Bob Iger’s repairs at Disney’s crumbling castle need more time

Repairing the crumbling castle that is the Walt Disney Co. is turning out to be a more complex and longer-than-expected job for Bob Iger.

Last November, Iger returned as Disney’s chief executive with a two-year contract that would have ended in December 2024. At the time, Wall Street investors were overjoyed with the news of his comeback, with one analyst’s note proclaiming “The Magic is Back.”

From November: “Steve Jobs Syndrome” strikes as Disney brings back Bob Iger

Late Wednesday, Disney

announced that Iger’s contract has been extended until December 2026, and the company also noted that the board’s vote to extend his contract will provide continuity of leadership and give them more time for “a CEO succession plan.”

Rich Greenfield, a partner with LightShed partners, said on Twitter that he had predicted this would happen. In early 2023, Greenfield wrote in a blog post of predictions for the year that Disney would extend Iger’s contract until 2027, because one of the entertainment giant’s biggest problems has been the declining quality of its content.

“Disney’s biggest challenge is that its IP/content creation has been underwhelming over the past few years — especially its animated content,” Greenfield wrote. “Pixar and Disney Animation have not had a breakout hit that impacted children’s play patterns and both Marvel and Lucasfilm feel increasingly tired from overuse.”

He also noted in post late last month that a projected lengthy turnaround time of its lifeblood content business is only going to be extended by the ongoing Writers Guild strike in Hollywood.

“Disney may not have a single $1 billion global box-office film released in calendar 2023,” Greenfield wrote in late June.

In its fiscal second-quarter earnings report in May, the company reported that it lost 4 million Disney+ subscribers, while cutting some losses at the streaming business. That news, however, began a downward trajectory for the stock, which has lost about 10% of its value since then. Wall Street analysts have become more negative recently about the stock, lowering their price targets or ratings.

Among the host of other issues at the Magic Castle: smaller crowds reported at its theme parks this summer; a lukewarm debut of the latest Indiana Jones movie; a potential rocky future for its ESPN service as a stand-alone streamer; and the Disney+ streaming business still struggling to become profitable. On top of these challenges, the company’s well-regarded chief financial officer, Christine McCarthy, stepped down last month to take a family medical leave, replaced on an interim basis with the CFO of the company’s parks unit, Kevin Lansberry.

“With the recent exit of CFO Christine McCarthy, Disney was facing two senior executive searches,” said TD Cowen analyst Doug Creutz in a note titled “The Indispensable Man.” “Pushing out Iger’s departure date makes even more sense in that context,” he said, adding that Disney’s “challenges are structural in nature and not easily solved.”

As with most construction projects that take longer than expected, repairs at Iger’s Mouse House are going to take much longer than his initial two-year contract indicated. Hopefully by that time, a new leader will also be in place to succeed him.

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