Bob Iger Says Linear TV “May Not Be Core” To Disney As Company Explores Strategic Options; Hits SAG-AFTRA And WGA For “Disruptive” Demands In Labor Fight
Disney CEO Bob Iger said the linear TV business “may not be core” to the company, and efforts are under way to explore a number of strategic options for them.
He also criticized SAG-AFTRA and the WGA for demands that are not “realistic” in their respective labor fights with the AMPTP, adding that the resulting strikes could do serious damage across the economy.
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Speaking to CNBC’s David Faber in a wide-ranging conversation in Sun Valley, ID, where Iger is attending Allen & Co.’s annual conference, Iger conceded his second stint as CEO has been more challenging than he expected. The 35-minute interview (watch a portion of it above) came a day after the news that Disney’s board unanimously voted to extend Iger’s contract to serve as CEO for another two years, through the end of 2026.
Iger said the labor situation is “very disturbing to me.” Coming after the ravages of Covid, he continued, “this is the worst time in the world to be adding to that disruption. I understand any labor organization’s desire to have its members to be compensated fairly based on the work that they deliver. We’ve managed as an industry to negotiate a very good deal with the Directors Guild that reflects the value that the directors contribute to this great business. We wanted to do the same thing with the writers and we’d like to do the same thing with the actors. There’s a level of expectation and they are adding to the challenges this business is already facing.”
Faber said the conclusion to be drawn from Iger’s comments was that the guilds “are not being very realistic.” Iger responded, “No, they’re not.”
Iger said the company is looking at a range of strategic options for linear TV, including with ESPN, though he asserted that sports “stands tall” when compared with the rest of the TV landscape. Disney, which has recently positioned ESPN as its own corporate division, plans to roll out a direct-to-consumer ESPN streaming offering in the next couple of years, though Iger declined to offer any specific timeline.
Pressed by Faber about what a new configuration would look like, Iger opted not to speculate, but he acknowledged that discussions are under way with several potential strategic partners. Additional minority stakeholders in ESPN — 20% is already owned by Hearst Corp., which invested in 1990 — as well as in ABC, local stations and cable networks are a possibility, Iger said. Private equity firms could well sense an opportunity in linear TV given they are already quite heavily invested in local TV stations as well as other sectors experiencing secular decline like terrestrial radio and satellite TV distribution.
“We have to be open-minded and strategic about the future of those businesses,” the CEO said. “They may not be core to Disney. The creativity and content they create is core to Disney, but the distribution model, the business model that forms the underpinning of that business, and that has delivered great profits over the years, is definitely broken. And we have to call it like it is. That’s part of the transformative work that we’re doing.”
The management team is treating ESPN “very differently” from the rest of the traditional TV portfolio, Iger noted, given the still-healthy tune-in for live sports.
The comments about the state of traditional TV are Iger’s starkest yet and have particular resonance given that he started his career as a TV weatherman and ABC staffer almost 50 years ago, in a very different landscape.
Iger conceded that the overall challenges facing the entertainment business are much more daunting than he expected when he returned to the corner office in November 2022 after an 11-month break after his prior 14-year CEO run concluded. “I recommend it,” he quipped about retirement.
While he is “pleased with how much we’ve gotten done,” Iger said the “challenges are greater than I had anticipated,” with the “disruption of the traditional TV business” atop that list.
Streaming will become a profitable and stable business, Iger maintained, though the rush to migrate content to streaming was, in retrospect, costly in every sense of the word. “We ended up taxing our people, in terms of their time and their focus, way beyond where they had been,” he said. “Marvel is a great example of that.” The comic book entity had never produced episodic series; suddenly, it was tasked with not only increasing its film output but also cranking out series for Disney+. “It diluted focus and attention” among staffers and talent as well as with audiences.
Pixar has been hamstrung by three straight releases (Soul, Luca and Turning Red) all going direct to Disney+ with no theatrical, Iger said, but the computer animation pioneer has also had “some creative misses,” in his view.
The prevailing strategy for the overall production engine, Iger said, is to recalibrate efforts across Marvel, Lucasfilm, Pixar and other suppliers, and pull back on spending.
The movie studio, despite its struggles, is No. 1 at the global box office in 2023 to date, Iger noted. In the current environment of cost containment (Disney is aiming to take $5.5 billion in costs out of its business) the company is “spending less on what we make and making less” at the studio.
Animation has had “peaks and valleys” in terms of animation over the course of Disney’s 100-year history, Iger said. “Every valley was followed by a peak. I studied it very carefully.” Iger observed that the “halcyon days” of his predecessor, Michael Eisner, when The Lion King and Beauty and the Beast sparked an animation revival, were followed by “a dip.”
The departure of longtime Pixar chief and director John Lasseter in 2018 after revelations of sexual misconduct “may have had some impact” on the animation studio’s direction, Iger conceded. “But there was other turnover as well.”
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