Disney has lost its magic. At least as far as Wall Street is concerned.
Shares for “content king” are down more than 40% this year, underperforming the broader market by a significant margin.
The reason is simple: Disney has failed to deliver what Wall Street is looking for in every listed company, top and bottom lines growth. On Nov. 8, the House of Mouse reported revenues and earnings that missed analysts’ estimates. Furthermore, it suffered a massive $1.5 billion loss in its Disney+ streaming division, up from $630 million last year.
Management didn’t see things that way, expressing complacency about the company’s performance.
“2022 was a strong year for Disney, with some of our best storytelling yet, record results at our Parks, Experiences and Products segment, and outstanding subscriber growth at our direct-to-consumer services, which added nearly 57 million subscriptions this year for a total of more than 235 million,” said Bob Chapek, who at the time was still CEO of The Walt Disney Company.
Moreover, he blamed the rising marketing and production costs for the losses in the Disney+ division.
But Wall Street didn’t buy this excuse, selling off the company’s shares, adding to the losses the stock has suffered so far this year.
Neither did the company’s board. In a surprise move on Sunday, they decided to let Chapek go and bring back his predecessor, Robert A. Iger, as CEO until December 2024.
The board’s move raised hopes on Wall Street that the return of Iger would help fix the House of Mouse. Thus, the big rally in Disney’s shares following the announcement of the leadership change.
Dan Goman, CEO of Ateliere Creative Technologies, an industry-leading cloud-native digital media supply chain and distribution platform, welcomed the leadership change at Disney.
“Iger’s 15 years at Disney were filled with innovation and excitement over new films, the introduction of Disney + and other services offered to Disney fans, and we can only hope to see the same magic happen with his return,” he told International Business Times in an email. “Disney needs stable leadership through these challenging economic times where consumers are on a tighter budget for luxuries like streaming services.”
Joe Lanzisero, former Disney Imagineer and current Executive VP and Chief Art Director at Zeitgeist, gave his vote of confidence to Iger. “When Bob Iger took over the reins as CEO from Micheal Eisner in 2005, there were many strained relationships, Pixar most notably, and other fences to mend,” he told IBT. “Bob immediately showed his ability to reach out and repair broken business relationships and build allies that lead to tremendous growth for the company.”
Lanzisero thinks that Iger faces similar challenges this time and much more, like mending the relationship and trust of the consumers, guests, and cast members.
“The leader of the Walt Disney Company has always been more than a businessman. They are a cheerleader for the brand. Eisner and Iger knew well the deep love and affinity the consumers and cast members have for the brand,” he added. “Chapek never really grasped the importance of this part of the role and, in not doing so, lost the trust of many.”
Still, Goman is skeptical about the chances of success for the new leadership. “For this leadership change to be a success, Disney needs to keep on top of the operating environment changes and pivot their services quickly to meet consumer demands,” he said.
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