It was a short trip into retirement that Bob Iger took. After 15 years at the helm of the Californian entertainment group Disney, he had chosen Bob Chapek as his successor in 2020. However, he was so dissatisfied with his work that he fired him in November 2022 and took over the management himself again. After Chapek, 7,000 more employees now have to go, Iger said on Wednesday in a telephone switchboard with analysts. Iger is under pressure – because of financial losses from the Disney Plus streaming portal, because of a grumbling major investor and also because Chapek’s failure is interpreted as a strategic mistake.
The new old boss wants to put the company, which created classics like Star Wars, Avengers and the Lion King, back into the hands of creative people and at the same time reduce costs. Letting go a good three percent of his 220,000 employees worldwide was not easy for him, said Iger, but the decision was necessary in order to master the economic challenges. Disney had already laid off 32,000 employees during the corona pandemic, mainly in its amusement parks, but then hired many again. The experience division is now running well again and was able to increase its profit by a quarter in the past quarter. The Disneylands in California, Florida or Paris and the cruise line “Disney Cruise Line” also embellished the figures for the entire group.
Because overall, Disney was even able to surpass the forecasts recently. In the three months ended December, profits increased 11 percent year-over-year to $1.3 billion and revenues rose 8 percent to $23.5 billion.
Film productions are time-consuming and expensive
But there was a problem with the streaming market of the future: many customers recently canceled their Disney Plus subscription after the company had significantly raised the prices for it. At the turn of the year, the video service had 161.8 million users worldwide, a good one percent fewer than three months earlier. The big competitor Netflix was even able to increase slightly in the year-end sprint and now has 231 million paying customers. After all, Disney won some new users for its series and feature film portal Hulu and the sports streaming service ESPN Plus. And the loss of the streaming division was also lower than feared at $1.1 billion. In the previous quarter, the minus was still 1.5 billion dollars.
Bob Iger has now set the ambitious goal of becoming profitable in the streaming sector in the coming year. The biggest lever will probably be to reduce the expenses for the expensive film and series productions. Iger also wants to license more films and series for other services again, after years of showing the vast majority of titles exclusively on its own portals. “We will continue to seek subscribers, but we will do so more carefully,” Iger said. He wants to reorganize Disney into three divisions: the entertainment unit with TV, movies and streaming businesses, the ESPN sports networks and the thriving theme park unit.
Iger envisions downsizing and restructuring saving him a total of $5.5 billion over the next few years. The conversion is also a reaction to the great pressure that large investor Nelson Peltz has built up. The eccentric billionaire holds a stake of around one billion dollars in Disney, he had repeatedly complained about the botched succession plan with Chapek and high expenses and acquisitions. In the future he would like to have more influence: Peltz wants a seat on the board of directors, the next opportunity for this would be at the annual general meeting on April 3rd. He argues that the company needs better cost control. These are wild times for Disney. Bob Iger is unlikely to be retiring anytime soon.