Iger: Disney Has Smoother Path Than Comcast Closing Fox Acquisition

NEWS ANALYSIS — When it comes to mega corporate mergers, regulatory muster is just as important as money.

Speaking (along with CFO Christine McCarthy) June 20 on the analysts call to discuss Disney’s enhanced $71.3 billion offer for 20th Century Fox Film, CEO Bob Iger said he believes his company has more insight with federal regulators than rival Comcast, which has a competing $61 billion offer on the table for Fox and British satellite TV operator Sky Plc., among other assets.

“We have a much better opportunity in terms of approval and the timing of that approval than Comcast does in this case,” said Iger. “We are confident that we have a clear and timely path to approval.”

Iger cites the six months already invested by Disney with Fox involving the media company’s initial $52 billion bid for the Rupert Murdoch-owned media giant. He also downplayed Comcast’s concerns that control of entertainment content was at the heart of government’s failed antitrust lawsuit in the recently completed AT&T/Time Warner deal.

“It’s simply an apples to oranges comparison to what the Justice Department was considering when considering the AT&T acquisition of Time Warner,” Iger said. “We have a much greater appreciation for the potential that these assets represent to us, to our strategy today and to the strategy we intend to deploy long-term. We’ve been extremely impressed with the talent we’ve been engaging with at Fox.”

Iger said internal management changes (upping Kevin Mayer and Bob Chapek’s duties) at Disney were done in part to absorb Fox and Sky — the latter Europe’s largest satellite operator with more than 10 million subscribers — while greenlighting over-the-top video initiatives.

“Direct-to-consumer distribution has become an even more compelling proposition in the six months since we announced the [initial Fox] deal,” Iger said. “Clearly the consumer is voting, loudly, that these new platforms are very compelling from a consumer experience and consumer value perspective.”

CFO McCarthy projects $2 billion in cost synergies (i.e. job cuts) and lower debt with the transactions by 2021.

“We’re very comfortable with this level of [debt-to-earnings] leverage,” said McCarthy. “We’ve always said we would be willing to deploy our balance sheet to advance our strategic objectives.”

 

Trump Wades Into ‘Roseanne’ Debacle

Leave it to President Donald Trump to make Roseanne Barr’s May 29 racist tweet about a former Obama Administration official about him — and turn it into a social media attack on Bob Iger, CEO of The Walt Disney Co.

Barr’s comments resulted in widespread condemnation in the media (including from Fox News rightwing firebrand Sean Hannity) and cancellation by Disney-owned ABC of her top-rated “Roseanne” TV show reboot.

While Barr has apologized, she also blamed the incident on her use of insomnia medication Ambien, to which the drug’s manufacturer responded that racism is not a known side effect.

Iger, who called cancellation of the “Roseanne” show the “right thing to do,” reportedly reached out to Valarie Jarret, the former senior advisor to Obama at the center of Barr’s racist tweet.

That was enough to irk Trump, who first took to social media May 30 asking for his own apology — from Iger.

“Bob Iger of ABC called Valerie Jarrett to let her know that “ABC does not tolerate comments like those” made by Roseanne Barr. Gee, he never called President Donald J. Trump to apologize for the HORRIBLE statements made and said about me on ABC. Maybe I just didn’t get the call?” Trump tweeted.

The same day, Trump’s press enabler, Sarah Huckabee Sanders, called out ABC and Disney-owned ESPN on a list of alleged political wrongs originated by the media giant’s personalities.

Trump was referring to an “ABC News” report last year by Brian Ross that alleged former national security advisor Michael Flynn had been instructed by Trump to contact Russian sources prior to the 2016 election. That turned out to be false. Flynn had been in contact with the Russians on his own accord, which he later lied about to Congress and was subsequently fired for by Trump.

Ross apologized for the inaccurate report and was suspended.

But to Trump, who remains in the crosshairs of a Russian collusion investigation headed by former FBI leader Robert Mueller — with Flynn cooperating as part of a plea agreement — the grievance remains personal.

“Iger, where is my call of apology? You and ABC have offended millions of people, and they demand a response. How is Brian Ross doing? He tanked the market with an ABC lie, yet no apology. Double Standard!” Trump tweeted May 31.

Iger, who seeks to acquire 20th Century Fox Film in a deal that would require regulatory approval, has not responded. Nor should he.

Bob Iger Steps Up to Plate Following Latest School Shooting

In the aftermath of the latest (May 18) school shooting (the 22nd in 2018!) that saw a deranged teen (with legally-acquired assault weapons) slaughter 10 high school classmates, including a teacher, and wound 10 others in Santa Fe, Texas, our politically-divided country was again reduced to the repetitious cycle of “thoughts and prayers,” arguing on social media and paralyzed lawmakers (including President Trump) unwilling or unable to confront gun control, the NRA or the 2nd Amendment.

Only this time the vacuous grieving to the horror of Santa Fe High School was quickly overshadowed by The Royals, or obsession over the wedding of Prince Harry and his American “Princess,” actress Meghan Markle.

The reported $40 million ceremony May 19 in St George’s Chapel at Windsor Castle in the United Kingdom, drew 18 million television viewers in the United States. An impressive statistic in today’s fractured TV landscape.

So immune has the media become toward school shootings, that CNN’s Anderson Cooper, after interviewing the father of a slain student at the most-recent school shooting in Parkland, Fla., quietly pivoted to the network’s non-stop coverage of The Wedding.

In the midst of Saturday’s spectacle, Bob Iger, chairman and CEO of The Walt Disney Co., took to social media with a different mindset: “By not acting to stop gun violence, we are failing our children and failing our country,” he tweeted.

A strong statement coming from the boss of a media giant whose family values brand goes out of its way not to create controversy.

But Iger has long been less than shy about gun violence, telling Variety following the Las Vegas shooting that left 59 concertgoers dead, the country has a crisis and gun control shouldn’t be political.

“We have the worst record in the modern world when it comes to gun violence and gun deaths,” he said. “We should be demanding a dialogue about this from our politicians and demanding some productive action.”

Indeed, advocating — no, demanding — safety for our children at school shouldn’t be controversial. It should be common sense.

 

Disney Has Lofty Plans for Hulu, Despite SVOD’s Mounting Fiscal Losses

The Walt Disney Co. plans to “fuel” Hulu with original programming from its core brands should its $52.4 billion acquisition of 20th Century Fox be completed, Disney CEO Bob Iger told analysts.

Speaking May 8 on the fiscal call, Iger said the Fox acquisition would give Disney 60% ownership of Hulu (and Hulu Live online TV service) with co-owners Comcast and Time Warner owning 30% and 10%, respectively.

Comcast is reportedly finalizing plans to outbid Disney for Fox, which, if successful, would give the cable giant control of Hulu.

“It is our intention to continue to fuel Hulu with more original programming,” Iger said. “And much of that original programming will come from the assets of both Disney and Fox. Think FX as one example, Fox Searchlight is another.”

Iger said Disney’s plan to rollout a branded SVOD service in 2019 could include other Fox assets such as National Geographic, but would be largely anchored by Disney, Marvel, Pixar and Star Wars content.

“When we announced [our direct-to-consumer initiatives] a year ago, we were not talking about Hulu,” he said. “And again, neither is dependent upon, but stands to benefit from the Fox acquisition.”

Disney’s growing obsession with OTT video and Hulu comes as it watches Netflix and Amazon Prime Video grab global market share, increasingly featuring original content.

“When we were considering the best way to integrate the Fox assets, we asked ourselves how best to organize the company,” Iger said. “And one of the things that we looked at was how some of the new entrants in the marketplace are organized. And you typically find – Netflix is a good example.”

At the same time, as Hulu ups its content profile and subscriber base (20 million), costs escalate.

Disney has guaranteed $113 million of Hulu’s $338 million term loan, which expires in August 2022. Disney is also committed to infusing $450 million in capital contribution to Hulu in 2018, according to a regulatory filing. Through March 31, Disney’s capital contributions totaled $114 million against this commitment.

Hulu lost $920 million in 2017 compared to a loss of $531 million in 2016. The fiscal loss is reportedly projected to reach $1.7 billion this year as original content (“The Handmaid’s Tale,” “Marvel’s Runaways,” “Future Man,” and “The Doozers”) spending skyrockets.

“The higher losses at Hulu were primarily driven by continued investments in programming and marketing, partially offset by higher subscription and advertising revenue,” said CFO Christine McCarthy.

 

Bob Iger for President? Disney CEO ‘Seriously’ Considered 2020 Campaign Run

Appalled by the nation’s bitter political divide and the current occupant of the White House, Disney CEO Bob Iger considered running for president in the 2020 election.

The political aspiration, outlined in a Vogue profile, was cut short after Disney’s $52.4 billion acquisition of select 21st Century Fox assets, including 20th Century Fox, require Igor remain CEO through 2021.

Iger, who has repeatedly announced/cancelled retirement dates, actually thought about running in 2016, against the advice of his wife, Willow Bay. He has been Disney CEO since 2005.

“The thought I had was coming from the patriot in me, growing up at a time when we respected our politicians not only for what they stood for but because of what they accomplished,” Iger said.

Declaring himself to be “horrified at the state of politics in America today,” Iger contends there exists the opportunity for a presidential candidate who is more “open-minded” and willing to govern in a bi-partisan manner that would “shame everyone else into going to the middle.”

He reportedly has pushed Disney units Pixar, Marvel Studios and Lucasfilm to diversify lead characters, and was a big supporter in the production of box office hit Black Panther, which features a predominantly black cast and was filmed almost entirely in Atlanta.

When local law makers sought to pass “religious freedom” legislation that would have enabled businesses to discriminate against the LGBTQ community, Iger publicly warned Georgia Gov. Nathan Deal that such a move would see Disney relocate its production business out-of-state. The bill was scuttled.

“On the business side, there is a case to be made for your product reflecting the world you’re trying to do business in,” Iger said. “But of course, there’s also an ethical side.”

Notably, Iger’s business stances run both ways. He was one of the first high-profile CEOs to quit Trump’s business advisory panel after the president announced U.S. plans to exit the Paris climate accord.

In 2016, Iger came under fire from Democrat presidential candidate Bernie Sanders – a longtime critic of economics favoring the nation’s top 1% — when he accused Disney of paying Disneyland employees unlivable wages, among other labor-saving actions, while reaping billions in quarterly profit.

Iger, whose compensation at Disney ranks among the highest in corporate America, lashed back in a Facebook post.

“To Bernie Sanders: We created 11,000 new jobs at Disneyland in the past decade, and our company has created 18,000 in the U.S. in the last five years. How many jobs have you created? What have you contributed to the U.S. economy?”

Notably, Disney shareholders last month – in a non-binding vote – rejected an executive compensation plan that would pay Iger upwards of $48.5 million annually over the next four years, in addition to a $100 million equity grant.

Disney’s board has not made a final ruling on Iger’s compensation package.

 

Bob Iger Reiterates Disney’s OTT Future

When CEO Bob Iger announced Disney would cease distributing original movies through Netflix in 2019, he was laying the foundation for a proprietary direct-to-consumer ecosystem.

Speaking Feb. 26 at the Morgan Stanley Technology, Media & Telecom confab in San Francisco, Iger reiterated oft-discussed plans to launch standalone apps around ESPN (dubbed ESPN Plus and bowing in March at $4.99 monthly) and Disney (OTT in 2019) brands.

The CEO conceded technology and SVOD is disrupting the pay-TV ecosystem, with the aforementioned apps giving Disney an opportunity to “participate in the very business that is doing the disrupting.”

The ESPN service will also enable users to add out-of-market access to Major League Baseball games (MLB.tv) and National Hockey League (NHL.tv) matches for a premium.

“I imagine you’ll see that price rise for the augmented service. We have the opportunity to enable customers to buy seasons, teams, weekends,” Iger said.

But it is the Disney OTT service that is generating the most buzz and speculation. Calling the platform a long-term priority for Disney, the service will feature four-to-five original movies and TV series, in addition to theatrical fare, including Star Wars, Marvel and Pixar, according to Iger.

The executive expects to get a better picture of Disney’s OTT window after closing acquisition of 20th Century Fox Film Company.

“We’ll see how that goes and we’ll have a better sense of what kind of volume we can provide,” Iger said.

He said Disney currently has 11 billion-dollar movie franchises, with Black Panther slated to be the 12th – and exclusive to Netflix later this year.

“[We are] competing with ourselves,” Iger said.

Disney Readying ESPN OTT Video Service for Spring Launch

The Walt Disney Co. this spring is launching a standalone ESPN over-the-top video service, a $4.99 monthly platform powered by the media giant’s recent $3.75 billion BAMTech acquisition. Disney will also launch its first domestic OTT video in late 2019.

The move comes as Disney reported 11% drop in first-quarter (ended Dec. 30, 2017) ad revenue at ESPN. The company attributed the decline in part to the timing of the NCAA college football playoffs. ESPN broadcast six bowl games in Q1 last year compared to two games this year.

Speaking on the Feb. 6 fiscal call, CEO Bob Iger explained that the revamped ESPN app would feature live (authenticated) streaming, scores, highlights, news, stories, etc.

A third component, dubbed ESPN Plus, will feature on-demand content, including the entire library of ESPN’s award-winning “30 for 30” series.

“We plan to invest further in the direct-to-consumer feature, adding more live games and produce sports programming, along with even greater personalization in the years ahead,” Iger said.

Should Disney’s $52 billion acquisition of 20th Century Fox go through, it plans to incorporate movies from Fox 2000 and Fox Searchlight for OTT video – a strategic move Netflix follows.

“As a company, when combined, we’ll have far more production … to flow into our traditional distribution businesses, that being TV channels and the motion picture exhibition business, as well as the capability to create product for our direct-to-consumer businesses,” Iger said.

He said that with Disney, Marvel, Pixar and Star Wars brands, the studio won’t try and emulate Netflix’s 80 feature-film production goals.

The demand for those [Disney] brands, we believe, will give us the ability to spend less on volume,” Iger said.