In a little over 30 minutes, Bob Iger covered a lot of ground in his Morgan Stanley conference appearance Thursday. Among the topics on offer: how he’s working with the board to find his successor, how he values Hulu, and what’s in store for the standalone ESPN.
Among the things he did not say was “Bob Chapek” — Iger instead went with “my predecessor” a few times — but he had plenty to review about why he felt compelled to return to Disney in November. Iger said he feels that steps have been taken to stabilize the company and resolve the disconnect between revenue generation, spending, and marketing. He added that Disney “had to come to grips” with costs getting out of control and his plan to cut 7,000 jobs and save $5 billion.
Up next is who manages Disney next.
“We all know that not only is it an important decision, we don’t have endless time to make it,” he said. “My goal is essentially to leave here in two years with a trajectory, whether it’s my successor, or the structure of the company or the creative pipeline or revenue generation that is very optimistic and positive.”
In discussing Hulu, Iger left the door open for an outright sale. On Thursday, he noted that Disney has an arrangement that could allow them to own “100 percent” of Hulu — an expensive proposition.
“It’s a solid platform, and it’s also a very attractive platform for advertisers,” he said. “It’s already proven to be valuable for them, and advertising has proven to be valuable for us. But the environment is very, very tricky right now, and before we make any big decisions about our level of investment and our commitment to that business, we want to understand where it could go.”
To that end, Iger said he asked a lieutenant to update him on what every major streamer said about their future outlook… and found everyone intends to be profitable in the next couple of years and grow subscribers by the tens of millions. Good luck with that.
“It can’t possibly happen,” he said. “There are six or seven basically well-funded, aggressive streaming businesses out there all seeking the same subscribers, in many cases competing for the same content. Not everybody’s going to win.”
That leaves ESPN. (Iger joked that Morgan Stanley was “salivating” over ESPN being reported separately in the future: Disney is being divided into three pieces for reporting purposes: Disney Entertainment, Disney Parks, Experiences and Products, and ESPN.) He stressed that in his new Disney, he remains optimistic about the ESPN brand even as he acknowledges that linear television is crumbling. Inevitably, he believes, ESPN will become a direct-to-consumer streaming business as more sports migrate to digital — and another competitor for subscribers.
“ESPN ratings have actually held up nicely, particularly when you consider the erosion of the platform that they’re on,” Iger said. “Then we have to look at what ESPN+ has done, which in 25 million subs is nothing to sneeze at. When you combine the strength of live sports and the brand and the value of advertising, you can create a business that’s not just subscriber dependent, but dependent on advertising and subscriber revenue. I think there’s a reason to be bullish.”
During Iger’s Morgan Stanley conference, he also addressed the health of some of Disney’s other brands, namely Marvel and Star Wars. Read about those here.