Bob Iger: Disney+ Launching First ‘Real Foray’ Into Password-Sharing Crackdown in June, Full Rollout in September

Disney plans to launch official crackdowns on password sharing among its branded subscription streaming video platforms, led by Disney+ in June in select markets, with a full rollout planned in September, CEO Bob Iger told CNBC’s morning business show, “Squawk on the Street“.

“We’ll be launching our first real foray into password sharing,” Iger said. “But it will grow significantly [thereafter].”

While Iger did not identify which markets would begin clamping down on subscribers sharing their passwords with non-paying friends, the move aims to emulate Netflix’s successful crackdown, which has prompted growth in the streamer’s ad-supported plan, as well as lower-cost add-on memberships.

Iger said Netflix remains the gold standard in streaming, suggesting he would “certainly” be fine being second to Netflix, but that’s “not necessarily the goal.”

“They’ve done a phenomenal job in a lot of directions,” he said. “I actually have very high regard for what they have accomplished. If we could only accomplish what they’ve accomplished, that would be great.”

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Those goals include double-digit margins in the DTC market (like Netflix has), improving content recommendations to reduce churn, increasing stickiness, and reducing the cost of customer acquisition and marketing.

Iger said that when he returned as CEO of Disney (replacing his successor Bob Chapek on Nov. 20, 2022), the DTC was losing $4 billion a year, due to what he says was a strategy of chasing sub growth at the expense of the bottom line.

“It was clear that was not sustainable — and not acceptable,” he said.

The executive said the business has turned things around since then, with expectations that the DTC segment will turn its first profit in the fourth quarter this year.

“That’s a huge improvement. And we know exactly how we delivered that improvement,” Iger said.

Specifically, the CEO believes improving subscriber engagement, content recommendations, and time on the platforms are the keys to streaming success.

“We just launched Hulu on Disney+, which just came out of beta on [last] Friday, and I can tell you it’s doing extremely well,” he said, adding that recent strong viewership for the original historical drama “Shōgun” supports the strategy.

“We know what we have to do, and we start with a very strong hand [with Pixar, Star Wars, Marvel, Hulu, 20th Century Studios, etc.],” Iger said. “We have the goods. Now he have to execute. We know what it takes to be successful in streaming. And not everybody has that. And not everybody can get that.”

Bob Iger-Controlled Disney Board Defeats Activist Investors’ Efforts to Join

The Walt Disney Co. shareholders have voted against activist investors’ attempts to gain control of select seats on the media giant’s board of directors, the company announced April 3 at the conclusion of the business portion of the annual meeting.

“We are pleased to announce, that based on the tabulation of our proxy solicitor, it appears that the full Disney slate [of board directors] has been elected by a substantial margin over the Trian group’s nominees and Blackwell group’s nominees,” a Disney spokesperson said on the shareholder meeting webcast.

The results put to end a bruising corporate battle between CEO Bob Iger and his board against activist investor and Trian Fund Management founder/CEO Nelson Peltz’s attempt to join the board along with former Disney CFO Jay Rasulo.

Blackwells Capital had separately nominated former studio executive Jessica Schell, Tribeca Film Festival co-founder Craig Hatkoff and TaskRabbit founder Leah Solivan to the board. None of them were approved.

Among Peltz’s biggest complaints: the company’s underperformance at the box office, and narrow-minded focus on streaming, which has seen the direct-to-consumer business unit lose billions of dollars since launching Disney+ in 2019.

In addition, shareholders approved the appointment of Pricewaterhouse Coopers as Disney’s certified public accountant of record; the consideration of an advisory vote to approve executive compensation; and the approval of an amendment and restatement of the company’s amended and restated 2011 stock incentive plan.

Shareholders in total rejected six proposals, which included investor firms Trian Partners and Blackwells Capital’s efforts to secure board seats.

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Activist Investor Nelson Peltz Reaffirms Call for Disney Board Change While Still Supporting CEO Bob Iger

Activist investor Nelson Peltz, whose Trian Group owns more than $3.5 billion worth of Walt Disney Co. common stock, March 25 reaffirmed his call for change in the composition of Disney’ board of directors, advocating for the nomination of himself and former Disney CFO Jay Rasulo at the upcoming shareholders meeting on April 3.

Peltz and Trian contend the Disney is the most consumer-advantaged entertainment company in the world, but that over the past 10 years the media giant has “woefully underperformed,” costing shareholders more than $200 billion in value.

Peltz believes he and Rasulo should replace current board members Maria Elena Lagomasino and Michael B.G. Froman — while maintaining support for CEO Bob Iger.

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Peltz and his backers believe Disney’s problems revolve around the board, which they claim lacks focus, alignment and accountability. In addition, Peltz contends the board members have invested “almost none of their own money” in Disney stock, and have failed to heed investor input.

Specifically, the activist says the Disney board failed shareholders by installing Bob Chapek as CEO in 2020 following the abrupt departure of Iger without appropriate vetting or oversight.

“The board then renewed Chapek’s contract just months before firing him for poor performance. Ultimately, the board had to call Iger out of retirement to fill the void,” Peltz and Trian wrote in a release.

Peltz contends the board election is not about Iger, whom he emphasized is admired and respected by service providers and advisors.

“This campaign is not about Iger, nor is it a referendum on his leadership,” Peltz wrote. “That Disney spends so much time and ink defending Iger — while saying almost nothing about the two director candidates whose reelection Trian is challenging — is both troubling and telling.”

The investor said he and Rasulo (who held the CFO position for five years) would work collaboratively with board members.

Notably, in 2019, at the bequest of Iger, Peltz was asked to address the Disney board in a discussion all parties said was “seemingly productive and interactive.”

Peltz and Trian believe that re-electing the current Disney board would lead to more of the same: questionable strategic and capital allocation decisions, poor executive compensation alignment and suboptimal succession planning.

“Voting for change versus more of the same, is really what this election is about,” Peltz wrote.

Corporate Advisory Firm Glass Lewis Backs Disney, CEO Iger’s Board Slate

The Walt Disney Co. March 18 announced that independent proxy voting and corporate governance advisory firm Glass, Lewis & Co. is recommending that Disney shareholders support of all of the media giant’s 12 board member nominees (and no other nominees) at the upcoming annual shareholder meeting on April 3.

The recommendation comes as activist shareholder Nelson Peltz, through his Trian Partners hedge fund, wants a place on the board, along with former Disney CFO Jay Rasulo. Peltz contends CEO Bob Iger’s streaming-centric policies have hurt Disney’s stock

“In its recommendation, Glass Lewis clearly identifies the strength of the diverse skillsets across our board nominees, the credibility of our succession planning process and recent changes to the board and compensation program, and the promise of our recent efforts to bolster growth and value creation to position Disney for the future,” Mark Parker, chairman of the Disney board, said in a statement.

In a March 18 report, Glass Lewis said Disney is undertaking “a credible effort” to shift key operational priorities under the leadership of one of “the most well-respected CEOs in the industry.”

The report said it remains too early to say if Disney’s streaming initiatives, among others, will prove successful, arguing it is too early for investors to support alternate board members, who may prove “significantly less accretive to Disney’s trajectory, by comparison.”

Glass Lewis contends that in the 15 months since Iger’s return as CEO, he and new management have provided the company “an incrementally reconstituted board” with adequate opportunity to launch a more credible CEO succession program, develop, communicate and execute on several key initiatives, which appear to “reasonably target acknowledged operational and financial weaknesses at Disney.”

In commenting on Disney’s current governance practices, succession planning efforts, and the experience and engagement of the current Disney Board, relative to the Trian Group and Blackwells proposals, Glass Lewis said the Disney board has demonstrated a willingness to refresh its membership in the service of shareholder responsiveness and skill reconstitution with some reasonable regularity, resulting in an average tenure of less than five years across the incumbent slate.

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“Given what we believe is already a credible plan underway for Disney, we struggle to see many of Trian’s intentions as representing a likely net gain for investors,” read the report. “Notwithstanding faults in Disney’s prior succession initiative, Trian’s intent to launch a new process is not clearly superior to, and may be heavily duplicative of, Disney’s ongoing effort, which is already tied to a special board committee composed of members we believe to be credible.”

Disney CEO Bob Iger: We Need to Be at Netflix’s Level

Since coming back to The Walt Disney Co. as CEO in November 2022, Bob Iger has pushed through $7.5 billion in cost savings (and 7,000 layoffs) companywide, some of which has come out of the direct-to-consumer streaming business. With the DTC segment projected to be profitable by the fourth quarter, Iger said management’s goal remains to reduce subscriber churn (members not renewing service) and increase platform scale globally.

“The task at hand was a little bit more significant or more challenging than I expected it would be,” Iger said March 5 as keynote speaker at the Morgan Stanley Technology, Media & Telecom Conference in San Francisco. “Fifteen months later, I feel great about where we are.”

Iger said that upon his return to Disney, one of his first steps was to put streaming under new management, including naming longtime studio bosses Alan Bergman and Dana Walden as co-chairs of Disney Entertainment. Last April, Hulu executive Joe Earley replaced Michael Paull as head of all DTC businesses.

Iger said that since the launch of Disney+ in 2019, the company rushed to get the service up to get scale, despite lacking the requisite technology to reduce subscriber churn, and reduce marketing expenses, among other challenges.

“We are now in the processes of developing all of that technology, and obviously the gold standard there is Netflix. We need to be at their level in terms of technology capability,” Iger said.

Indeed, Netflix generated $5.4 billion in profit on revenue of $33.7 billion in 2023. By comparison, Disney’s DTC business segment generated a fiscal-year loss of $1.7 billion on revenue of $21.6 billion.

Tech prowess not only enhances DTC functionality, it also improves margins and churn rates, both of which Iger admitted Netflix remains the market leader in doing.

“[Netflix] has that technology, so our marketing expenses are significantly higher, [and] our churn rates are higher than they need to be,” Iger said.

In addition to technology, the CEO said DTC success revolves around consumer engagement and lowering distribution expenses, which is why Disney went all in acquiring ownership and control of Hulu (from minority owner Comcast), which is called Star outside of the United States.

Hulu is currently set to be included in the Disney+ app after exiting beta testing this month.

“We are not only increasing the volume of content on the platform, but with that comes significantly more [user] engagement,” Iger said, adding that greater access to Disney, Pixar, “Star Wars” and Marvel movies, in addition to bundling Hulu with Disney+, reduces churn significantly.

“That’s a path to profitability,” he said.

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Disney CEO Bob Iger to Step Down at End of 2026, Succession Plans Underway

Walt Disney Co. CEO Bob Iger Nov. 29 confirmed that he plans to step down when his contract expires at the end of 2026.

Speaking at the New York Times Dealbook Summit in New York City, the 72-year-old Iger reiterated that he would not be seeking a contract extension.

“I’m definitely going to step down,” Iger said. “We are aggressively pursuing succession.”

Iger’s return to the CEO position in November 2022, replacing his successor Bob Chapek, was supposed to last two years. That agreement was extended until November 2026.

Since his return, Iger has dealt with myriad problems at the Magic Kingdom, including a money-losing streaming business, Hollywood labor strikes, the departure of CFO Christine McCarthy, and a declining television ad market, among other issues. At the same time, Iger has implemented 7,000 layoffs companywide in an effort to generate more than $5.5 billion in operating cost savings.

Following a meeting with Disney employees on Nov. 28 where he said the company was done “fixing things,” with plans to revamp the entire operations in a “modern version” of the company in 2024, Iger said he had no has plans to sell ABC TV or FX, among other media assets.

“It is not for sale,” Iger said.

Iger was first appointed CEO of Disney in October 2005, and was elected chairman in 2012. In February 2020, he assumed the role of executive chairman following the appointment of Bob Chapek as CEO, and directed the company’s creative endeavors until retiring in December 2021.

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Disney Names Longtime PepsiCo CFO Hugh Johnston as its New Chief Financial Officer

Hugh Johnston, chief financial officer with PepisCo for more than 20 years, is leaving the soft drink conglomerate to join The Walt Disney Company as CFO on Nov. 30. Johnston is replacing Christine McCarthy, who left her CFO position at Disney in June for a family medical leave of absence.

Hugh Johnston

As Disney’s CFO, Johnston will report directly to CEO Bob Iger and will lead the company’s worldwide finance organization, which includes corporate real estate, corporate strategy and business development, enterprise controllership, enterprise technology, financial planning and analysis, global product and labor standards, global security, investor relations, risk management, tax, and treasury.

“Hugh’s well-earned reputation as one of the best CFOs in America and his wealth of leadership experience in both financial and operational roles overseeing a diverse portfolio of top global brands make him a perfect addition to Disney’s senior leadership team,” Iger said in a statement.

Johnston replaces interim CFO Kevin Lansberry, who is returning to his CFO position at Disney Experience.

Johnston joined PepsiCo in 1987, and has held a variety of roles, including EVP, Global Operations, PepsiCo; President, Pepsi-Cola North America; SVP, Transformation, PepsiCo; SVP and CFO, PepsiCo Beverages and Foods; and SVP, Mergers and Acquisitions, PepsiCo. Johnston also served as VP, Retail at Merck & Co. from 1999 until 2002, when he rejoined PepsiCo.

Johnston was named CFO of PepsiCo in 2010 and has been responsible for providing strategic financial leadership for PepsiCo, including ensuring the company’s strategy creates shareholder value, communicating the company’s strategies and performance to investors, and implementing a capital structure, financial processes and controls to support the company’s growth and return on investment goals.

Johnston currently serves as a member of the board and chair of the audit committee of Microsoft Corp., and as a member of the board and chair of the audit committee of HCA Healthcare. He is also a director for the Peterson Institute for International Economics, a leading global economic think tank.

Johnston holds a Bachelor of Science degree from Syracuse University and an M.B.A. from the University of Chicago.

Bob Iger: ‘Avatar: The Way of Water’ Tracking to Become Disney’s All-Time Best-Selling Digital Retail Title in the U.S.

Disney-owned 20th Century Studios’ Avatar: The Way of Water is tracking to become the company’s best-selling digital retail release in the the United States, CEO Bob Iger told investors on an Aug. 9 fiscal call. The movie already is the best-selling digital release ever in the United Kingdom.

Disney’s acquisition of the Fox’s former movie studio assets resulted in the company assuming ownership of James Cameron’s “Avatar” film franchise. Disney has already partnered with Cameron for an “Avatar” land at its Animal Kingdom theme park in Florida.

The 2022 theatrical follow-up to 2009’s Avatar, the all-time No. 1 box office release with more than $2.9 billion in global revenue, ranks No. 3 all-time with $2.32 billion in ticket sales behind Marvel Studios’ Avengers: Endgame with $2.79 billion.

Iger highlighted The Way of Water to reiterate Disney’s push to maximize a movie’s revenue potential across all distribution channels, including home entertainment.

“We’re maximizing the full impact of our titles by embracing the multiple distribution windows at our disposal, enabling consumers to access their content in multiple ways,” Iger said, adding that future Disney theatrical release would be headed to alternative retail channels, in addition to streaming.

“Certain other titles will be sold in the download-to-own window as well,” Iger said, adding that by focusing on big franchises and tentpole films, Disney will be better able to generate interest in the company’s legacy movie library.

“We’re seeing tremendous engagement on Disney+ with the previous ‘Guardians of the Galaxy’ films, the original Avatar and the first four ‘Indiana Jones’ movies,” he said. “But the value of our Disney entertainment studios and the reason this will be a key growth business for us extends far beyond our library and new releases [i.e., theme parks and consumer products].”

Netflix’s Free Cash Flow a Bone of Contention in Hollywood Labor Strikes

NEWS ANALYSIS — Netflix’s free cash flow is at the center of Hollywood’s burgeoning labor strike, after the SAG-AFTRA’s board voted yesterday to join writers in striking against the Alliance of Motion Picture and Television Producers (AMPTP).

AMPTP represents the major studios and streamers, including Amazon Studios, Apple, Disney, NBCUniversal, Netflix, Paramount Pictures, Sony Pictures and Warner Bros. Discovery, among others.

Netflix has been criticized by the unions for its disruption of existing compensation guidelines for episodic content production, including abbreviated seasons with fewer episodes requiring fewer writers and actors, among other changes.

Meanwhile, Netflix, unlike its streaming and media peers, is booming financially. Netflix’s initial guidance of $3.5 billion in free cash for fiscal-year 2023 seems ultra-conservative after the streamer generated about $2 billion in free cash alone in the first quarter (ended March 31). Free cash is the amount of cash left after a company pays operating expenses and capital expenditures. The streamer is projected to generate upwards of $8.24 billion in revenue, and nearly 2 million new subs for the 90-day period through June 30.

Burgeoning free cash flow would appear to undermine Netflix’s argument that it can’t pay writers and actors more in compensation, according to Michael Pachter, media analyst with Wedbush Securities in Los Angeles.

“Of course, the writers/actors will bring it up,” Pachter said in an email.

Disney CEO Bob Iger, who just re-upped with Disney for two more years with a bump in annual compensation to $31 million from $27 million, in an interview with CNBC’s “Squawk Box” called striking writers/actors’ fiscal demands “not realistic.”

That comment was met with scorn from actress Fran Drescher, president of SAG-AFTRA, who decried the studios’ greed and the fact that they are beholden to Wall Street (where much of Iger’s compensation is based through stock options).

“You’re sitting on the wrong side of history,” Drescher said during yesterday’s press conference. “Shame on you.”

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While Iger may personify Ebenezer Scrooge to striking unions, Disney’s direct-to-consumer streaming business is hemorrhaging billions of dollars, more than $1.5 billion in the last fiscal quarter.

That’s fiscal reality not lost on other media companies, including Warner Bros. Discovery (whose DTC business just turned profitable), Paramount Global and Comcast.

“I don’t think free cash will be the deciding factor [in the labor talks],” Pachter said. “All of the producers of content have to agree, and it’s highly unlikely Netflix gets a different result from the overall AMPTP group. The other guys are losing money, so that’s the counter argument.”

Bob Iger: Disney’s Fixation on Streaming, Episodic Content Diluted Brands

Disney CEO Bob Iger is throwing some shade on his own executive decisions, specifically pushing the entire media giant’s focus on streaming and episodic content — moves he said have resulted in a dilution of key brands such as Pixar Animation and Marvel Studios.

Speaking July 13 on CBC’s “Squawk Box” business report, Iger said recent decisions to dramatically increase content production for the sake of evolving distribution channels such as Disney+, Hulu and others, prompted burnout among the creatives.

Bob Iger

“Marvel’s a great example of that,” Iger said. “They had not been in the TV business at any significant level. Not only did they increase their movie output, but they ended up making a number of television series, and frankly, it diluted focus and attention. That is, I think, more of the cause than anything.”

Iger, who just extended his employment contract with Disney for another two years through 2026, said streaming and the loss of key personnel (i.e. co-founder John Lasseter for inappropriate workplace behavior) at Pixar have contributed to problems at the animation studio.

“There has been turnover … not just John, but there’s been other turnover as well,” Iger said. “That may have had some impact.”

However, the executive believes that the release of three consecutive Pixar releases direct to streaming, in part due to the pandemic, created the belief among consumers that there wasn’t an urgency to watch them.

“And … I think you’d have to agree that there was some creative misses, as well,” Iger said, alluding to Elemental, which generated one of the worst Pixar opening box office weekends, but has rebounded somewhat with a $257 million global theatrical haul.

Iger said there will be continued pullback across Disney, not just on content production, but also as part of companywide cost containment initiative.

“Spending less on what we make, and making less,” he said.