A lot has happened since Bob Iger took over as CEO of The Walt Disney Company once again.
©Reuters
But, it’s the future most people are concerned about. Iger was hired to restructure the company, and we’re still in the dark about what exactly that means. Disney stock performance has dropped to a nearly 50-year low, several executives have left the company, and Iger may start making moves sooner than we think — reversing a huge decision made by former CEO Bob Chapek.
Bob Iger is back at Disney, and experts are expecting big changes. According to Wells Fargo analyst Steven Cahall, spinning off ESPN and ABC may be “the best path forward” for The Walt Disney Company. Disney stock was trading at $85.78 on December 20th, a 52-week low and over 40% drop overall this past year.
Bob Iger ©New York Post
But getting rid of ESPN and ABC “would leave Disney as an attractive pureplay IP company,” Cahall shared.
“We also think investors are increasingly put off by trying to determine how fast linear networks — most of which is ESPN/ABC — is declining as direct-to-consumer (DTC) profits improve. The seesaw creates a constant headache. Spinning ESPN/ABC provides price discovery for the asset at a Fox-esque multiple of 6-7 times enterprise value/earnings before interest, taxes, depreciation and amortization (EBITDA), and then lets remaining Disney be more of a pureplay on global IP and streaming.”
©ESPN
Could this be the potential “big change” Iger is going to make to restructure the company? Cahall shared with the Hollywood Reporter that in the short term, Iger and his team will most likely “focus on content and cost rationalization.”
But, for the long term, Cahall expects “a deeper think on portfolio reshaping.” Iger played a huge role in making the Walt Disney Company what it is today, but spinning off ESPN and ABC would be “increasingly logical,” per Cahall.
ESPN Wide World of Sports
This separation could have multiple benefits, as Disney would be able to move forward with an IP strategy while ESPN focuses on how to monetize sports. Cahall added that he thinks this spin off is a “reasonably probable event for late 2023.”
This means we could see Disney sell or offload ESPN by this time next year.
©Alberto E. Rodriguez / Getty Images
If Iger does sever ties with ESPN, he would be undoing one of Chapek’s “big ticket” decisions. Chapek was passionate about ESPN, and even after inquiries about selling came from other companies, Chapek didn’t budge.
In an interview with Deadline, Chapek said, “So, if you happen to have a vision for the future that the rest of the world’s not necessarily in tune with yet, then you keep ESPN. You keep ESPN, and you have a full complement of general entertainment, family news, sports that no other entertainment company can touch.”
Bob Chapek ©Disney
But Iger may not share Chapek’s “vision for the future” of ESPN, and may not see how it jibes with Iger’s plans to restructure the company — though there would certainly have to be some restructuring if Disney did get rid of ESPN and ABC. On the one hand, analysts share that ESPN and ABC generated roughly $2.5 billion in fiscal year 2022 and could be most of Disney’s free cash flow.
Disney CEO Bob Chapek in Disney World on its 50th Anniversary
If Iger and Disney did get rid of ESPN and ABC as entities altogether, analysts think The Walt Disney Company “would trade at 16 times enterprise value-to-EBITDA (earnings before interest, taxes, depreciation, and amortization) and the company can move forward with a strategy focused on intellectual property, while ESPN works on sports.”
©Disney | Walt Disney Company Headquarters
Not only that, but this move could continue to help with cutting costs at the networks, “given that streaming would require additional investment and help pressure its cash flows.” Cahall added that Disney might consider selling its two-thirds ownership in Hulu to help get back on track again.
©Hulu
Whether or not Iger does what analysts are expecting and does sever ties with ESPN and ABC remains to be seen, but we’ll continue to keep you updated.
To learn more about Bob Iger’s return, check out:
- Disney Announces “Organizational and Operating Changes” As a Result of Bob Iger’s Return
- “They Brought This on Themselves” — Governor DeSantis Responds to Disney CEO Bob Iger’s Comments on Florida Legal Battles
- Will Bob Iger Reverse Bob Chapek’s Decisions?
- Disney CEO Bob Iger Comments on Reedy Creek and & Don’t Say Gay Controversy
- CEO Bob Iger Comments on Disney Park Pass Reservation System
Stay tuned to DFB for the latest Disney news and more.
Every Major Change Since Bob Iger Returned as Disney’s CEO
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Do you think Iger will get rid of ESPN? Let us know in the comments!
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He should bring back things like FREE fast pass. The company is nickeling and dimeing people to death. Don’t know how they can afford it
Wells Fargo FUD. Mr. Iger spent years putting Disney together. He is not some venture capitalist pick sent to make break it down to create investor “value”
What needs to be reversed is all the park reservations, surge pricing and restart park hopping with no time restrictions. We are going in 2 weeks and for the first time since 1972, we are not going to set foot in a park. We are using our DVC as a home but going to other attractions and visiting other places. I am done paying for over priced meals with so so food, park tickets that prices have sky rocketed. Its a shame but there is no more magic
The best start to the WDW experience was the Magical Express, a big, big disappointment when canceled. Not a good start to the “Magic of WDW, the Magical Express was just that ….Magical! Imperative to restart that again! Also, prices are really not geared to “family” in any way, shape or form!
Never was a fan of the ESPN buy. There nothing about Disney that says sports. As for ABC again not sure I am for Disney Plus and more money and focus on content but more more movies direct to consumers should be a goal along with park and resort upgrades. Also, it is a shame and missed opportunity not to have really developed/partnered with a gaming company to make online games or even a game for a gaming system. Loved the faeries 🧚 but needs to be for adults like AC but with the whole disney faeries world. Disney needs to use it’s awesome creative force in new ways and this may require fresh talent and collaboration in those fields.
Please
PLEASE
Bring Magical Express Back ….
It just does not feel RIGHT without it …
It was HUGE to see go …
Was best way to START & END a WDW TRIP …
Please bring back …
I’m with Joe. My family is going to use our DVC to hang out at the resort, take advantage of activities there, some eating out at Disney Springs. Theme park tickets? YES, except that they will be at Universal, not Disney.
You know, I am not sure how others might think about this, but I would LOVE to see Magical Express come back. Myself, I would be willing to pay maybe a $15.00 fee per person for the use of Magical Express. It would help offset their costs, but give us what we want and help restart the magic. What does anyone else think?