Disney CEO Bob Iger opened the door to selling the company’s linear TV assets as business struggles during the media industry’s transition to broadcast and digital offerings.
Iger appeared on CNBC Thursday, the morning after the company announced it was extending his contract by two years through 2026. He returned to the company helm in November after Disney’s board ousted Bob Chapek with a two-year contract through 2024 and plans. To find the next heir.
“After I came back, I realized the company was facing a lot of challenges, some of them self-inflicted,” Iger told CNBC’s Fabre on Thursday, noting that he had done a lot of work in seven months but more needed to be done.
On Thursday, Iger said valuations of traditional TV businesses were at the top of the list. Disney owns a range of television networks, from broadcast station ABC to cable TV such as ESPN.
Disney would be “expansive” in its thinking about the traditional television business, leaving the door open for a potential sale to the networks. “It may not be the core of Disney,” Iger said, adding that the creativity that came from those networks was the core of Disney.
However, cable TV channel ESPN is in a different bucket. On that front, Iger said Disney is open to finding a strategic partner, which could take the form of a joint venture or offloading an ownership stake.
Egger said that when he left the company he had predicted the future of traditional television and was “very pessimistic”, and has found since his return that he was right in his reasoning, adding that it was worse than he had expected.
When Iger last spoke with Faber in February, shortly after he announced a major restructuring at the company, he said he felt a “sense of obligation” to return to Disney and that he would have preferred to stay on his two-year contract.
“We got a lot done very quickly, a significant cost cut, a significant reorganization of the company,” Iger said. “But dealing with some of the biggest challenges we face.”
The February appearance came shortly after Disney announced a sweeping restructuring that included thousands of layoffs and billions of dollars in spending cuts.
The reorganization averted a potential proxy battle with activist investor Nelson Peltz.
Disney has been reorganized into three divisions: Disney Entertainment, which includes most broadcasts and media; ESPN section; Parks, experiences and unit product.
These were some of Egger’s most significant actions in the months following his return. Disney revealed that it would cut $5.5 billion in costs, consisting of $3 billion from content, excluding sports, and the remaining amount from non-content costs. The company has allocated 7,000 layoffs.
In addition to searching for his next successor, Iger was tasked with bringing Disney’s streaming business to profitability. In the past year, media executives across all companies have focused on how to make live broadcasting profitable, especially after the broadcast giant. Netflix It lost subscribers early last year and has since started ad-supported streaming and cracking down on password sharing to increase revenue.
While the company reported revenue and earnings in line with Wall Street estimates for the past quarter, it saw a loss of 4 million subscribers to its flagship Disney+ program.
Those subscriber losses were offset by price increases, which Egger said in May were not responsible for the lower numbers. Instead, he said it showed room for more increases when it comes to streaming, pushing customers into the ad-supported tier, with the aim of hitting profitability.
In an effort to increase the volume of Disney+ and get more subscribers to its cheaper, ad-supported tier — which it launched last year — the company announced last quarter that it would add Hulu content to Disney+.
In May, Iger attributed the move toward a single-app site for both Disney+ and Hulu content to the increased advertising potential of a cross-platform.
Disney has been considering whether it should buy Hulu outright, which it owns 66% and Comcast He owns the rest. Comcast will likely sell its stake in Hulu to Disney at the beginning of 2024, CNBC previously reported.
Disney will report its third-quarter financial earnings after the market closes on August 9th.
Disclosure: Comcast is the parent company of NBCUniversal, which includes CNBC.
“Reader. Infuriatingly humble coffee enthusiast. Future teen idol. Tv nerd. Explorer. Organizer. Twitter aficionado. Evil music fanatic.”