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CEO Reiterates Company Is Weighing Decision On Hulu In “Very, Very Tricky Environment”
Bob Iger, just over three months ago as Disney CEO, spoke about the major organizational changes he’s made to the company – and his optimism about making streaming, especially Disney+, a profitable part of the empire.
“I’m generally bullish on streaming as a great consumer proposition, as a really robust platform to deliver high-quality content,” Iger said, speaking at the Morgan Stanley Technology conference on Thursday, Media and Telecom 2023 in San Francisco. He later said, “Eventually, I think everything will migrate to streaming,” including (as he said before) ESPN as a direct-to-consumer offering.
But, Iger said, “we need to streamline our costs better” and “obviously we need to attract more submarines.” Additionally, he said, Disney+ needs a “pricing strategy that makes sense.”
“In our zeal to develop global subs, I think we got our pricing strategy wrong, and we are now starting to learn more about that and adjust accordingly.” Iger also said that Disney overall has a “disconnect” between what it spends on content and how it monetizes it – and that the company needs to get “smarter” about investing in content because costs production soared.
Regarding Hulu’s fate, Iger reiterated that the company continues to consider whether Disney would seek to buy out Comcast’s 33% stake in Hulu or seek to exit the streamer. “We are really looking at the business very, very carefully,” he said. He called Hulu a “strong platform” with strong original programming and library content, which is also a very attractive platform for advertisers. “But the environment is very, very tricky right now and before we make big decisions about our level of investment, our commitment to this business, we want to understand where it might go,” Iger said.
Iger, Disney’s former CEO from 2005 to 2020, returned as acting chief executive of Mouse House after Bob Chapek was ousted last November. At the Morgan Stanley conference, Iger said “succession is pretty much at the top of the list between me and the board.”
“My goal is basically to go from here in two years with a trajectory…very optimistic and positive,” Iger said.
In one of Iger’s biggest moves since returning, Disney said last month it would cut 7,000 jobs in a massive layoff as part of an effort to cut costs by 5.5 billions of dollars. Disney is targeting a $3 billion annualized reduction in non-sports content costs. Iger said that goal is “achievable” although “not right away” and that “support on the content side of our business is real and we will provide it.”
Also last month, Iger also reorganized the company into three main business segments – Disney Entertainment, led by co-presidents Dana Walden and Alan Bergman; ESPN, led by Jimmy Pitaro; Disney Parks, Experiences and Products, led by Josh D’Amaro – breaking up the former Disney Media & Entertainment Distribution (DMED) division. The goal of the reorganization, Iger said in a statement, was to “put creativity back at the center of the business.”
“The company had been restructured after I left as CEO to basically create a giant revenue-generating division… (and) it was completely separated from the content side, where all the money was spent,” Iger said Thursday. . “I happen to believe that there should be a direct link between what is spent and what is earned. It’s all about responsibility.
Disney’s previous organizational structure also created a disconnect on the marketing side, according to Iger. “We were spending too much marketing platforms and not enough marketing for the programming that was on the platforms, and I think that may have had a negative impact on our undergrowth,” he said. Iger also said that Disney had a disconnect between the programming it produced for international markets and the United States; as part of the reorganization, Rebecca Campbell, president, content and international operations, left the company.
Iger has previously pointed out that the media conglomerate is focused on streaming profitability — signaling a step back from Chapek’s heavy investment in content and drive to amass subscribers. In the last three months of 2022, Disney+ lost 2.4 million subscribers, its first drop since its launch in late 2019, driven by a 3.8 million sequential drop at Disney+ Hotstar, the service’s version offered in India and parts of Southeast Asia. At the end of 2022, Disney+ had 161.8 million subscribers.