In November 2022, Disney’s Board of Directors shocked Disney fans around the world when they announced that they had fired CEO Bob Chapek. Chapek’s contract had been renewed just two months earlier, and he hadn’t even been CEO for three years. Not long after Chapek’s firing, it was revealed that the Board had opted to use their ability to fire Chapek “without cause.” At the same time Chapek’s firing was publicly announced, the Board of Directors also announced that beloved former CEO Bob Iger would be returning to run the company.
While many fans were excited to see Iger come back, his return hasn’t brought about all the happiness originally anticipated. Since his return, Iger has laid off thousands of Disney employees. Guests visiting Disney Parks are also upset that he hasn’t done anything to lower prices, that he has kept Genie+, and has kept the theme park reservation system. Iger is also currently in a lot of hot water for comments he made regarding the SAG strike that has currently put almost all Disney productions on pause.
On the shareholder side, they were determined that Iger bring the stock price back, since it had tanked when Chapek was in charge. Laying off thousands of people has increased the stock. But the biggest stock killer has been Disney’s struggle with its streaming platform, Disney+. Each quarter, Disney loses tens of millions of dollars on Disney+. The company is also struggling with declining profits from its linear programming — that means its cable entities like ABC, Freeform, and ESPN.
During a recent interview on CNBC’s Squawkbox, Iger admired that the future of Disney was most likely not going to be found in “linear programming.” As a way to deal with that, Iger has made a huge move. He has put one-third of Disney up for sale. According to a report from Bloomberg, Iger is trying to sell ABC, Freeform, and FX. He is also reportedly looking for a strategic partner to help run ESPN.
It’s a stunning if inevitable turn of events for an executive who spent so much of his career working in TV, and for a company that relied on cable networks for the majority of its profit. Before the pandemic, Disney’s media networks generated 35%, or $24.8 billion, of company revenue and more than 50%, or $7.5 billion, of its operating income.
Yet the accelerating decline of cable TV has limited Iger’s options. He thought he’d solved this problem with Disney+ and Hulu, his two mass-market streaming services. But his streaming business is expected to register a loss of about $800 million in the company’s just-ended third quarter.
Bloomberg also noted that, while Iger appears ready to sell, it is much more complicated. If Iger were to sell ABC, Disney could lose the rights it has to show and profit from the NBA.
It’s not yet clear how serious Iger is about selling entire TV networks. ABC, for example, is key to retaining NBA rights. FX has been a key supplier of programming to Hulu, which Iger plans to keep and fold into Disney+.
Yet Iger’s CNBC interview was unmistakably a distress signal. Disney is contractually obligated to buy Comcast Corp.’s one-third stake in Hulu in a deal that would value the business at least at $27.5 billion. It’s also wrestling with a colossal debt pile stemming from its $71.3 billion acquisition of 21st Century Fox in 2019.
Iger has been with Disney for nearly 5 decades, and spent a lot of his time building the company up. During his first run as CEO, Iger was responsible for Disney purchasing Pixar, Lucasfilm, and Marvel. He was also responsible for Disney purchasing 20th Century Fox, a deal that many are calling a mistake because of the massive debt it has put Disney in.
