Disney CEO Bob Iger said the linear TV business “may not be core” to the company, and efforts are under way to explore a number of strategic options for them.
He also criticized SAG-AFTRA and the WGA for their “unrealistic” demands in their labor fights with the AMPTP, with the resulting strikes doing damage to the economy.
Speaking to CNBC’s David Faber in a wide-ranging conversation in Sun Valley, ID, where Iger is attending Allen & Co.’s annual conference, Iger conceded his second stint as CEO has been more challenging than he expected. The 35-minute interview (watch a small portion of it above) came a day after the news that Disney’s board unanimously voted to extend Iger’s contract to serve as CEO for another two years, through the end of 2026.
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Iger said the labor situation is “very disturbing to me.” Coming off Covid, he said, “this is the worst time in the world to be adding to that disruption. I understand any labor organization’s desire to have its members to be compensated fairly based on the work that they deliver. We’ve managed as an industry to negotiate a very good deal with the Directors Guild that reflects the value that the directors contribute to this great business. We wanted to do the same thing with the writers and we’d like to do the same thing with the actors. There’s a level of expectation and they are adding to the challenges this business is already facing.”
Faber said the conclusion to be drawn from Iger’s comments was that the guilds “are not being very realistic.” Iger responded, “No, they’re not.”
Iger said the company is looking at its strategic options for linear TV, including with ESPN, though he asserted that sports “stands tall” when compared with the rest of the TV landscape.
Pressed by Faber about what a new configuration would look like, Iger said he would not speculate, but discussions are under way with several potential partners. Additional minority stakeholders in ESPN — which is already 20% owned by Hearst — and ABC, local stations and cable networks are a possibility, Iger said.
“We have to be open-minded and strategic about the future of those businesses,” the CEO said. “They may not be core to Disney. The creativity and content they create is core to Disney, but the distribution model, the business model that forms the underpinning of that business, and that has delivered great profits over the years, is definitely broken. And we have to call it like it is, and that’s part of the transformative work that we’re doing.”
The management team is handling ESPN “very differently” from the rest of the traditional TV portfolio,” Iger noted, given the still-robust tune-in for live sports.
The comments about the state of TV are Iger’s starkest yet and have particular resonance given that he started his career as a TV weatherman and ABC staffer almost 50 years ago, in a very different landscape.
Iger conceded that the overall challenges facing the entertainment business are much more daunting than he expected when he returned to the corner office in November 2022 after an 11-month break after his prior 14-year CEO run concluded. “I recommend it,” he quipped about retirement.
While he is “pleased with how much we’ve gotten done,” Iger said the “challenges are greater than I had anticipated,” with the “disruption of the traditional TV business” atop that list.
Streaming will become a profitable and stable business, Iger maintained, though the rush to migrate content to streaming was, in retrospect, costly in every sense of the word.
“Our zeal to basically grow our content and service our streaming offerings, we ended up taxing our people, in terms of their time and their focus, way beyond where they had been,” he said. “Marvel is a great example of that.” The comic book entity had never produced episodic series; suddenly, it was tasked with not only increasing its film output but also cranking out series for Disney+. “It diluted focus and attention.”
Pixar has been hamstrung by three straight releases (Soul, Luca and Turning Red) all going direct to Disney+ with no theatrical, but the computer animation pioneer has had “some creative misses as well,” in Iger’s view.
The prevailing strategy now, Iger said, is to recalibrate efforts across Marvel, Lucasfilm, Pixar and other areas, and pull back on spending.
The movie studio, despite its struggles, is No. 1 at the global box office in 2023 to date, Iger noted.
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