Walt Disney is giving CEO Bob Iger more time to search for his successor, extending his contract by two years. The Dow Jones entertainment giant announced late Wednesday its deal with Iger would now run through 2026. Disney stock climbed Thursday after fading at the opening bell.
Iger agreed to serve as Disney's CEO through the end of 2026 as the company continues its ongoing transformation plan and to allow him more time to search and transition to a new chief executive.
"Because I want to ensure Disney is strongly positioned when my successor takes the helm, I have agreed to the Board's request to remain CEO for an additional two years," Iger said in the release. "The importance of the succession process cannot be overstated, and as the Board continues to evaluate a highly qualified slate of internal and external candidates, I remain intensely focused on a successful transition."
A Long List Of Challenges
Longtime executive and former chairman Iger retook the helm at the House of Mouse in November. He replaced Bob Chapek, his hand-picked successor, who had taken over in February 2020.
Disney faces challenges from the broader economic environment, from existing structural and efficiency issues, and "tectonic shifts" in the industry, Iger added. He went on to say, "despite the challenges, I believe Disney's long-term future is incredibly bright."
Since returning, he implemented a restructuring plan that included 7,000 layoffs and plans to cut $5.5 billion in costs, including $3 billion from content. However, the company's streaming growth is slowing and Disney+ subscribers decreased 2% to 157.8 million from Q1 to Q2 2023.
Iger Discusses Changes Ahead
Disney is pulling back on Marvel and Star Wars production as part of the cuts, Iger revealed in an interview with CNBC Thursday. Iger said the rapid expansion of the Marvel Cinematic Universe's movie and TV series catalog "diluted focus and attention."
"You pull back not just to focus, but also as part of our cost containment initiative. Spending less on what we make, and making less," he said.
He is also open to potentially selling an equity stake in ESPN and seeking a strategic partner to help with distribution and content as it transitions to streaming. Iger said it is "inevitable" that Disney will make ESPN direct-to-consumer but did not lay out a specific timeline. Disney purchased a controlling stake in ESPN in 1996 and currently owns 80% of the sports network.
He mentioned there have been some conversations with interested parties but declined to elaborate.
Along with ESPN, Iger is open to selling some of Disney's major television assets, including ABC, National Geographic and FX. Iger mentioned the properties "may not be core" to Disney as linear TV assets and the traditional business model struggle.
Despite current cost challenges, Iger said that Disney+ will be a growth business for Disney, that they will turn it around to become profitable.
In addition, Disney is currently facing off with Florida Gov. Ron DeSantis over control of its theme parks. The feud began last March after Chapek spoke out in opposition to DeSantis-backed legislation banning discussion of gender identity and sexual orientation issues in classrooms.
Disney Stock
DIS shares inched up 0.4% Thursday after easing in early Trade. Disney stock has crept up 4.1% this year, but remains well below its Feb. 9 high of 118.18. DIS stock retreated about 10% from their Nov. 21 high when Iger was reinstated as CEO.
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