Disney’s returning CEO Bob Iger has wasted no time in making his presence felt.
Iger spent 15 years running Disney, transforming the company in uncountable ways and helping to guide it to new heights.
The acquisitions he made during his first tenure (from 2005 to 2020) included spending $7.4 billion to acquire Pixar from Apple CEO Steve Jobs in 2006, $4 billion to acquire Marvel in 2009, $4 billion to purchase Star Wars studio Lucasfilm in 2012 and, quite shockingly, $71.3 billion for 21st Century Fox in 2019.
He’s also been credited with bringing Disney’s (DIS) theme parks into the future by investing heavily in “Imagineering” departments and international expansion.
His tenure was not without criticism though, as his focus at Disney was on making franchise films that not only could run for multiple installments, but could be heavily merchandised, turned into theme park attractions and television shows, and so on. While this was no doubt a lucrative direction, there are people who blame Iger for the franchise-heavy state of modern culture, where it seems like everything is a reboot or a sequel these days.
Iger Has Already Made Changes
In a surprise move, Iger returned to his post late last year, taking back the job from Bob Chapek, who had been earning criticism from employees for his response to Florida’s so-called “Don’t Say Gay Bill,” which many critics found half-hearted.
But in addition to this criticism, Chapek also likely lost his job due to losses in Disney’s streaming services, such as Disney+. (Though it is fair to ask to what extent these losses were Chapek’s fault.)
Iger has already made some big decisions of late. In a recent earnings call, he detailed changes within the group's operating structure, which included 7,000 layoffs, $5.5 billion in cost cuts and a new three-part organizational structure focused on Parks, Entertainment and ESPN.
But he also said content spending would remain in the low-$30 billion range this year, and announced sequels to the popular franchises “Toy Story” and “Frozen” are in the works.
But there’s a major decision he’s still weighing. Iger said in the call that Disney “will take a very hard look at the cost of everything we make across television and film.”
Recently, Disney had its first major dip in subscriber numbers, as Iger revealed that 2.4 million subscribers chose not to renew their Disney+ membership in the final quarter of 2022.
In an interview CNBC’s Squawk on the Street the following day, as pointed out by Consequence, Iger told host David Faber that Disney’s strategy for making streaming “a growth business” by the end of 2024 will be a focus on revenue rather than subscriber numbers.
The phrase “focusing on revenue” generally means taking a look at costs and profitability, and often entails making cuts. But is one of Disney’s streaming services on the chopping block here?
Will Disney Get Rid of Hulu?
Does cutting costs entail getting rid of Hulu, the more adult skewing streaming service that Disney now owns a majority share of?
After Disney purchased 21st Century Fox, the company absorbed the majority of the streaming service, which is one of the oldest streaming companies in the game. Disney currently uses the platform for its Fox content, as well as the more adult-skewing movies in the Disney portfolio, and has earned critical raves for its boutique label FX on Hulu, which launched the summer 2022 hit “The Bear.”
Some people get Hulu as part of a bundle that also includes Disney+ and ESPN+, but the number of people who only subscribe to Hulu was, in the fourth quarter of last year, was 47.2 Million. That’s an impressive number, but it doesn’t quite compare to Netflix or HBO Max, which also offer a general slate of entertainment options and claimed 231 million and 95 million subscribers, respectively, in the fourth quarter of last year.
As part of the acquisition deal signed in 2019, Comcast can be required to sell the remaining stake to Disney, but Disney has to pay the higher of a guaranteed minimum. Comcast has slowly been taking its NBC-content off of Hulu and placing it on Peacock, including new episodes of “Saturday Night Live.”
In the interview, Iger indicated that Disney might take full acquisition of Hulu and continue to invest in new content. Or it might sell the streaming service to a different company, which could theoretically help Disney with its stated goal of finding $5.5 billion in cost savings. Honestly, he’s still thinking about it, he said.
Iger called Hulu “a very successful platform, and I think a good consumer proposition. But everything’s on the table right now.”
He then added, “I’m not gonna speculate about whether we’re a buyer or seller of it.”
In other words, maybe ask Iger after the next “Frozen” film comes out, because he needs more time to decide the future of Hulu.
