Walt Disney Co. Chief Executive Bob Iger appears to be making good progress in his turnaround efforts at the Magic Kingdom, and is now getting his hands dirty to fix the content problem at its studios.
On Wednesday, Disney
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reported better-than-expected quarterly earnings, in part due to a huge increase in subscribers to its Disney+ streaming service. Revenue came in slightly below the consensus on Wall Street, but investors were likely also buoyed by news that the entertainment giant is on track to cut $2 billion more in costs than previously expected.
Shares of Disney jumped 3% in after-hours trading.
Many of those cuts are going to come from Disney’s studio business, where the company is going to focus on developing fewer, but higher-quality, films, Iger told Wall Street analysts.
After years of massively expensive blockbusters from the likes of Pixar, Marvel and “Star Wars” dominating the box office, grosses for many releases in recent years have been lackluster, at least by Disney standards.
“I’ve always felt that quantity can be actually a negative when it comes to quality, and I think that’s exactly what happened,” Iger said. “We lost some focus. And so working with the talented team at the studio, we’re working to consolidate — meaning make less, focus more on quality. We’re all rolling up our sleeves, including myself, to do just that.”
Earlier this year, Iger suggested it may be time for Disney to cut down on the number of sequels, saying Marvel goes “back to the well” too often.
Kevin Lansberry, Disney’s interim chief financial officer, said the company would not be cutting any more jobs, after slashing 8,000 positions already this year, which is 1,000 more than the company outlined in March.
Iger said Disney will focus on a balance between some “really strong sequels” to popular titles, and good original content, starting with “Wish,” an animated musical fantasy that is coming out over Thanksgiving weekend.
Other movies in progress include the superhero sequel “The Marvels,” opening this weekend, and sequels to franchises like “The Lion King,” “Toy Story,” “Frozen,” “Zootopia” and “Avatar.” Pixar Animation’s “Elemental” has grossed nearly $500 million worldwide and is the most-viewed movie this year on Disney+, he said.
One analyst asked if Iger planned to mimic the recent move by Warner Bros. Discovery
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and license core content to Netflix Inc.
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Iger said Disney is already licensing some content to Netflix, but does not need to license its core brands, such as Pixar, Marvel or “Star Wars.”
“I don’t see why, just to basically to chase bucks, we should do that when they are really, really important building blocks to the current and future of our streaming business,” Iger said.
Disney’s entertainment segment, which also includes its streaming business, saw revenue grow 2% in the quarter, thanks to 12% growth in the streaming business. Linear television and licensing content, which includes theatrical releases, saw revenue fall 9% and 3%, respectively.
Iger did not specify any targets for investors to gauge improvements in its studio business, whether it will be in 2024 or 2025. And it’s not clear, other than creating new content, how the studios business can rebound from its current malaise. A tentative deal reached late Wednesday to end the Hollywood writers strike should hopefully clear the way for new content to be made.
Iger may be rolling up his sleeves to help his studios rebound, but the timeline may take longer than investors are hoping.
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