Disney CEO Bob Iger opened the door for the sale of the company’s linear TV assets as the business struggles during the media industry’s transition to streaming and digital offerings.
Iger appeared on CNBC Thursday, the morning after the company announced it was extending his two-year contract through 2026. Returned at the helm of the company in November after Disney’s board of directors ousted Bob Chapek on a two-year contract through 2024 and plans to find a next successor.
“After coming back, I realized that the company faces many challenges, some of them self-inflicted,” Iger told CNBC’s Faber on Thursday, noting that he has accomplished a lot of work in seven months, but more remains to be done. (NBCUniversal is the parent company of CNBC and NBC News.)
At the top of the list is the evaluation of the traditional television business, Iger said Thursday. Disney owns a portfolio of television networks, from broadcast station ABC to cable TV channels like ESPN.
Disney is going to be “expansive” in its thinking about the traditional television business, leaving the door open for a possible sale of the networks. “They may not be critical to Disney,” Iger said, adding that the creativity that has come out of those networks has been critical to Disney.
However, the cable television channel ESPN is in a different category. On that front, Iger said Disney is open to finding a strategic partner, which could take the form of a joint venture or divesting of an ownership stake.
Iger said that when he left the company he had predicted the future of traditional television and had been “very pessimistic”, finding that since his return he was right in his thinking, adding that it is worse than he expected.
when iger last spoke with Faber in February, shortly after announcing a major restructuring at the company, he said he felt “a sense of obligation” to return to Disney and preferred to stay on for his two-year contract.
“We’ve done a lot very quickly, significant cost reductions and a significant realignment of the business,” Iger said. “But dealing head-on with some of our biggest challenges.”
The February appearance came shortly after Disney announced a sweeping restructuring that included thousands of layoffs and multibillion-dollar spending cuts.
the reorganization refused a potential power struggle with activist investor Nelson Peltz.
Disney rearranged into three segments: Disney Entertainment, which includes most of its streaming and media operations; a division of ESPN; and a parks, experiences and products unit.
These were some of Iger’s highlights. significant actions in the months after his return. Disney revealed that it would cut $5.5 billion in costs, consisting of $3 billion of content, excluding sports, and the remaining amount of non-content costs. The company allocated 7,000 layoffs.
In addition to looking for your next successor, Iger has been tasked with driving Disney’s streaming business to profitability. In the past year, media executives at every company have been focused on how to make streaming profitable, especially after the streaming giant. Netflix it lost subscribers early last year and has since instituted ad-supported streaming and cracked down on password sharing to generate revenue.
While the company posted revenue and profit in line with Wall Street estimates Last room, saw a loss of 4 million subscribers on its flagship streamer Disney+.
Those subscriber losses were offset by price increases, which Iger said in May were not to blame for the lower numbers. Instead, he said he showed room for further increases when it comes to streaming and pushing customers toward the ad-supported tier, with the goal of reaching profitability.
In an effort to increase the volume of Disney+ and attract more subscribers to its cheapest ad-supported tier, which thrown out last year: the company announced last quarter that add hulu content to Disney+.
In May, Iger had attributed the move toward a single-app location for Disney+ and Hulu content to the greater advertising potential of a combined platform.
Disney has been weighing whether it should buy all of Hulu, since it owns 66% and Comcast own the rest. Comcast is likely to sell its stake in Hulu to Disney in early 2024, CNBC previously reported.
Disney will report its fiscal third-quarter earnings after the market closes on August 9.
