Bob Iger, CEO, Disney at the Allen & Company Sun Valley Conference on July 11, 2023 in Sun Valley, Idaho
David A Grogan | CNBC
Disney CEO Bob Iger opened the door for the sale of the company’s linear TV assets as the business struggles during the media industry’s transition to streaming and digital offerings.
Iger appeared on CNBC Thursday, the morning after the company announced it was extending his two-year contract through 2026.
Iger returned to the helm of the company in November after Disney’s board of directors ousted Bob Chapek on a two-year contract through 2024 and plans to find a next successor.
On Thursday, Iger sat down with CNBC’s David Faber to explain his contract extension. The two spoke at the site of investment bank Allen & Co.’s annual summer conference at the Sun Valley Lodge in Idaho, often referred to as “summer camp” for billionaires and media moguls.
“After coming back, I realized that the company faces many challenges, some of them self-inflicted,” Iger told Faber on Thursday, noting that he has accomplished a lot of work in seven months, but there is still a lot to do.
When Iger last spoke to Faber in February, shortly after announcing a major restructuring at the company, he said he felt “a sense of obligation” to return to Disney and preferred to stay on for his two-year contract.
“We’ve done a lot very quickly, significant cost reductions and a significant realignment of the business,” Iger said. “But dealing head-on with some of our biggest challenges.”
The February appearance came shortly after Disney announced a sweeping restructuring that included thousands of layoffs and multibillion-dollar spending cuts.
The reorganization averted a potential power struggle with activist investor Nelson Peltz.
Disney was reorganized into three segments: Disney Entertainment, which includes most of its streaming and media operations; a division of ESPN; and a parks, experiences and products unit.
These were some of Iger’s most significant actions in the months following his return. Disney revealed that it would cut $5.5 billion in costs, consisting of $3 billion of content, excluding sports, and the remaining amount of non-content costs. The company allocated 7,000 layoffs.
In addition to searching for his next successor, Iger has been tasked with making Disney’s streaming business profitable. In the past year, media executives at every company have been focused on how to make streaming profitable, especially after the streaming giant. Netflix it lost subscribers early last year and has since instituted ad-supported streaming and cracked down on password sharing to generate revenue.
While the company posted revenue and profit in line with Wall Street estimates last quarter, it experienced a loss of 4 million subscribers on its flagship streamer Disney+.
Those subscriber losses were offset by price increases, which Iger said in May were not to blame for the lower numbers. Instead, he said he showed room for further increases when it comes to streaming and pushing customers toward the ad-supported tier, with the goal of reaching profitability.
In an effort to ramp up Disney+ and attract more subscribers to its cheaper ad-supported tier, which it launched last year, the company announced last quarter that it would add Hulu content to Disney+.
In May, Iger had attributed the move toward a single-app location for Disney+ and Hulu content to the greater advertising potential of a combined platform.
Disney has been weighing whether it should buy all of Hulu, since it owns 66% and Comcast own the rest. Comcast is likely to sell its stake in Hulu to Disney in early 2024, CNBC previously reported.
Disney will report its fiscal third-quarter earnings after the market closes on August 9.
Disclosure: Comcast is the parent company of NBCUniversal, which includes CNBC.