When Disney CEO Bob Iger returned to replace the embattled Bob Chapek, Wall Street cheered the move. It would be a return to the glory days of the Walt Disney Company, which saw massive growth through acquisitions like 20th Century Fox, Marvel, Pixar, and LucasFilm. But now, less than a year after Iger’s return, some Wall Street analysts openly call for Iger to break up the company and quickly bring the Walt Disney Company back to profitability.
The Walt Disney Company hit a new low last week, dropping the stock to its lowest point in nearly nine years. Since Iger’s return last November, Disney’s stock has fallen 15 percent. Even Iger admitted that the “challenges are greater than I anticipated.” Analysts are looking for a backdoor on Disney and may have found one.
Barton Crockett, an analyst at Rosenblatt Securities, proposes a breakup of the Walt Disney Company into three separate entities. This will allow Disney to rid itself of some bad assets while maintaining the ones that work. He also pointed out that if the stock price continues to fall, Disney may not have a choice.
Crockett said on CNBC:
They either find some solid footing underneath this company or the pressure is going to build to re-structure and break it up.
In Crockett’s plan, Disney would maintain control of the Parks, including the Walt Disney World Resort in Florida. Disney would sell the television networks to private equity firms specializing in undervalued assets. The final piece of this puzzle would be the content libraries, which would be sold to a tech platform.
Rumors have been swirling that Disney is in talks with Apple, Verizon, and Amazon about a partnership centered around ESPN. This new deal would allow those streaming partners to have all of Disney’s vast intellectual property assets.
However, Disney would still need access to those intellectual properties for use within the parks. The group that buys them would have to sign a perpetual licensing agreement with Disney to allow use in Disney’s parks.
While it’s not ideal, the Walt Disney Co. would be able to focus its attention on its theme park operations and not have to worry about film, television, or streaming services.
But Wall Street may not give them a choice if Iger and Disney don’t turn things around soon.
We will continue to update this story at Disney Fanatic.
