Disney investors await CEO Bob Iger’s revival plan

Walt Disney CEO Bob Iger is expected to discuss a turnaround plan on Wednesday, when the media company delivers its first quarterly results since the return of the executive who built the modern incarnation of Disney.

As anxiety sweeps across the rank and file at the entertainment conglomerate, according to employees and company observers, investors said they anticipate Iger will articulate a new vision for the company he built and ran for 15 years.

“It’s Bob Iger presenting for the first time in public. Everybody’s going to be listening,” said Bank of America analyst Jessica Reif Ehrlich. “This is the right place to do it. It’s the right time.”

Disney and Iger are under pressure from activist investor Nelson Peltz, chief executive of Trian Fund Management, who has launched a proxy battle to place him on the board. He has accused the company of underperforming financially, despite its global scale and collection of powerful entertainment brands.

The company urged its shareholders to reject Peltz’s bid, noting in a Feb. 2 letter that the board has the right combination of experience, skills and perspective to guide Disney through an unprecedented period of change. It also endorsed Iger’s leadership, adding that Disney generated a shareholder return of 554% under his previous tenure as CEO.

Shortly after returning as CEO in November, Iger announced plans to restore decision-making power to the company’s creative executives. That change resulted in the departure of Kareem Daniel, head of the Disney Media and Entertainment Distribution group created by Iger’s predecessor, Bob Chapek, to consolidate budgeting and distribution for the studio’s content.

In Disney’s famously tight-lipped culture, even senior executives say they do not know what is to come. Discussions about the restructuring are taking place at the highest level of the company, involving general entertainment chief Dana Walden, film Chairman Alan Bergman, ESPN’s Jimmy Pitaro and Chief Financial Officer Christine McCarthy.

Awaiting update on streaming strategy, ESPN

Wall Street is waiting for Iger’s assessment of Disney’s streaming business, which he launched with the 2017 announcement that the company would form its own direct-to-consumer service. The company has amassed a combined 235.7 million subscribers across its trio of streaming services – Disney+, Hulu and ESPN+ – even as losses rose to $1.5 billion in the most recent quarter.

Investors have begun prioritizing profit over subscriber growth since last year, when Netflix reported its first loss of subscribers in more than a decade. Disney has said it expects its direct-to-consumer service to reach profitability in fiscal 2024.

Disney’s longtime cash cow, ESPN, is another focus for Wall Street. The sports network has been caught between declining cable subscribers and increasing fees paid to sports leagues.

“I’m not expecting numbers to be changed, but I am expecting thoughtful conversations that are honest about these businesses,” said media analyst Michael Nathanson of SVB MoffettNathanson.

Wall Street analysts are expecting first-quarter earnings of 78 cents a share, down from $1.06 a year ago, on revenue of $23.37 billion, up from $21.8 billion a year ago.

Analysts polled by FactSet estimate Disney+ will have 163 million subscribers, down modestly from the previous quarter.