to Reveal Plans to Turbocharge Streaming OfferingsSome big-budget movies will first go to theaters. Other offerings will debut online. All will ultimately strengthen Disney+.“The Mandalorian” has been a hit for Disney+ and the company is planning more “Star Wars” content for the streaming service.Credit…Disney Plus, via Associated PressDec. 9, 2020Updated 6:39 p.m. ETLOS ANGELES — A significant expansion of the “Star Wars” universe. Tom Hanks as Geppetto in a live-action “Pinocchio,” and Yara Shahidi as Tinker Bell in a live-action “Peter Pan & Wendy.” Footage from new Marvel projects. A star-studded prequel to “The Lion King.”On Thursday, as part of a four-hour investor presentation focused on streaming, the Walt Disney Company will discuss a Death Star-size trove of coming content — all of the above and more, said three people with knowledge of the matter, who spoke on the condition of anonymity to discuss private planning.Some big-budget Disney movies will continue to have exclusive runs in theaters. (The “Lion King” project, directed by Barry Jenkins and focused on Mufasa’s back story, is a good bet.) Others will debut online. (That is where “Pinocchio” is headed.) All will ultimately serve one goal, which is strengthening Disney+, the company’s flagship streaming service.At a time when streaming is becoming cuttingly competitive — and some of Disney’s traditional businesses are struggling — Disney hopes to use the virtual event to dazzle Wall Street: Here is a 97-year-old company making a jump to direct-to-consumer hyperspace.Last month, Bob Chapek, Disney’s chief executive, announced that Disney+ had reached 74 million subscribers worldwide after only 11 months in operation. (Netflix took seven years to reach that threshold, and now has 195 million customers worldwide.) Disney+ has since rolled out in Latin America and grown rapidly in India, analysts say, leading some to estimate that Disney may reveal that the service is within reach of 100 million subscribers.Disney is also expected to give growth updates on its other streaming platforms, including ESPN+, Hulu and a new general entertainment offering, Star, which will debut overseas in the coming months.“The question everyone has now is where to from here?” Michael Nathanson, a founder of the MoffettNathanson media research firm, said in a phone interview. “We expect to see a lot more spending on content to turn Disney+ into more of an always-on service, which will increase pricing power.”Subscriptions to Disney+ cost $7 a month. The least expensive Netflix plan is $9 a month, and HBO Max, a fledgling WarnerMedia service, costs $15.Disney declined to comment for this article.Investors have been licking their lips in anticipation of what Disney will unveil, including forecasts of subscriber growth. Disney shares have climbed 32 percent since the investor day was announced in August, compared with an 11 percent rise in the Standard & Poor’s 500-stock index.Disney was trading at about $155 on Wednesday, near an all-time high, even though several of its theme park resorts (which are enormous cash generators) remain closed because of the pandemic. The company laid off 30,000 workers.Hollywood is keenly interested in the investor presentation because Disney executives have said they will discuss an evolving approach to movie distribution. The coronavirus has forced Disney and other studios to push back the releases of more than a dozen major films and reroute others to streaming services. In September, Disney debuted “Mulan” on Disney+ as part of a “premium access” experiment, charging subscribers $30 for indefinite access. “Soul,” the latest Pixar film, will arrive on Disney+ on Christmas Day for no additional cost.Pixar’s “Soul” will arrive exclusively on Disney+ on Christmas Day.Credit…Disney/PixarCiting the pandemic, WarnerMedia last week shifted 17 coming Warner Bros. movies to a hybrid release model — simultaneous arrival on HBO Max and in theaters — even though some of the films (“Dune,” “The Matrix 4”) are not scheduled to come out until the fourth quarter, long after vaccines are expected to be deployed. The surprise move prompted swift and severe blowback from WarnerMedia talent, who felt betrayed by the sudden switch. They also stand to receive considerably lower paydays.John Stankey, the chief executive of AT&T, which owns Warner Media, referred to the furor as “a lot of noise” while speaking at a conference on Tuesday and predicted that WarnerMedia’s strategy would prove to be a “win-win-win.”In contrast, Mr. Chapek and Robert A. Iger, Disney’s executive chairman, will not go with a one-size-fits-all approach for movie releases in 2021, the people with knowledge of the company’s plan said.Some titles on Disney’s theatrical slate will move to Disney+ at no extra cost. Expect “Peter Pan & Wendy,” like “Soul” and “Pinocchio,” to debut in this manner.Other movies will take the “Mulan” route and arrive on Disney+ as premium offerings. “We’ve got something here in terms of the premier access strategy,” Mr. Chapek told analysts on a recent conference call. “There’s going to be a role for it strategically with our portfolio of offerings.”And some of Disney’s biggest movies will continue to receive exclusive runs in theaters before arriving on the company’s streaming services. For instance, contrary to widespread speculation, “Black Widow,” a much-anticipated Marvel spectacle, will remain on Disney’s theatrical release calendar for May 7, the people with knowledge of the presentation said.Scarlett Johansson in “Black Widow,” which will remain on Disney’s theatrical release calendar for May.Credit…Marvel Studios/Disney, via Associated PressMovies are helpful in attracting subscribers, but television shows keep streaming customers paying month after month. To that end, Disney has an abundance of series on the way for its services. They include “Turner and Hooch,” an adaptation of the 1989 film about a detective and his oversize mutt; “Willow,” an adaptation of the 1988 big-screen fantasy; and eight Marvel shows based on characters like Loki and She-Hulk.Streaming is not yet profitable for Disney — far from it. Losses in the direct-to-consumer division totaled $2.8 billion in the company’s 2020 fiscal year. Streaming-related losses are expected to peak in 2022, as rollout costs decline and content expenses normalize, with analysts expecting Disney+ profitability by 2024.Disney has indicated that some of the money for its new content blitz will come from programming budgets at its traditional television networks. The company owns the Disney Channel, National Geographic, FX, Freeform and ABC, among others.“We will be heavily tilting the scale from linear networks over to our direct-to-consumer business,” Mr. Chapek said on the recent conference call.Analysts pushed for additional details. “Just hold on until Dec. 10,” Christine McCarthy, Disney’s chief financial officer, said on the call. “Hopefully we can answer all your questions then.”AdvertisementContinue reading the main story More