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Walt Disney is strategically planning for a future that goes beyond traditional television networks, according to CEO Bob Iger. In a recent investor meeting, Iger identified film studios, theme parks, and streaming as the key drivers of Disney’s growth, leaving out traditional networks like ABC, where his career started. He acknowledged the undeniable impact of cord-cutting trends and expressed openness to exploring various strategic options for the company’s TV portfolio. Iger also mentioned potential partnerships for ESPN, with a focus on retaining control of the sports cable network. Analysts interpreted Iger’s remarks as a clear indication that Disney’s linear TV assets, including ABC, are up for sale.
Disney’s quarterly results showed a decline in revenue and operating income in its film and traditional TV units, although streaming video losses narrowed. Despite missing Wall Street’s revenue forecast, Disney’s diluted earnings surpassed expectations, leading to a more than 4% rise in after-hours trading. Iger, who returned to Disney after his successor’s ousting, faces challenges such as revitalizing the TV business, dealing with box office disappointments, and resolving issues with Hollywood writers and actors. He aims to make Disney’s streaming business profitable by the autumn of 2024.
The number of subscribers at Disney’s Disney+ service fell below expectations due to the loss of streaming rights to Indian Premier League cricket matches on Disney+ Hotstar. However, Disney’s core Disney+ offering, excluding the India business, added around 800,000 subscribers. Disney managed to reduce streaming service losses more than anticipated through higher subscription prices and reduced marketing spending. The streaming division, which includes Disney+, Hulu, and ESPN+, saw a 9% increase in revenues.
While Disney’s theme parks experienced growth, its traditional TV networks faced challenges from cord-cutting and a weak advertising market. Operating income and revenue declined for Disney’s US television channels. Iger’s recent remarks about linear TV no longer being “core” to Disney fueled speculation about potential divestment of the TV businesses. Moreover, Disney’s recent box office performance, including the disappointing releases of “Indiana Jones and the Dial of Destiny,” Pixar’s “Elemental,” and “Haunted Mansion,” has also raised concerns on Wall Street.
Iger, known for being talent-friendly, encountered criticism from Hollywood actors and writers for his perceived dismissal of their strike demands. However, he adopted a more conciliatory tone, emphasizing the importance of Disney’s relationships with the creative community. He expressed hopes for reaching a resolution to the strikes and committed to working towards that goal.
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