Disney’s Iger Just Can’t Let It Go

Give Robert Iger credit for this much—the Walt Disney chief executive knows how to make an entrance. Or a re-entrance, in this case. 

The entertainment giant said late Wednesday that Iger has agreed to extend his stay in the corner office for two more years, through the end of 2026. He will have plenty to do; Iger granted CNBC an interview from the Sun Valley conference Thursday morning, during which he floated the possibility of selling off some of the company’s TV assets, including the ABC and FX networks.

Even ESPN, the crown jewel, could be somewhat on the block. Iger said Disney may seek a strategic partner for a joint venture or ownership stake in the once lucrative cable-TV sports network, though he also made clear “we want to stay in the sports business.” 

“We just have to be open minded,” he said in the interview, adding that the traditional TV model “is definitely broken.” 

The potential of reducing exposure to the declining cable-TV business in the future might be an attractive one for Disney. But the company and its Hollywood peers face the more near-term problem of a growing strike that is already crippling TV and movie production and appears to be getting worse.

The Screen Actors Guild ended contract talks with studios late Wednesday and was poised Thursday to join already-striking writers on the picket line. It will mark the first time since 1960 that the two unions have been on strike together. An extended shutdown could cripple the pipeline of TV and movie content well into next year. 

That is a problem for the whole industry, but Disney is facing several unique challenges of its own. Movies from Pixar and Marvel—two major acquisitions from Iger’s first tenure—are underperforming at the box office. Signs of strain at Marvel are a particular problem given Disney’s reliance on its content both for its theatrical business and its Disney+ streaming service.

“We don’t see the breakdown of the content engines here as structural, but fixes take time,” wrote analyst Michael Nathanson of SVB MoffettNathanson in a note to clients Thursday. 

All isn’t well in the actual Magic Kingdom either. Disney’s theme parks are facing a slowdown in traffic, with its largest one in Florida seeing a significant drop in the wait times for attractions, according to a report by The Wall Street Journal on Monday.

The following day, UBS analyst John Hodulik wrote that the broker’s own data showed a 23% drop in foot traffic to Disney’s domestic parks during the June quarter relative to the same period last year. That quarter is typically the biggest in terms of revenue for domestic parks in Disney’s fiscal year, which ends in September. The Orlando area park is also ground zero in a growing political fight with Florida governor and presidential hopeful Ron DeSantis.

Considering the aforementioned challenges—along with the departure of Chief Financial Officer Christine McCarthy —it is understandable why Iger feels he needs more time. His return to the C-suite late last year was greeted warmly by investors following the tumultuous and short-lived reign of handpicked successor Bob Chapek.

But that grace period is clearly over as the company’s challenges have mounted. Disney shares are now nearly 2% below their level from the day before Iger’s return was announced. The S&P 500 is up 13% over the same period. 

There also remains the small matter of finding a new successor. Disney Chairman

But analyst Doug Creutz of Cowen wrote late Wednesday that keeping Iger in place, while understandable given the company’s challenges and current need to fill the CFO slot, “also reinforces the notion that Disney continues to have serious succession planning issues.” Iger still needs to show he can hand over the keys to the kingdom when the time comes. 

Write to Dan Gallagher at [email protected]