On Monday I wrote an essay arguing that the Disney “magic” returning CEO Robert Iger reportedly thinks that now-fired CEO Bob Chapek neglected – and which he sees himself as bringing back – may not be the “magic” audiences have been trained to pay for in the age of TikTok and YouTube. Today, I had planned on looking at Disney through the lens of each of PARQOR’s four key trends in media for Q4 2022, and then making recommendations as to what Iger and his management team may need to do to create shareholder value.
Those plans changed yesterday evening after Disney released its 10-K for FY 2022, which included this paragraph in its Management’s Discussion and Analysis:
As contemplated by the leadership change announcement, we anticipate that within the coming months Mr. Iger will initiate organizational and operating changes within the Company to address the Board’s goals. While the plans are in early stages, changes in our structure and operations, including within DMED (and including possibly our distribution approach and the businesses/distribution platforms selected for the initial distribution of content), can be expected. The restructuring and change in business strategy, once determined, could result in impairment charges.
“While the plans are in early stages” is notable phrasing in light of former CEO Bob Chapek’s “Disney Prime” vision: exclusive deals for Disney+ subscribers for Disney merchandise, theme parks and cruises. Disney+ would become more than just an app — Chapek envisioned it as an “experiential lifestyle platform” for over 150MM Disney streaming subscribers and hundreds of millions more Parks visitors. As I have written previously, the objective was to change the value proposition of Disney+ from streaming content, alone, to “a deeper direct-to-consumer relationship that can be nurtured in ways both obvious (such as sales of consumer products) and less obvious (such as gaming).”
Returning CEO Bob Iger and Disney's board may be right in rejecting Bob Chapek’s vision of "Disney Prime" vision, but it's not yet clear what Disney's alternative paths are for creating both consumer and shareholder value at scale.
Total words: 2,100
Total time reading: 9 minutes
This vision offered a utilitarian answer for “magic” — use Disney+ for marginal economic benefits elsewhere in the Disney ecosystem. As un-magical as that may read, it reads much closer to Amazon’s and Apple’s bundles of services, and YouTube’s and TikTok’s multipronged business relationships ...