Bob Iger Says Not All Subscription Streaming Video Services Will Survive

In global media landscape gone streaming, survival of the fittest among subscription video platforms is an ongoing battle spearheaded by four likely winners: Netflix, Disney+, Prime Video — and Apple TV+?

That’s the mindset of Bob Iger, recently retired former Disney CEO and executive chairman, who gave his two-cents worth Sept. 7 as a featured speaker at the 2022 Code Conference in Beverly Hills, Calif.

Iger, who helped launch the Disney+ SVOD platform in late 2019 after realizing Disney had helped make streaming pioneer Netflix a household mainstay, said the current rush to market much of the company’s brands through the branded streaming platform is a winning strategy due in large part to the company strong intellectual property rights.

“I believe that Netflix is going to continue to thrive. They have some issues now, but they’re not going away,” Iger said, adding that he believes both Netflix and Disney+ would prosper further following separate launches of less expensive ad-supported streaming subscription tiers. He stressed that both Amazon and Apple would also emerge winners in the SVOD market due to both companies’ reduced dependence upon streaming video.

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Prime Video, which is nearly as old as Netflix, is largely offered as a free add-on feature to Prime members primarily interested in Amazon’s stranglehold on e-commerce and free two-day shipping. Apple, which includes free streaming access to the Apple TV+ platform (launched two weeks ahead of Disney+) with every Apple consumer electronics sale, continues to generate billions in revenue and profit as a CE manufacturer.

Indeed, Apple has never disclosed subscriber data for its branded SVOD service, which continues to ramp up content spending and industry awards, including a Best Picture Oscar for CODA.

“They’re not primary businesses for them and they’re measured, probably, by different standards in terms of bottom line, and they serve other purposes in those companies,” Iger said about both Prime Video and Apple TV+. “They’re going to continue to grow, and they’ll grow well. They’ve got deep pockets. They’ve got great access to consumers. They have strong technology platforms. They’ve proven they know how to do it. So, they stay.”

Iger made no mention of other streaming rivals, including NBCUniversal’s Peacock, Paramount+ or the pending melding of HBO Max with Discovery+.

While Peacock continues to struggle generating paying subscribers, Paramount+ enjoyed the strongest subscriber growth in the most recent fiscal period among any service. Warner Bros. Discovery combines HBO pay-TV subs with HBO Max streaming (and soon Discovery+) to showcase a larger streaming footprint. The parent company continues to scale back Max content spending and licensing in an effort to realize mandated $3 billion in post-WarnerMedia/Discovery merger cost synergies

“They’ve got some tough hands, and it takes a lot of capital to be in that business,” Iger said of the competition. “I don’t think they’ll all make it.”

Susan Arnold to Replace Bob Iger as Disney Board Chair

The Walt Disney Company board of directors Dec. 1 announced that it has named Susan Arnold as chairman of the board, effective Dec. 31, 2021. Arnold, a 14-year member of the media giant’s board who has served as its independent lead director since 2018, would replace Bob Iger when he departs the company at the end of the year. She also becomes the first female to head Disney’s board.

Incoming Disney chair Susan Arnold (photo courtesy Walt Disney Co.)

“Susan is the perfect choice for chairman, and I am confident the company is well-positioned for continued success under her guidance and leadership,” Iger said in a statement. “It has been a distinct honor to work with Susan and our many other talented directors, and I am incredibly grateful for the support and wise counsel they have provided during my tenure.”

Arnold brings extensive public-company board experience and in-depth knowledge of brand management and marketing, environmental sustainability, product and business development, international consumer markets, finance, and executive and risk management. She was formerly an operating executive of the equity investment firm The Carlyle Group, where she served from 2013 to 2021. Previously, she served as president — global business units of Procter & Gamble from 2007 to 2009.

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Iger has served as board chairman since 2012, and as Disney’s executive chairman since 2020, directing the company’s creative endeavors. From 2005 to 2020 he was Disney’s CEO — the company’s longest-running chief executive. During his tenure, Iger built Disney into one of the world’s largest entertainment companies with the acquisitions of Pixar (2006), Marvel (2009), Lucasfilm (2012) and 21st Century Fox (2019), as well as the landmark 2016 opening of Shanghai Disney Resort, and the release of a number of record-setting films, including Marvel’s Avengers: Endgame, Disney’s Frozen and Frozen 2, and the groundbreaking movie Marvel’s Black Panther.

Iger helped make Disney an industry leader through its creative content offerings across multiple platforms, most recently leveraging direct-to-consumer technology with the launch of the Disney+ streaming service in 2019 and ESPN+ in 2018.

Disney’s Bob Iger Wants Chinese Ambassadorship, Politics Responds

NEWS ANALYSIS — News that Walt Disney Executive Chairman Bob Iger is up for being named U.S. Ambassador to China by President-Elect Joe Biden has produced strong pushback from conservative circles, which allege the executive’s cozy relationship with Chinese government officials is the wrong signal for the United States going forward.

Should Iger be named to the position, it would represent a crowning cap to a 46-year corporate career that has seen Disney embrace China across its business segments under Iger and current CEO Bob Chapek.

In addition to operating two amusement parks in China — Shanghai Disneyland and Hong Kong Disneyland — Disney is one of the world’s largest licensing operators, with much of its merchandise manufactured and sold in China.  J.P. Morgan analyst Alexia Quadrani contends that before the coronavirus pandemic, the two amusement parks contributed $1 billion in revenue and about $50 million in operating profit to Disney annually.

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In 2018, about 66 Disney-licensed products were sold in China every second, according to Kermid Rahman, VP and GM of Marvel and Consumer Products Commercialization for The Walt Disney Company Greater China and Korea. Speaking to China Daily, Rahman said the Disney, Pixar, Marvel and Star Wars brands worked with more than 600 licensees throughout China.

In Iger’s recently published memoir, The Ride of a Lifetime, the executive recounted myriad interactions with Chinese officials, including President Xi Jinping.

“The creation of the [theme] park was an education in geopolitics, and a constant balancing act between the possibilities of global expansion and the perils of cultural imperialism,” Iger wrote. “The overwhelming challenge, which I repeated to our team so often it became a mantra for everyone working on the project, was to create an experience that was ‘authentically Disney and distinctly Chinese.'”

The latter is what some critics say underscores Disney’s growing subservience to the Chinese government in return for financial gain.

Indeed, on the theatrical side, Disney filmed some of its recent live-action movie Mulan in China’s Xinjiang province, a region where human rights groups allege ethnic Uyghur Muslims have been subjected to abuse by the erstwhile Communist government.

In recent years, Disney-owned ESPN reportedly came under fire for not calling out the NBA’s strained relationship with China regarding a coach’s comments about pro-democracy protests in Hong Kong.

With the outgoing Trump Administration at odds with China regarding trade, intellectual property and high-tech issues — underscored by a 2019 trade deficit that topped $345 billion — Iger’s potential ambassadorship has been put in the political crosshairs.

Earlier this year, former U.S. Attorney General William Barr warned that “if Disney and other American corporations continue to bow to Beijing, they risk undermining their own future competitiveness and prosperity as well as the classical liberal order that has allowed them to thrive.”

“The Biden administration shouldn’t put Iger — or any other entertainment industry bigwig, for that matter — in charge of diplomatic relations with China,” Sunny Bunch wrote in The Washington Post. 

“Iger … is qualified to negotiate with Beijing, but for all the wrong reasons — cozy ties, long relationships, and tolerance for the government’s terrible conduct,” Emily Jashinsky wrote in The Federalist.

Fox News host Laura Ingraham Dec. 16 suggested Iger’s selection would be keeping with what she alleges will be the Biden Administration’s “soft-on-Beijing policy.”

“The [local] government there got a special thanks credit in the film [Mulan],” Ingraham said.

Ted Sarandos, Bob Iger Among Executives on California Gov.’s Task Force Seeking $1 Trillion in Congressional Virus Relief for Local Governments

Netflix CCO Ted Sarandos and Disney executive chairman Bob Iger have joined a group of more than 90 California business leaders calling on Congress to approve $1 trillion in coronavirus fiscal relief for all states and local governments.

Sarandos and Iger are members of California Gov. Gavin Newsom’s Task Force on Business & Jobs Recovery organized to deal with the economic, environmental and social fallout from the pandemic.

In a May 15 letter to House and Senate leaders Rep. Nancy Pelosi (D-CA) and Sen. Mitch McConnell (R-KY), the task force said COVID-19 has “fundamentally” changed how business and organizations operate and are managed.

“The worst of the economic impact is likely still to come,” read the letter.

The group said successful re-opening of state and local economies relies on building confidence among consumers that it is safe to shop and greater certainty for workers that the services they rely on to do their jobs will remain in place.

“Without that, we will be a re-opened economy in name only,” they wrote.

The group said it stands with business leaders throughout the nation, from both sides of the aisle, who said the funds would protect core government services like public health, public safety, public education and helping people get back to work.

“This funding will help our states and cities — and America’s economy — come out of this crisis stronger and more resilient,” they wrote.

The letter came on the day the Democrat-controlled House approved a $3 trillion relief bill, which included $1 trillion in states aid. The Republican-controlled Senate is not expected to pass the bill.

Disney Names Rebecca Campbell Chairman of Direct-to-Consumer & International

With the departure of Kevin Mayer to TikTok, Disney CEO Bob Chapek has named longtime colleague Rebecca Campbell chairman of the media giant’s Direct-to-Consumer & International business unit. Separately, Josh D’Amaro has been named chairman of Disney Parks, Experiences and Products.

In her new role, Campbell will help launch flagship subscription streaming platform Disney+ in Japan, with further bows planned in Latin America and Eastern Europe.

Josh D’Amaro

“Our company is very fortunate to have a deep bench of talent and we’re extremely pleased to welcome these two exceptionally qualified Disney veterans to our senior management team,” Chapek said in a statement. “Both Josh and Rebecca have more than two decades of leadership experience with the company, a keen understanding of our brands and businesses, and a shared passion and vision for delivering extraordinary entertainment and one-of-a-kind experiences.”

A 23-year Disney executive, Campbell since 2017 has worked closely with Chapek as president of Disney Resort, including Disneyland and Disney California Adventure. Before that, Campbell led the Magical Kingdom’s European, Middle East and Africa operations.

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Since launching last November, Disney+ has generated more than 54 million subscriptions.

D’Amaro, who most recently served as president of Walt Disney World Resort, succeeds Chapek as chairman, Disney Parks, Experiences and Products. In his new role, D’Amaro will attempt to jumpstart Disney’s shuttered travel and leisure businesses, which include six theme park-resort destinations in the United States, Europe and Asia; a cruise line; a vacation ownership program; and a guided family adventure business.

Walt Disney World Orlando is re-opening retail center Disney Springs on May 21 — 10 days after the re-opening of Shanghai Disneyland and Disneytown in China.

Disney Streaming Boss Kevin Mayer Jumps to China’s TikTok as CEO

In a surprise move, Kevin Mayer, chairman of Disney’s direct-to-consumer & International unit, is leaving to become COO of the corporate parent of Chinese-owned social media platform TikTok, effective June 1.

Mayer, who has spent 25 years at Disney, will report directly to Yiming Zhang, founder/CEO of ByteDance. He will be charged with driving the global development at ByteDance, as well as overseeing corporate functions, including corporate development, sales, marketing, public affairs, security, moderation, and legal.

In his role as COO, Mayer will lead music, gaming, Helo, emerging businesses, and will also serve as CEO of TikTok, leading the rapidly growing platform as it continues to build its global community of creators, users, and brands.

“Kevin’s wealth of experience building successful global businesses makes him an outstanding fit for our mission of inspiring creativity for users globally,” Zhang said in a statement.

As chairman of Disney’s revamped home entertainment unit, consumer products and international business, Mayer oversaw rollout of Disney+, the company’s flagship subscription streaming video service. Additionally, Mayer led the company’s other direct-to-consumer businesses, including Hulu, ESPN+, and India’s Hotstar, as well as overseeing Disney’s international operations, global ad sales, and global content sales.

“Like everyone else, I’ve been impressed watching [ByteDance] build something incredibly rare in TikTok — a creative, positive online global community,” Mayer said.

The executive said he is grateful to Bob Iger for his visionary leadership and mentorship over many years, and Bob Chapek, whom Mayer said he greatly admires.

Alex Zhu, the current president of TikTok, will transition to ByteDance VP of product and strategy, where he will focus on his primary passion overseeing strategy and product design.

Kelly Zhang and Lidong Zhang will continue to lead the business as CEO and Chairman of ByteDance China, respectively, reporting to Yiming Zhang, as ByteDance’s global CEO. They manage a range of products, including Douyin, Toutiao, and Xigua, in addition to their duties leading the business and operational teams in China.

In the management restructuring, TikTok said its national and regional management leaders would remain in their roles with their current responsibilities, reporting to Mayer.

Walt Disney Studios Q2 Biz Deflects Pandemic; Worse Still to Come

With the extent of the coronavirus not impacting its studio operations until March, Walt Disney Studios May 5 revealed it managed to avoid a fiscal catastrophe in the second quarter (ended March 28).

Studio revenue for the quarter increased 18% to $2.5 billion, and segment operating income decreased 8% from the previous-year period to $466 million. The decrease in operating income was due to lower results at legacy operations, partially offset by the consolidation of the 20th Century Fox businesses that Disney took over a year ago. The decrease at legacy operations was due to higher film impairments and decreases in theatrical distribution and stage-play results, partially offset by an increase from TV/SVOD distribution.

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Theatrical distribution in the quarter was still negatively impacted by COVID-19 as theaters closed domestically beginning in mid-March and internationally at various times beginning late January.

Theatrical distribution results in the quarter included an increase in bad debt expense and also reflected an adverse impact from COVID-19 on the performance of Onward, which was released domestically on March 6. Other significant titles in the current quarter included Frozen II and Star Wars: The Rise of Skywalker compared to Captain Marvel, Mary Poppins Returns and Dumbo in the prior-year quarter.

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Stage-play results in the quarter were negatively impacted as live entertainment theaters also were closed. Growth in TV/SVOD distribution results was due to sales of content to Disney+ driven by The Lion King, Toy Story 4, Frozen II and Aladdin. This was partially offset by a decrease in sales to third parties in the pay and free television windows. The benefit from the Fox businesses reflected income from TV/SVOD distribution, partially offset by a loss from theatrical distribution and general and administrative costs. Fox theatrical releases in the current quarter included The Call of the Wild and Downhill.

“While the COVID-19 pandemic has had an appreciable financial impact on a number of our businesses, we are confident in our ability to withstand this disruption and emerge from it in a strong position,” CEO Bob Chapek said in a statement. “Disney has repeatedly shown that it is exceptionally resilient, bolstered by the quality of our storytelling and the strong affinity consumers have for our brands, which is evident in the extraordinary response to Disney+ since its launch last November.”

This is Disney’s first earnings report with former home entertainment chief Chapek as CEO. Former CEO Bob Iger in February said he would turn the reins of the company over to Chapek, who previously had run the parks division, and transition to executive chairman.

Just weeks after Chapek officially took over, the novel coronavirus led to a succession of stay-at-home orders throughout the country, and Iger stepped back in work with Chapek on day-to-day operations, according to a New York Times report.

The coronavirus pandemic has hit Disney particularly hard. Movie theaters have shuttered, productions have shut down, live sporting events have been canceled and theme parks are closed indefinitely. Theme parks accounted for 37% of Disney’s $69.6 billion total revenue in 2019.

Disney said it expects the pandemic to negatively impact the company by $1.4 billion in the current third quarter, which ends June 30.

To cut costs, Disney has furloughed thousands of workers, mostly across theme parks and resorts; taken out a $5 billion line of credit; and slashed executive pay, including a 50% pay cut for Chapek. Iger is forgoing his salary, according CNBC.

Bob Chapek Named to Disney Board

New Disney CEO Bob Chapek has been officially named to The Walt Disney Company’s board of directors, according to a regulatory filing. Chapek assumed the chief executive position in February after 15-year chief executive Bob Iger decided to step away from day-to-day operations.

“Bob Chapek has demonstrated remarkable leadership in the face of unprecedented challenges that were unimaginable when he became CEO just seven weeks ago, and we’ve watched him navigate this very complex situation with decisiveness and compassion,” Iger and Susan Arnold, independent lead director, said in a joint statement.

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Iger, who assumed a newly created position of executive chairman of the board, earlier this week said he is returning to daily duties in an effort to assist Chapek as the latter confronts disastrous conditions across most Disney business units as a result of the coronavirus pandemic.

Prior to becoming CEO, Chapek served as chairman of Disney parks, experiences and products. During his tenure at Parks, Chapek oversaw the opening of Disney’s first theme park and resort in mainland China, Shanghai Disney Resort, and creation of the new “Star Wars: Galaxy’s Edge” lands at Disneyland and Walt Disney World. From 2011 to 2015, Chapek was president of the former Disney consumer products segment, where he drove a technology-led transformation of the business. He also served as president of distribution for The Walt Disney Studios, and was president of Walt Disney Studios Home Entertainment, where he spearheaded the successful “vault strategy” for the company’s legacy movies.

Disney reports second-quarter (ended March 31) fiscal results on May 5.

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Bob Iger Upping Corporate Presence as Pandemic Ravages Disney

With Disney reportedly losing $30 million daily as the coronavirus effectively shutters most of its business units, former CEO Bob Iger is stepping in to assist new CEO Bob Chapek to help navigate the pandemic.

“A crisis of this magnitude, and its impact on Disney, would necessarily result in my actively helping Bob [Chapek] and the company contend with it, particularly since I ran the company for 15 years!,” Iger wrote in an email to The New York Times, which ran an April 12 story about the executive chairman’s increased public presence.

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Iger abruptly stepped down from the CEO position on Feb. 25 just as the pandemic was was expanding its global presence and impacting economies worldwide. Chapek, former head of home entertainment, consumer products and amusement parks, was named the new chief executive — a position he said he was more than ready to handle.

But to say Chapek’s plate is full would be a major understatement, and publicly at least the Disney veteran has expressed willingness to accept any advice from his former boss.

“I do understand the gravity of trying to fill this gentleman’s shoes, but I’m ready for it and look forward to some great years ahead,” Chapek said at Disney’s annual shareholders meeting in March in Raleigh, N.C.

Indeed, Chapek jumped into the deep end at that shareholders meeting fielding questions about ABC News’ perceived bias against President Trump and not giving in to LGBTQ rights at its amusement parks.

“At Disney, we strongly believe that we should reflect in our creative content the diversity that we find in our fan base and with our audience,” Chapek responded.

But with Disney furloughing 43,000 Walt Disney World employees in Florida on April 19, on top of the 30,000 furloughed staffers in California, Chapek finds himself fighting a pandemic on multiple fronts.

Iger, who is under contract through 2021 in a four-year compensation package worth $423 million, assumed a newly created executive chairman position overseeing Disney’s creative measures. So it wasn’t surprising he told the media last week about plans to further postpone some theatrical releases while expediting others to retail channels, including releasing Artemis Fowl exclusively to Disney+.

Iger floated the idea of testing consumers’ temperatures whenever Disney re-opens its amusement parks, adding separately that the pandemic underscores the need to stop holding expensive ad-upfront presentations and producing TV series pilots that never air.

One area Iger has no interest in weighing in on is staffing. During his tenure as CEO, Iger was dogged by a long-running dispute with striking Disneyland hotel workers and allegations Disney underpays its theme park employees.

“The people who walk around all day in Mickey Mouse and Donald Duck costumes, the workers who prepare and deliver the food, the men and women who collect tickets and manage the rides, make wages so low that they are barely surviving,” Bernie Sanders, the former Democrat presidential nominee and Vermont Senator, wrote in an opinion piece for The Guardian in 2018.

Iger, who during the 2016 presidential campaign criticized Sanders as being clueless about matters of running businesses and creating jobs, in his New York Times email was clear to underscore whose job it would be regarding company staffing.

“Any decision about staff reductions will be made by my successor and not me,” he wrote in the email.

Disney shares were down more than 2% in early market trading April 13.

Disney Executives Forgo Salary, Perks During Pandemic

While some media companies have set aside tens of millions of dollars for displaced workers and production personnel, The Walt Disney Co. is cutting salaries and perks to senior executives as its business units get hammered from all directions due to the coronavirus pandemic.

With nearly all business segments either idled or severely curtailed due to shutdowns and consumer quarantines in major markets, Disney will subject its senior executives to significant payroll cuts and related perks, effective April 5.

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According to a regulatory filing, former CEO Bob Iger, who earlier this year transitioned to executive chairman, will forgo his entire $3 million salary, in addition to the use of a company car. Disney will still pay Iger his health care benefits.

Iger’s successor, Bob Chapek, will have his $2.5 million salary cut in half. In addition, general counsel Alan Braverman, CFO Christine McCarthy, human resources chief Jayne Parker, and head of corporate communications Zenia Mucha will see 30% cuts to their base salaries.

Disney said that except for the amount of compensation for paid time off, the salary reductions are not intended to reduce any company employee benefit provided to executives that is determined by reference to the base salary payable, except as may be required at law.

Chapek is still eligible for a bonus of “not less than 300% of the annual base salary,” according to a SEC filing. He is also in line for “a long-term incentive award having a target value of not less than $15 million” for each fiscal year of the agreement through Feb. 28, 2023.

The cuts come as Wall Street downgrades Disney’s fiscal estimates going forward. Credit Suisse analyst Doug Mitchelson, in a note, said his two-week old forecasts for Disney are moot.

“There remains virtually no visibility as to when sports and Hollywood content production will resume and re-openings for theme parks and theaters will take place — we assume beginning of June,” Mitchelson wrote. “As for the media business, the depth of ad declines is also uncertain.”

It should be noted that base salaries are what constitutes the majority of Disney’s payroll taxes and related employee costs. The bulk of senior executive compensation revolves around stock options, which are based on, and compensated by, the stock market.

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Indeed, Iger received total compensation in excess of $66 million in 2018 and $47.5 million in 2019 — the bulk of it stock options and bonuses, including a combined $18.5 million if he remained employed with the company past July 2, 2019, and closing of the Fox studio acquisition.

The Disney board  later rescinded the Fox bonus (after fiscal contributions plummeted) and Iger voluntarily forfeited the employment deadline perk.