Disney CEO Bob Iger has recently enacted the first steps of his long-awaited turnaround strategy, which he plans to present at the media giant’s annual shareholder meeting on April 3rd. The future of core assets like ESPN and Hulu will also be questioned at this meeting. Iger has been making changes to improve the company’s fundamentals and stock price, including cost reductions, cleaning up the company, and focusing on differentiated content over general entertainment.
Cost Reductions and Job Cuts
As part of its cost-saving plan, Disney announced that around 7,000 layoffs were heading to the company. The layoffs are not only limited to one subsidiary or role; every division is affected. The first round of layoffs began with Disney’s metaverse division, shrinking the size of its ABC News executive team, and letting go of Isaac Perlmutter, the chairman of Marvel Entertainment.
Three Core Business Segments
To restructure the organization, Disney has disclosed plans to move into three core business segments – Disney Entertainment, ESPN, and Disney Parks, Experiences and Products. Additionally, Iger highlighted a direct link between content decisions and financial performance, suggesting his preference for differentiated content over general entertainment.
Hulu Ownership Structure
The ownership structure of Hulu might change as well. Though it currently falls under the joint control of NBCUniversal (Comcast), Fox Corporation (Disney), and AT&T (Warner Media), Disney may sell its majority stake in Hulu in order to fund ESPN’s over-the-top network initiatives. Macquarie analyst Tim Nollen suggested that if stakeholders follow-through with their plans according to the joint ownership agreement, Comcast could require Disney to buy out its stake in Hulu no later than January 2024 at a guaranteed minimum equity value of $27.5 billion.
Disney’s Special Tax District in Florida
Disney is also facing trouble with Florida Governor Ron DeSantis over the management of its special tax district. There’s a conversation about the political tussle between Walt Disney World Resort and Governor Ron DeSantis. The new oversight board, appointed by the governor, accused the previous Disney-controlled board of passing a last-minute agreement, rendering them powerless.
Wall Street Analysts See Potential Value Creation
Despite its challenges, Disney is still an excellent investment for Wall Street analysts due to its diverse set of strong businesses and premium intellectual property through its iconic franchises. However, shareholders remain concerned about the long-term vision of Disney and how Iger plans to take Disney forward.
The Walt Disney Company’s Annual Shareholders Meeting presents an opportunity for CEO Bob Iger to provide clarity on his new vision for the company and recent changes implemented to improve processes and make end consumers happy. With ESPN becoming an independent unit within the entertainment and theme park giant for the first time since being acquired by Disney, stakeholders will be interested to see what Iger plans to do with Hulu in the future during the annual meeting.
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