Bob Iger of Disney (DIS) will be in big trouble as he retakes the CEO position at the company he ran for 15 years.
“Disney’s problems have more to do with structure than who runs the company,” Doug Krutz, media analyst at Cowen, told Yahoo Finance Live.
Krutz listed several fundamental problems, including a shrinking line business that was tied to the increasingly expensive sports business on ESPN, and a streaming division losing money in an ultra-competitive environment.
“I don’t think Bob Iger will wave a magic wand to change that,” the analyst said.
Disney’s consumer-facing division, which includes Disney+, Hulu, and ESPN+, lost $4 billion for the year in its most recent fiscal year.
The live streaming division lost a total of $1.5 billion in the company’s latest quarter, falling short of expectations and lowering the stock by more than 10% on the results. Shortly after these results, Disney created a “cost structure task force” under former CEO Bob Chapek to help the streaming division meet its profitability targets.
Iger will hold an employee meeting on Monday morning, Nov. 28, to discuss the company’s future as well as its business strategy, according to an internal memo obtained by Yahoo Finance.
Earlier this week, Iger briefed investors on what appears to be the first step in this strategy — firing Kareem Daniel and restructuring Disney Media and Entertainment Distribution (DMED). DMED was one of Čapek’s first major changes as CEO, but the reorganization was cited as a controversial move that upset longtime veterans and reportedly “confused” workers.
Bob Iger’s legacy is at stake
Iger has spent over four decades at Disney, including 15 years as CEO.
The 71-year-old will serve as acting CEO for two years, with a mandate from the board of directors to “set a strategic direction for renewed growth and work closely with the board to develop a successor to lead the company to the end of his term,” the company said.
Krutz said Aiger’s return was a bit strange as he’s putting his once spotless reputation on the line.
“I really thought Iger was a genius, launching Disney+, getting all the subscriptions, and then stepping aside and letting someone else be in charge of making it profitable, which has always been more of a challenge,” he said. .
“Now he owns it again, so he [putting] his own heritage is a little at risk here.”
The analyst added that Iger’s return would also make it harder to find a permanent CEO, explaining: “For Iger to come back in just a few years and take back control, whoever becomes the next Disney CEO, they’ll be looking over their shoulder from day one, wondering, really whether they are the CEO of the company or they are going to be pushed out, as Capek did.”
“This is not the best position for Disney if they are trying to find someone who can successfully lead the company from 2024 onwards,” Krutz warned.
Ultimately, Krutz said Czapek’s biggest problem is one that would likely haunt other potential candidates: “He wasn’t Bob Iger.”
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