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Walt Disney Company
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Robert Iger Shakes Up Disneys Entertainment Operations, Rethinks Hulu Ownership Robert Iger Shakes Up Disneys Entertainment Operations, Rethinks Hulu Ownership By Robbie Whelan and Joe Flint Dow Jones Robert Iger's plans for reshaping Walt Disney Co. came into sharper focus Thursday, as the company detailed plans for a reorganization of its entertainment operations and signaled it could explore a sale of streaming platform Hulu. Mr. Iger, who made a stunning return as Disney's chief executive in November in a boardroom coup, has begun to lay out a vision that includes cost-cutting, streamlining investments in general-entertainment and sports, and giving more control to creative leaders. Mr. Iger outlined broad changes during the company's earnings call Wednesday, and Disney provided more specifics Thursday. The new structure at Disney would essentially put all key business operations, from content distribution to programming budgets and ad sales, under top entertainment executives. That means those executives, in addition to being the tastemakers who pick and develop the company's shows and movies, will also be in charge of how to distribute them -- whether via a streaming platform or traditional outlet -- and how to promote and make money off them. The reorganization essentially undoes the structure put in place by Mr. Iger's predecessor, Bob Chapek, who had given those functions to business executives. That approach had been a source of tension inside Disney, as key creative leaders were frustrated with their loss of autonomy. "Our strategic restructuring will return creativity to the center of the company, increase accountability, improve results, and ensure the quality of our content and experiences," Mr. Iger said in a statement. Also Thursday, activist investor Nelson Peltz called off his proxy fight for a board seat at Disney, saying the moves announced by Mr. Iger are similar to the ones he sought. Disney shares were up slightly in midafternoon trading. As Mr. Iger overhauls Disney's entertainment strategy, he is putting a bigger focus on family content and big franchise fare that can drive the growth of its Disney+ streaming service, such as Star Wars and Marvel superheroes content. Less clear is the future for the general entertainment programming and darker television shows and movies that are a staple of Disney's Hulu and FX cable channel. Hulu has been an outlet for creators whose content wouldn't be a good fit for Disney+ or its cable networks, such as Disney Channel and Freeform. Mr. Iger said Wednesday that as part of planned cost cuts totaling $5.5 billion, the company would make fewer shows and movies than before. He said Disney would "aggressively curate" its general entertainment content, which includes more mature Hulu content like "The Kardashians," "Pam & Tommy" and "The Dropout" that appeals to a wider range of age groups. Hulu is two-thirds owned by Disney and one-third owned by Comcast Corp. Under an arrangement reached in 2019, Disney has the right to buy out Comcast's stake at a fair market value, starting in early 2024, and Comcast also has the right to force a sale of its stake. Mr. Iger surprised Disney-watchers Thursday by suggesting that another path could be explored in which it might be the seller. In an interview with CNBC, he said while Hulu is a successful platform, "everything's on the table right now," and added that the widely held assumption that Disney would take full control of Hulu "isn't necessarily the case." Both Messrs. Iger and Chapek have emphasized the importance of adult-targeted content to Disney's future. Mr. Chapek told The Wall Street Journal in an October interview that he wanted to gain full control of Hulu in order to minimize "friction" between Disney's various streaming apps. The reorganization announced Thursday included the elimination of Disney Media and Entertainment Distribution, a division created by Mr. Chapek as a clearinghouse for all decisions about distribution of content produced by Disney's studios. Under Mr. Iger's realignment, three executives will be in charge of the company's vast entertainment and sports operations. Dana Walden, who had overseen Disney's general entertainment unit, including content creation for ABC, Disney+, Hulu and other cable channels, is being paired with movie-studio chief Alan Bergman, who oversees brands such as Pixar, Marvel and LucasFilm, as co-chairs of the newly created Disney Entertainment unit. ESPN Chairman Jimmy Pitaro will broaden his portfolio as well, adding oversight of ad sales, distribution and technology for ESPN and its sister channels, as well as the ESPN+ streaming service. Amid speculation that Disney might explore a deal to hive off ESPN, Mr. Iger said Wednesday he had no plans to sell or spin off the sports-media business. Business functions including ad sales, distribution and technology will now report to Ms. Walden, Mr. Bergman and Mr. Pitaro. Among key executives leaving as a result of the restructuring is Rebecca Campbell, the head of Disney's international operations and a longtime company executive who has held many key leadership roles during her tenure there. The leadership team under her will now report directly to Disney Entertainment and ESPN. "Her talents and expertise, and her warmth and sense of humanity will be missed," Mr. Iger said of Ms. Campbell in an internal memo. Additional cuts are expected in the coming weeks as part of the consolidation of the DMED and international units. Other areas expected to be scrutinized include content promotion, Mr. Iger said Wednesday. |
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