DirecTV and The Walt Disney Co. said they have come to a carriage agreement in principle, ending a blackout that kept subscribers from watching ESPN and other Disney-owned channels as the football season began.

After a two-week negotiating impasse, DirecTV agreed to continue to carry all of Disney’s entertainment, sports and news programming.  The channels are being restored immediately as the two sides finalize and sign a deal.

The satellite TV company said it gained the opportunity to offer multiple genre-specific options to consumers, including sports, entertainment and kids and family packages that include linear Disney networks, as well as its streaming services, Disney Plus, Hulu and ESPN Plus.

Those streaming services will be included in select DirecTV packages.

DirecTV also has the right to distribute the ESPN flagship streaming service at no additional cost to DirecTV customers when it is available.

Financial terms were not disclosed.

“Through this first-of-its-kind collaboration, DirecTV and Disney are giving customers the ability to tailor their video experience through more flexible options,“ the companies said in a statement. “DirecTV and Disney have a long-standing history of connecting consumers to the best entertainment, and this agreement furthers that commitment by recognizing both the tremendous value of Disney’s content and the evolving preferences of DirecTV’s customers. 

“We’d like to thank all affected viewers for their patience and are pleased to restore Disney’s entire portfolio of networks in time for college football and the Emmy Awards this weekend,” the statement said.

During the blackout, DirecTV subscribers were deprived of the start of Monday Night Football and some college football games. There was also a dispute over carriage of the ABC News debate between Vice President Kamala Harris and former President Donald Trump, although ABC made that event available to other networks.

Earlier this week, Charter Communications reached a deal with Warner Bros. Discovery that would give Charter’s Spectrum TV customers WBD’s streaming services, including Max, as part of their pay TV packages.

Charter has signed similar deals with Disney, TelevisaUnivision, Paramount Global and AMC Networks.

With the blackout of Walt Disney Co.-owned networks keeping its subscribers from watching important college and NFL football games, DirecTV is telling subscribers to sign up for rival services.

To keep them from simply switching, DirecTV is offering its subscribers a $30 credit that will go into effect after the free trial period ends on Fubo and Sling TV.

“As the leaves turn each fall, you can be sure of two things – football season will be in full swing, and Disney will do everything it can to keep you from watching your favorite team unless they offer it to you exclusively (oh, Disney now owns all of Hulu too),” DirecTV said. “Don’t take our word for it. You can ask Spectrum customers in 2023 or YouTube TV customers in 2021.”

Disney and DirecTV failed to come to a new carriage agreement on September 1 and Disney programming, including ESPN, has been blacked out ever since.

DirecTV applauded when Fubo was able to obtain an injunction against Venu, a joint venture streaming service planned by Disney, Fox and Warner Bros. Discovery. Fubo was able to convince a federal court judge that Venu violated antitrust laws by being able to offer customers packages with on sports channels–something Disney hasn’t offered to other distributors, including DirecTV

"This is a small way to help you stay connected to your sports and entertainment while we work with Disney to reach a new agreement,” DirecTV said.

Networks owned by The Walt Disney Co. went to black on DirecTV just after 7:00 p.m. ET on Sunday as negotiations apparently failed to reach a new carriage agreement. The two sides had extended the deadline of 5 p.m. as conversations continued.

The blackout comes during the first full weekend of college football and days before the start of the NFL season.

DirecTV said that Disney insisted that the satellite TV provider buy other Disney channels and services in order to continue to show sports programming on networks like ESPN.

DirecTV also said any licensing agreement would be contingent on DirecTV waiving future challenges to Disney on antitrust grounds. Disney, Fox and Warner Bros. Discovery have been enjoined by a U.S. court from enabling their streaming joint venture Venu from offering only the sports networks to subscribers while preventing other distributors from doing so. 

“The Walt Disney Co. is once again refusing any accountability to consumers, distribution partners, and now the American judicial system,” Rob Thun, chief content officer at DirecTV, said. “Disney is in the business of creating alternate realities, but this is the real world where we believe you earn your way and must answer for your own actions. They want to continue to chase maximum profits and dominant control at the expense of consumers — making it harder for them to select the shows and sports they want at a reasonable price.”

 Disney blamed DirecTV for the breakdown.

“DirecTV chose to deny millions of subscribers access to our content just as we head into the final week of the U.S. Open and gear up for college football and the opening of the NFL season. While we’re open to offering DirecTV flexibility and terms which we’ve extended to other distributors, we will not enter into an agreement that undervalues our portfolio of television channels and programs,” ESPN chairman Jimmy Pitaro said. “We invest significantly to deliver the No. 1 brands in entertainment, news and sports because that’s what our viewers expect and deserve. We urge DirecTV to do what’s in the best interest of their customers and finalize a deal that would immediately restore our programming.”

DirecTV noted that Disney's actions mirrored changes in the industry, with the best programming, including sports shifting to streaming.

“Consumer frustration is at an all-time high as Disney shifts its best producers, most innovative shows, top teams, conferences, and entire leagues to their direct-to-consumer services while making customers pay more than once for the same programming on multiple Disney platforms,” Thun added. “Disney’s only magic is forcing prices to go up while simultaneously making its content disappear.”

The dispute went public Saturday as both companies began airing messages warning that a blackout was imminent.

Disney's message warned DirecTV and DirecTV Stream customers they could "lose the ESPN networks" and said they should go to KeepMyESPN.com to learn more.

DirecTV's urged viewers to go to its website TVPromise.com to get more information.

Disney agreed to modify how some of its channels are packaged in the agreement ending last year’s blackout with Charter Communications. Charter customers also got some Disney streaming services for free as part of their pay TV subscriptions.

As the expiration of their carriage agreement nears, The Walt Disney Co. and DirecTV are going public with their dispute.

During Saturday’s college football games, both sides aired dueling messages warnings that future games could be blacked out, with Disney telling viewers to contact DirecTV and DirecTV telling subscribers to contact Disney to avert the disruption.

The current agreement runs out September 1. (NOTE: The 5 p.m.  ET deadline passed with the Disney networks still appearing on DirecTV. Apparently the two sides agreed to an extension while they continue to negotiate.)

Disney's message warned DirecTV and DirecTV Stream customers they could "lose the ESPN networks" and said they should go to KeepMyESPN.com to learn more.

DirecTV's urged viewers to go to its website TVPromise.com to get more information.

“We remain in active discussions to provide customers with more flexible packages and lower-priced alternatives in one simple experience," a DirecTV spokesperson said.

DirecTV has said it wants to be able to offer lower priced packages that include Disney's sports channels, such as ESPN, but not all of its entertainment channels.

Disney agreed to let Venu, its sports joint venture with Fox and Warner Bros. Discovery stream that type of skinny bundle, but Venu has been prevented from launching by an injunction arising from an antitrust suit filed by Fubu, a sports-focused streaming service that is forced to pay for all of Disney's channels to get ESPN and other Disney sports programming.

Disney agreed to modify the way some of its channels are packaged in the agreement that ended last year's blackout with Charter Communications. Charter customers also got some Disney streaming services for free as part of their pay-TV subscriptions.

"We're working hard to get it done. We want to get it done. We want to deliver for sports fans," ESPN Chairman Jimmy Pitaro told Reuters.

"We do believe that we bring a lot of value. And hopefully DirecTV recognizes the value that we bring and we can continue to serve our fans through their platform," Pitaro added.

The Walt Disney Co. said that its direct-to-consumer business stopped bleeding red ink in the third quarter as the company posted $2.6 billion in net income, reversing a loss from a year ago.

The company said its streaming business was profitable for the first time in Q3, a quarter earlier than the company had forecast, with ESPN Plus contributing a profitable quarter. DTC streaming operating income was $47 million, compared to a year-ago loss of $512 million as revenue rose 15% to $6.4 billion.

Losses for Disney Plus and Hulu were reduced to $19 million from $505 million a year ago, with revenues rising 15% to $5.8 billion. 

For the quarter, Disney Plus added 700,000 “core” subscribers, finishing with 118.3 million customers. Domestically, it added 800,000 subscribers, ending the quarter with 54.8 million customers.

Hulu added 900,000 subscribers, giving it 51.1 million customers at the end of the quarter. It added about 900,000 subscription VOD-only customers for a total of 46.7 million, while losing 100,000 Live TV Plus SVOD customers, to finish with 4.4 million,

The company said it was ‘on track” for streaming profitability to improve, with both its entertainment direct-to-consumer services and ESPN Plus being profitable in Q4, with Disney Plus core subscribers growing “modestly.”

Overall, Disney had third-quarter net income of $2.6 billion, or $1.43 a share, compared to a loss of $460 million, or 25 cents a share, a year ago.

Revenues rose 4% to $23.2 billion.

After warding off a proxy fight from investors complaining that Disney wasn’t as profitable as it should be, the company said it increased targets for adjusted earnings-per-share growth to 30% for the full year.

The company said that operating income at ESPN rose 4%, helped by a 17% increase in domestic advertising revenue. A drop in operating income at Star India resulted in Disney’s sports segment’s operating income declining by 6% to $802 million.

Operating income at Disney’s Entertainment segment more than doubled to $1.2  billion as revenues rose 4% to $10.6 billion.

Disney’s linear networks had operating income of $966 million, down 6% from a year ago. Revenue was down 7% to $2.6 billion.

Operating income at Disney’s Experiences division — theme parks and cruises —was down 3% to $2.2 billion, despite a 2% increase in revenue to $8.4 billion as consumer demand grew less than expected the company said.

“Our performance in Q3 demonstrates the progress we’ve made against our four strategic priorities across our creative studios, streaming, sports and experiences businesses,” CEO Bob Iger said. “With our complementary and balanced portfolio of businesses, we are confident in our ability to continue driving earnings growth through our collection of unique and powerful assets.” 

Fox got a boost from its Tubi streaming unit and its share of total TV usage among media companies rose in May, according to new monthly figures from Nielsen.

The Walt Disney Co. remained at the top of Nielsen’s ranking of the 13th biggest media distributors, followed again by YouTube and NBCUniversal.

The only change in the rankings came as Roku Channel hopped over Weigel Broadcasting into 10th place on the list, with a 1.5% share.

Nielsen released its first monthly report on media distributors last month. The new measure is designed to provide a different perspective than the ratings company’s other monthly report, which compares the share of television usage of broadcast, cable and streaming, including a breakdown of the top streamers.

Nielsen said the new report removes the siloes of traditional television versus streaming and puts all content distributors on a level playing field to allow given how TV is being watched today.

In May, Disney’s share of television usage was 11.4% down from 11.5% in April. YouTube’s share rose to 9.7% from 9.6% the prior month.

Comcast’s NBCUniversal had a 9% share, up from 8.9%; Paramount Global had an 8.8% share, unchanged; Warner Bros. Discovery had 8.1%, unchanged, and Netflix garnered 7.5%.down from 7.6%

No. 7 Fox’s share jumped to 6.4% from 6.1%. Nielsen said Fox’s growth was amplified by a nearly 5% monthly viewing increase from its free ad-supported streaming television (FAST) platform Tubi TV, and a 1.6% monthly increase from Fox News Channel.

Amazon, now including Twitch, had a 3.1%, down from 3.2% and the E.W. Scripps Co. got 2.3% of viewing, unchanged from April..

The Roku Channel had a 1.5% share, up from 1.4%, moving it ahead of Weigel Broadcasting, which also had a 1.5% share, unchanged.

Rounding out the list were A+E Networks, with a 1.2% share, down from 1.3%; Hallmark Media at 1.1%, down from 1.2%; and AMC Networks with a 1% share, down from 1.1%.

Nielsen said it made some changes since releasing the first list last month with some entities added and mapped to the appropriate distributor, specifically NBA-TV and Hogar de HGTV have been mapped to Warner Brothers Discovery, and Twitch has been mapped to Amazon. The addition of these entities to their respective distributors would not have changed the share or ranking of WBD or Amazon in April, but did impact each distributor by an increase of 0.1 share point in May.

After winning a proxy fight, The Walt Disney Co. said its entertainment business turned a profit and added subscribers in its fiscal second quarter. 

Net income was down as the company wrote off Star in India, but Disney said its overall second-quarter performance was strong enough to increase its full-year earnings per share growth target to 25%.

The company added 6 million Disney Plus core subscribers, giving it 117.6 million in total.

Disney’s direct-to-consumer entertainment business generated positive operating income of $47 million in the quarter. A year ago, it lost $587 million. Cutting streaming losses has been a priority for media companies, which have been bleeding cash trying to catch up with Netflix.

Revenues rose 13% to $5.6 billion.

Disney said its DTC business improved because of subscription revenue growth as the company raised some rates. Distribution costs were down while advertising revenues were up. 

The company said it expects entertainment DTC results to be “softer” in the current quarter because of the India business. 

“We continue to expect our combined streaming businesses to be profitable in the fourth quarter, and to be a meaningful future growth driver for the company, with further improvements in profitability in fiscal 2025,” the company said.

Combined with ESPN’s streaming business, Disney lost just $18 million in its DTC business, with revenue climbing 12% to $6.1 billion.

The company had a net loss of $20 million, or 1 cent per share, for the quarter, compared to net income of $1.3 billion, or 69 cents a share, a year ago.

The results include a $2.1 billion charge for goodwill impairments related to Star India, which was folded into a new joint venture.

Excluding the charges, earnings per share were $1.21 vs 93 cents a year ago.

Revenues edged up 1% to $22.1 billion from $21.8 billion a year ago.

Disney’s entertainment segment increased operating income by 72% to $781 million. Revenue fell 5% to $9.8 billion.

Operating income for Disney’s linear networks was down 22% to $752 million. Revenue was down 8% to $2.8 billion. 

Disney said domestic affiliate revenue was down because Charter now carries fewer networks under the carriage agreement reached last year.

Advertising revenues are down because of lower ratings, the company said.

The company reversed its DTC losses with $47 million in operating income on revenue of $$5.6 million.  The company lost $18 million on content sales and licensing as revenue fell 40% to $1.4 billion. 

Disney Plus added 8 million domestic subscribers to give it 54 million. It lost 1.6 million international subscribers (including Disney Plus Hotstar in India)

Hulu added 500,000 subscribers, increasing its total to 50.2 million. SVOD only subs increased by 700,000 to 45.8 million, which Hulu Plus Live TV lost 100,000 subscribers to end the quarter with 4.5 million customers.

Operating income fell 2% to $778 million at Disney’s sports division, including ESPN. Revenues were up 2% to $4.3 billion.

ESPN operating income was down 9% to $799 million as revenues rose 3% to $4.2 billion. Affiliate revenue was down, while advertising revenue was up. Subscription revenue for ESPN Plus increased because of higher rates.

Disney’s experiences segment, including theme parks, grew its operating income by 12% to 2.3 billion, Revenues were up 10% to $ 8.4 billion.

“Our strong performance in Q2 … demonstrates we are delivering on our strategic priorities and building for the future,” CEO Bob Iger said.

“Our results were driven in large part by our Experiences segment as well as our streaming business. importantly, entertainment streaming was profitable for the quarter, and we remain on track to achieve profitability in our combined streaming businesses in Q4,” he said. “Looking at our company as a whole, it’s clear that the turnaround and growth initiatives we set in motion last year have continued to yield positive results.” 

Now that The Walt Disney Co. CEO Bob Iger has won the proxy battle waged by Trian Fund Management's Nelson Peltz, what happens next?

Analysts said Disney can now proceed with its plans to fix the company, which had already been bearing fruit. 

In recent months, Iger has focused more on the quality of the company’s movies, announced plans to make the ESPN networks available via streaming, cut costs and reduced head count — strategies that will continue with the Disney board in place.

Disney can declare victory and move forward, MoffettNathanson senior research analyst Michael Nathanson said.

“Despite the sell-off on news that Disney’s slate won the proxy vote, Disney shareholders can celebrate the fact that the company’s stock price has regained its momentum with 23% outperformance relative to the S&P 500 this year,” Nathanson said.

Disney stock closed at $118 a share on Wednesday, down 3%.

Matthew Dolgin, senior equity analyst at Morningstar, said the outcome of the proxy fight “wasn’t nearly as consequential as suggested by the publicity that the contest generated,” partly because Trian didn’t raise issues Disney and its shareholders weren’t aware of and its suggestions weren’t revolutionary. 

“We’re maintaining our $115 fair value estimate [of Disney’s value per share] and believe the stock’s recent appreciation now reflects forthcoming improvement, which we expect will occur regardless of which side had won,” Dolgin said.

“The most important thing for Disney is that the battle is now behind it and it can return its focus to addressing the issues that need to improve,” he said.

Disney’s most notable need is to figure out how best to preserve pay TV revenue as viewership shifts to streaming services, Dolgin said.  

“We strongly disagreed with Trian’s suggestion that Disney should explore deemphasizing the importance of non-sports linear networks — perhaps by finding a strategic partner — and we think Trian trivialized how the traditional media industry’s decline factored into Disney’s struggles,” he said. 

“In our view, Disney and its peers need to enhance the value of the pay TV bundle by including streaming access — similar to what Disney did with Charter — rather than trying to position for a world without traditional pay-TV or linear networks,” Dolgin added.

Dolgin said he believes Disney is on track to improve margins and profits.

“We have no doubt that Disney, like all peers, made mistakes, but we don’t think this is indicative of an inability to right the ship,” he said.

Similarly, Nathanson said that with the proxy fight in the rearview mirror. “We believe the company has finally focused on fixing the key challenges that we were left behind by the prior CEO,” he said.

Those include restructuring management to give creative executives more control, revisiting an overexpansive Disney Plus strategy, addressing the company’s challenges in India and more aggressively managing costs as Disney’s linear networks decline.

“We think the market is finally reflecting optimism that CEO Iger along with CFO Hugh Johnston will drive upside to Disney’s long-term operating profitability,” Nathanson said. “This starts with Disney delivering upon or outperforming its fiscal year 2024 adjusted earnings per share guidance of least 20% growth and pacing ahead of its $8 billion FY 2024 free-cash-flow guidance.”

The Walt Disney Co. shareholders voted to back CEO Bob Iger and its current directors by a substantial margin, the company said during its annual meeting Wednesday.

Shareholders rejected nominees backed by Nelson Peltz’s Trian Fund Management and Blackwells Capital.

Final vote totals will be released by the company in the coming days.

Re-elected as directors were: Mary T. Barra, Safra A. Catz, Amy L. Chang, D. Jeremy Darroch, Carolyn N. Everson, Michael B.G. Froman, James P. Gorman, Robert A. Iger, Maria Elena Lagomasino, Calvin R. McDonald, Mark G. Parker and Derica W. Rice.

Management proposals about executive pay and accounting were passed, while shareholder proposals were defeated.

“I want to thank our shareholders for their trust and confidence in our Board and management,“ Iger said. “With the distracting proxy contest now behind us, we’re eager to focus 100% of our attention on our most important priorities: growth and value creation for our shareholders and creative excellence for our consumers.”

Added Disney chairman of the board Mark Parker: “We are immensely grateful to our shareholders for their investment in Disney and their belief in its future, particularly during this period of great change in the broader entertainment industry. We are fortunate to have a highly qualified Board of Directors who possess a profound commitment to the enduring strength of this company and an enormous amount of experience and expertise, including succession planning. I’m thankful for Bob and his exceptional management team, as well as Disney’s employees and Cast Members around the world, for continuing to deliver for consumers and shareholders throughout this distracting proxy battle.” 

Before the vote, Nelson Peltz spoke at the meeting, noting that Trian and its affiliates have more than $3.5 billion invested in Disney.

“We invest in great companies that for one reason or another have stumbled. We seek to collaborate with management to make them better,” Peltz said. “We want Disney to get back to creating great content, delighting consumers and creating value for shareholders.”

Peltz acknowledged that Disney and Iger had taken steps to reduce streaming losses, rationalize its content production and started several initiatives at ESPN.

Long-term, Peltz noted that Disney stock is still down from its high at about $200 a share and pointed out that since Trian started its campaign, the stock has increased 50% and has been the best performer among the Dow-listed stocks year to date.

 Iger addressed some of the company’s issues during a question and answer session at the meeting.

Iger insisted that he has “never been more confident” that streaming would  become “a key earnings growth driver for the company.” He said he expects to add subscribers and that streaming would achieve double-digit operating margins.

With Disney Plus, Hulu and the streaming version of ESPN coming in 2025, “Disney has a chance to become the ultimate streaming destination for consumers,” He said.

At the parks, Iger said that the company has numerous projects in development, and that details would be shared when there’s something tangible to discuss.

Asked about Disney’s involvement in politics and social advocacy, Iger said “our job is to entertain.” He added that by telling great stories, Disney is a source of joy, hope and optimism . . . I always believe we have a responsibility to do good in the world, not to advance any agenda.”

Iger said that he was bullish on women’s sports after Caitlin Clark helped draw record ratings for a women’s basketball game. “ESPN is pleased to be a part of that,” he said.

And asked if Disney Plus would be streaming more Taylor Swift concerts, Iger said “we’re thrilled we were able to reach an agreement with Taylor and her team to put the film of her most recent concert on Disney Plus. We’d like nothing more than to continue our great relationship with her.”

The fight for board seats has been called one of the most expensive proxy fights in corporate history.

Peltz, an activist investor, originally criticized Disney for its stock price, which had lost $70 billion in value between February and December of last year. Peltz joined up with Isaac Perlmutter, who was fired by Disney and owns 25 million Disney shares. (Disney has knocked Perlmutter for having a “personal agenda” against Iger.)

Trian has also complained about Disney’s streaming losses, the performance of its movie slate and its plans to spend $60 billion on its parks.

Peltz campaigned to get a seat on Disney’s board for himself and for Jay Rasulo, a former Disney CFO.

When Iger returned to Disney as CEO in November 2022, replacing Bob Chapek, he moved quickly with a plan to cut costs by $7.5 billion that included reducing the company’s headcount by about 5,000.

To make shareholders happy, Disney has also started paying a dividend on its stock.

In addition to Trian, another investment company, Blackwells Capital, put forward candidates for Disney’s board. Blackwells has been generally supportive of Iger, but nonetheless nominated former Warner Bros. and NBCUniversal executive Jessica Schell, Tribeca Film Festival co-founders Craig Hatkoff and TaskRabbit founder Leah Solivan as directors.

Last month, Iger called the proxy battle a distraction to the company as it tried to navigate a new media landscape.

“We’re at this hard every day, and when you go from fixing [the company], which was significant and heavy lifting, to really creating meaningful growth for our shareholders, the only way to achieve that is by focus and this campaign is in a way to distract us, to take our eye off all those balls,” Iger said, speaking at the Morgan Stanley Technology Media and Telecom Conference.

“Focus is necessary to generate what we need to generate for the shareholders,“ he said. “It’s that simple. And I am working really hard to not let this distract me because when I get distracted, everybody who works for me is distracted, and that’s not a good thing.”

The Walt Disney Co. said that it launched Hulu on Disney Plus, which makes Hulu programming available via the Disney Plus app.

Subscribers to the Disney bundle will be able to access all Hulu programming via a new tile on the Disney Plus homepage. Customers who currently subscribe only to Disney Plus will be able to upgrade to the bunch for prices starting at $2 more per month.

Disney is under pressure to cut losses from its streaming services. Disney agreed to buy Comcast's stake in Hulu, giving it the ability to be more flexible on how Hulu is programmed, marketed and distributed.

“This marks the most significant technical, operational, and product evolution for Disney Plus since its launch — one that reflects a wider technology transformation that we have been undertaking,” said Aaron LaBerge, president and chief technology officer, Disney Entertainment & ESPN. “That work is going to drive an enhanced, more engaging user experience with Disney Plus and lays the foundation for the innovations and enhancements we are planning for the future.”

Disney will be launching an ad campaign looking to upsell consumers.  The campaign includes  out-of-home placements, custom broadcast and digital spots, cross-branded social media posts, bi-coastal experiential stunts, including on-site activations at the Disneyland Resort and Walt Disney World Resort, 

The ads use the White Stripes song We’re Going to Be Friends to highlight the combination of Disney Plus and Hulu characters.

The Disney Plus homepage also features a new greener logo, reflecting the addition of Hulu.

“The collective power of Disney Plus and Hulu — outstanding originals from the most powerful brands and studios in the industry, libraries filled with decades of iconic favorites, and industry-leading advertising and technological capabilities – is transformative,” said Joe Earley, president of Direct-to-Consumer, Disney Entertainment. “Today’s official launch of Hulu on Disney+ gives viewers even more opportunities to easily discover and enjoy thousands of titles all in one place, underscoring the extraordinary value of the Disney Bundle.”

Blackwells Capital, which is seeking seats on the board of the Walt Disney Co., said it has discovered that ValueAct Capital Management, an investment company publicly supporting Disney CEO Bob Iger in its proxy battle with Nelson Peltz's Trian Fund Management, has received $55 million to $95 million in undisclosed pension management fees from Disney.

Because of the lack of disclosure, Blackwells said shareholders should disregard ValueAct’s endorsement of Disney’s current board. It also questioned whether Disney’s board violated pension laws and Disney’s code of ethics.

Disney announced that it had entered into an information-sharing arrangement with ValueAct, a large Disney shareholder, in January. The announcement includes an endorsement of Disney’s board.

“The Board has repeatedly trumpeted ValueAct’s endorsement in proxy materials mailed to millions of shareholders, press releases, letters to shareholders, one-off engagements with shareholders and in a recent presentation delivered to proxy advisory firm Institutional Shareholder Services,” Blackwells said. 

“ValueAct’s management of Disney’s pension funds is not disclosed anywhere in any of the referenced communications,“ Blackwells added. “Meanwhile, Disney’s entire shareholder franchise population has been led to believe that ValueAct provided its independent and unqualified support of the Board independently.”

A Disney spokesman did not respond to a request for comment.. A source familiar with ValueAct's situation said the company was no longer receiving fees for managing funds for Disney when the information sharing agreement was reached, and that Disney had withdrawn its pension money from ValueAct's funds.

Blackwells said it has been demanding disclosure about Disney’s relationship with ValueAct, but has been rebuffed by Disney’s board. It also criticized ValueAct for not disclosing its relationship with Disney, most recently when ValueAct appeared last week at the Council of Institutional Investors.

“We urge fellow shareholders to join us in demanding that the Board immediately take all necessary steps to file updated proxy materials with full disclosure of the ValueAct arrangement — so that shareholders can have the information needed to cast votes that are fully informed,” Blackwells said. 

Taking a step back helped Kavita Vazirani take a giant leap forward to advocate for others.

Since 2022, Vazirani has led The Walt Disney Co.’s integrated research and insights team, supporting all media and entertainment distribution businesses and functions across the Disney Entertainment Group. Where she started, though, was as a research manager for Comcast Cable. Early on, Vazirani said, Comcast lacked infrastructure, and it was exciting to help build a Media Sciences Group that fueled a data-driven approach to media spend and predictive modeling to forecast outcomes. 

She was responsible for strategy development, planning and placement of more than $1.5 billion in paid or owned media across Comcast’s portfolio and rose to senior VP of media strategy and sciences.

“I loved the company and the culture,” Vazirani said of Comcast. “It was a big company, but still had that entrepreneurial feel.” 

In 2013, Comcast completed its acquisition of NBCUniversal and Vazirani became NBCU’s executive VP of insights and measurement. 

Vazirani focused on aligning NBCUniversal’s research, insights and measurement capabilities across all of the media company’s platforms and partnerships. She oversaw measurement and research initiatives across marketing and agency partners beyond traditional viewing patterns.

COVID-19’s Silver Lining

Then the COVID-19 lockdown changed everything. 

“I have three children. One has Down syndrome, and it was especially challenging to do virtual school with her,” Vazirani said.

Though her husband is a stay-at-home dad, the lockdown took a toll on the whole family. At the same time, the industry she worked in for decades was in a state of disruption.

“I was spending a ton of time at work, even though it was from home,” she said. “And I’m watching my husband try to do seventh grade with our daughter while our two other children are in their bedrooms in virtual classrooms.”

She said she felt overwhelmed with everything. 

Over the years while mentoring others, there’s talk of work/life balance. Now it applied to her and Vazirani shared great advice she received from a friend: “There’s a lot of balls you juggle,” she said. “The one that’s your family is made of glass and when you drop it, it will break. The other balls will bounce back. That advice stood out in my head.” 

Vazirani made the difficult decision to take a break from work and focus on her family’s needs. 

After six months at home, she took on consulting projects and connected with former colleague Debra OConnell, who is now president, News Group and Networks at Disney Entertainment. So, when a role at Disney opened up, Vazirani was ready and OConnell became her boss. 

“Kavita is one of the most strategic thinkers in the research and insights area,” OConnell said. “Her ability is not limited to simply viewing and analyzing this field as it is, but also discerning how this data may evolve in a changing industry and recognizing opportunities to work holistically across teams to achieve results.”

In addition to her role leading a modern integrated research and insights team, Vazirani runs the Disney Entertainment Group’s DE&I Council.

“Kavita is the type of person who is always thinking about other people, and how we can all work together to make the world a better place,” OConnell said. “It’s that kindness and thoughtfulness that makes her an incredible leader and the natural choice to lead our DE&I team.”

Advocating for Others

Vazirani was born in India, lived in Hong Kong and came to the U.S. to attend college. Her life’s journey and her family’s path make her a strong advocate for inclusion.

She supported women through mentor programs. She’s passionately dedicated to her local Down syndrome parenting groups, working tirelessly to help parents who are expecting a child, engage school districts and create a strong community for families.

“I always think about, how do we create opportunities for new thinking?” she said.

The brief career break was a move that would have scared many, but not Vazirani. It allowed her to focus on her family while positioning her to jump into a challenging new role stronger than ever. 

Charter Communications said subscribers of its Spectrum TV Select Plus video service are now getting the ESPN Plus streaming service at no additional cost.

The arrangement is the result of the groundbreaking carriage agreement that Charter and The Walt Disney Co., reached last year, following a contentious two-week blackout.

Charter customers also began getting Disney Plus in January.

During negotiations, Charter argued that its subscribers were already paying for Disney programming that was moving from networks like ABC and ESPN to Disney Plus.

Also Read: CEO Chris Winfrey Says Charter Wants More Deals Like Disney’s

Disney agreed to the deal, which will expand the subscriber base for both Disney Plus and ESPN Plus.

“Through our collaboration with Disney we are providing a better experience for our customers,” Charter executive VP, programming acquisition Tom Montemagno said. “Making ESPN Plus available to our TV Select Plus customers allows us to cater to sports fans’ evolving viewing habits with one high-value video package that includes the best of linear and direct-to-consumer sports content.”

“The addition of ESPN Plus to Spectrum’s offerings helps bridge the gap between linear TV and streaming services to provide a comprehensive entertainment solution for Spectrum customers,” The Walt Disney Co. president, platform distribution Justin Connolly said. “Spectrum TV Select Plus customers will now have access to ESPN’s linear and direct-to-consumer content, making ESPN Plus available to a wider audience and providing fans with even more ways to stay connected to the sports they love such as NCAA Women’s Basketball, FA Cup Soccer, NHL games and more.”

The Walt Disney Co. CEO Bob Iger said the proxy battle mounted by activist investors is a “distraction” for him and senior managers as they try to make a complex company more profitable.

“We’re at this hard every day, and when you go from fixing [the company], which was significant and heavy lifting, to really creating meaningful growth for our shareholders, the only way to achieve that is by focus and this campaign is in a way to distract us, to take our eye off all those balls,” Iger said, speaking at the Morgan Stanley Technology Media and Telecom Conference on Tuesday.

“Focus is necessary to generate what we need to generate for the shareholders,“ he said. “It’s that simple. And I am working really hard to not let this distract me because when I get distracted, everybody who works for me is distracted, and that’s not a good thing.” 

Iger was upbeat, saying that in the 15 months since he returned as CEO, the company had accomplished a restructuring that put creative at the center of Disney’s management structure, and that the company was likely to exceed its $7.5 billion cost-cutting goal.  

He said he expected operating income to grow by the low to mid teens in the second quarter compared to a year ago, exceeding the company’s recent guidance. The company is also pacing ahead of its cash-flow guidance, he said.

Iger addressed the business’s dissident shareholders who would like to see a different approach.

On streaming, Iger noted that Dana Walden and Alan Bergman, the executives now managing Disney’s streaming business, also manage the company's film and TV content creation.

“That’s really important when it comes to streaming, because streaming is a path to monetizing what they make in a much more efficient, more effective way,“ he said. ”So it starts with that.” 

Catching Up to Netflix

But Iger conceded that Disney was behind Netflix in streaming technology. 

Iger said that Disney Plus quickly grew to 100 million subscribers but “what we didn’t have was the technology that we needed to lower customer acquisition and retention costs, to increase engagement to essentially grow our margins by reducing marketing expenses.”

He said Disney was now in the process of creating all of that technology.

“Obviously, the gold standard there is Netflix,“ he said. “We need to be at their level in terms of technology. One of the reasons why their margins are so much more significant than ours is because they have that technology,” he said.

Iger added that Hulu is part of Disney’s strategy to increase engagement with its streaming business. Having Hulu within the Disney Plus app increases the volume of content available to consumers. And bundling that way tends to bring down churn rates.

“We’re finding wherever we bundle, churn rates are down significantly. So that’s a path to profitability,” he said.

Trian Asset Management, one of the shareholders seeking seats on Disney’s board, wants streaming to be more profitable. It is also against the expense of creating a new streaming version of ESPN.

Iger didn’t indicate any changes in how Disney’s sports business will be managed. The joint venture with Fox and Warner Bros. Discovery is expected to launch this year. A streaming, a la carte version of flagship ESPN would come next year.

“What we’re trying to do is be very pro-consumer,” Iger said of the company’s sports strategy. 

“You've got a lot of young people who have not subscribed to the multichannel bundle. You have a lot of people that used to be subscribers that lapsed,” Iger said.  “We want them in they want to watch the sports they want to watch. We're trying to provide them a less expensive, more focused opportunity for them.”

Iger noted subscribers who subscribe to the joint venture’s offering will be able to upgrade to the digital version of ESPN, which will have additional features, including betting.

Next Up: NBA

ESPN’s big negotiation now is with the National Basketball Association. 

“Negotiations are unfolding,” He said. It’s our goal to stay in that relationship because we love the sport.”

Iger also said that he felt good about the upcoming films from Disney’s studio — which will eventually generate engagement on Disney Plus — and that there was room to grow Disney’s parks and cruise businesses.

The Walt Disney Co. said it signed a deal with Reliance Industries that forms a joint venture in India.

The deal combines Disney's Star India with Viacom18 and values the joint venture at $8.5 billion. 

Viacom18 is a joint venture formed by  Reliance, Paramount Global and James Murdoch's Bodhi Tree Systems.

Reliance has agreed to invest $1.4 billion to grow the joint venture.

India has been a problem for Disney since it lost streaming rights to Indian Premier League cricket matches to Viacom18.

“India is the world’s most populous market, and we are excited for the opportunities that this joint venture will provide to create long-term value for the company,” said Disney CEO Bob Iger.. “Reliance has a deep understanding of the Indian market and consumer, and together we will create one of the country’s leading media companies, allowing us to better serve consumers with a broad portfolio of digital services and entertainment and sports content.”

Nita M. Ambani will be the chairperson of the venture  with. Uday Shankar serving as as vice chairperson providing strategic guidance to the JV

The JV will be granted exclusive rights to distribute Disney films and productions in India, with a license to more than 30,000 Disney content assets, providing a full suite of entertainment options for the Indian consumer.

“This is a landmark agreement that heralds a new era in the Indian entertainment industry." said Mukesh D Ambani, chairman & managing director of Reliance Industries. "We have always respected Disney as the best media group globally and are very excited at forming this strategic joint venture that will help us pool our extensive resources, creative prowess, and market insights to deliver unparalleled content at affordable prices to audiences across the nation. We welcome Disney as a key partner of Reliance group.”

The Walt Disney Co. said it will invest $1.5 billion to buy a stake in Epic Games and that the two companies will work together to bring Disney content and characters into a new Fortnite universe.

Consumers will be able to play, watch, shop and engage with intellectual property from Disney, Pixar, Marvel, Star Wars and Avatar. Users will also be able to create their own stories and games and share content, powered by Epic’s Unreal Engine.

Disney has already worked with Epic on Video games like Kingdom Hearts 3 and Star Wars Jedi: Survivor and in putting Disney characters into Fortnite.

Disney CEO Bob Iger announced the deal with Epic Games on Disney’s earnings call Wednesday.

Iger told of a meeting with executives from Disney’s experiences and games businesses.

“One of the first things they showed me were demographic trends,“ Iger said. “When I saw Gen Z and Gen Alpha and millennial’s screen time on video games it was stunning to me. [It was] equal to what they spend on TV and movies. And the conclusion I reached was we have to be there and we have to be there as soon as we possibly can in a very compelling way.” 

Iger conceded that Disney has tried to get into the video-game market before results.

“We knew through our relationship with Fortnite that there was already success when some of our characters and franchises were expressed or showed up in Fortnite,” he said.

He met with Epic Games CEO Tim Sweeney.

“His team started a discussion about what if we create a gigantic Disney World, a la Fortnite, that can live next to Fortnite and be completely interconnected with it,” Iger said.

“You can imagine the creation of short-form videos or we may even use the platform to actually distribute some of our content,“ he said. “Also people that could interact with one another and ultimately some form of shopping as well and other forms of creation.”

Disney and Epic Games began their relationship when Epic participated in Disney's Accelerator program in 2017.

“Disney was one of the first companies to believe in the potential of bringing their worlds together with ours in Fortnite, and they use Unreal Engine across their portfolio,” Sweeney said. “Now we’re collaborating on something entirely new to build a persistent, open and interoperable ecosystem that will bring together the Disney and Fortnite communities.”

The Walt Disney Co., under pressure from investors, reported higher fiscal first-quarter earnings as losses from its direct-to-consumer business fell substantially.

CEO Bob Iger opened the company's earnings call by saying the long-awaited direct-to-consumer version of ESPN would be arriving in fall 2025. He added that former Alabama head football coach Nick Saban will be joining the networks as a commentator. The new streaming joint venture announced by ESPN, Fox and Warner Bros. Discovery launches this fall.

He also said Disney Plus would be the exclusive home of Taylor Swift's concert film, starting March 15. Disney Plus will show the entire concert, including the song Cardigan, Iger said. It will also have four acoustic songs not in the theatrical or digital version of the film

Disney has also taken a $1.5 billion stake in Epic Games, with Disney storytelling integrated into Epic’s Fortnite video game.

Disney Plus “core” subscribers fell 1.3 million from the end of September, a drop expected after prices were increased in the quarter.  The company said it expects to add between 5.5 and 6 million subscribers in the second quarter.

Also Read: New Sports Venture Not Open to Addtional Partners: Lachlan Murdoch

Hulu subscribers rose 1.2 million.

Disney’s direct-to-consumer business had a loss of $138 million in the quarter, down 86% from a year ago. DTC revenues rose 15% to $5.5 billion.

The DTC business had a $420 million operating loss in the fourth quarter. 

Including ESPN Plus, Disney’s streaming businesses lost $387 million.

Disney now says it expects its streaming business to reach profitability in the fourth quarter of fiscal 2024 and ultimately to have double-digit operating margins, according to CFO Hugh Johnston.

The company said that it cut more than $500 million in selling, general and administrative and other operations expenses in the quarter. Disney is on track to exceed the $7.5 billion in cost cuts promised by Iger a year ago, it said.

Disney and Iger are facing proxy challenges from Nelson Peltz’s Trian Fund and Blackwells Capital, which are seeking seats on Disney’s board.

Trian has nominated Peltz and former Disney executive Isaac Perlmutter to be directors. (Disney contends Perlmutter, who was fired, has a vendetta against Iger.)

Trian argues that Disney should work to achieve Netflix-like margins for its streaming services, restore its creative leadership and box-office performance and commit to a reasonable payback period and return before launching a direct-to-consumer version of ESPN.

Blackwells is seeking three seats and said Disney should explore splitting into three companies. “Disney may simply be too complex for any one successor to Mr Iger to manage holistically,” Blackwells said.

In the first quarter, Disney had net income of $1.91 billion, or 1.04 a share, up from $1.28 billion, or 70 cents a share, a year ago.

The company said it expects full-year earnings per share to be up 20%.

Revenues were flat at $23.5 billion.

Earnings exceeded Wall Street expectations, but revenue was below forecasts.

To make shareholders happy, Disney said its board declared a cash dividend of 45 cents a share, a 50% increase. Disney will also be buying back share for the first time since 2018, Iger announced.  The company plans to buy $3 billion worth of shares in fiscal 2024.

Disney also said that ESPN’s domestic business grew both revenue and operating income compared to a year ago, which might allay concerns that ESPN’s business is being hurt by cord-cutting and rising sports-rights costs.

In the fourth quarter, Disney added 7 million “core” Disney Plus subscribers.

At the end of the fiscal first quarter, Disney Plus had 111.3 million “core” subscribers, down from 112.6 million in the third quarter.

Disney Plus Hotstar subscribers rose to 38.3 million subscribers from 37.6 million subscribers in the fourth quarter. 

Domestic Disney Plus subscribers fell to 46.1 million from 46.5 million at the end of Q3.  

SVOD platform Hulu had 49.7 million subscribers, up from 48.5 million subscribers in the fourth quarter. Hulu’s SVOD-only subscribers rose to 45.1 million from 43.9 million. Hulu Plus Live TV had 4.6 million subscribers, unchanged from last quarter. 

At Disney’s linear networks, operating income fell 7%to $1.2 billion. Revenues dropped 12% to $2.8 billion.

Operating income for domestic networks was down 5% to $838 million, with revenue of $2.2 billion, down 14%.

The company said advertising revenue were down because of fewer impressions at ABC and less political advertising at its local stations. 

Affiliate revenue was down 5% because of a 10% decrease in subscribers, offset by a 5% increase in rates. Some of that subscriber loss was the result of Disney’s new carriage deal with Charter, which is no longer carrying some networks.

Costs were down because there was less scripted programming on the networks because of the writers and actors strike. That programming was replace by lower cost non-scripted programming and sports programming, whose costs are accounted for in the company’s sports segment.

The sports segment had an operating loss of $103 million, compared to a $164 million loss a year ago. Star in India was responsible for $315 million in losses.

ESPN had operating income of $199 million, compared to a loss of $38 million a year ago. Revenues were up 1% to $4.4 billion.

Domestically, ESPN had operating income of $255 million, compared to a $41 million loss a year ago. Domestic revenue was up 1% to $4.1 billion.

In the quarter ESPN’s advertising revenue were down 2% because of lower rates and fewer impressions, reflecting the timing of College Football Playoff games. For the second quarter ESPN cash ad sale are pacing up by double digita in a strong sports marketplace, Johnston said.

 Affiliate revenue was flat.

ESPN Plus subscribers fell 3% to 25.2 million. Average monthly revenue per subscriber rose 14% to $6.09.

Experiences (including theme parks) operating income rose 8% to $3.1 billion as revenue rose 7% to $9.1 billion.

 “Just one year ago, we outlined an ambitious plan to return The Walt Disney Company to a period of sustained growth and shareholder value creation,” Iger said in a statement.

“Our strong performance this past quarter demonstrates we have turned the corner and entered a new era for our company, focused on fortifying ESPN for the future, building streaming into a profitable growth business, reinvigorating our film studios and turbocharging growth in our parks and experiences,” Iger said.

“As we build for the future, the steps we are taking today lend themselves to solidifying Disney’s place as the preeminent creator of global content,” he said. ”Looking at the renewed strength of all of our businesses this quarter–from sports to entertainment to experiences–we believe the stage is now set for significant growth and success, including ample opportunity to increase shareholder returns as our earnings and free cash flow continue to grow.”

The Walt Disney Co., which is adding Hulu content to its Disney Plus streaming service, told advertisers that they will be able to buy commercials across both Hulu and Disney Plus in a single campaign.

Disney has also announced the launch of a new commerce platform, Gateway Shop.

Speaking at the Disney Tech and Data Showcase in Las Vegas, where media companies and agencies are beginning upfront conversations at CES, Disney Global Advertising president Rita Ferro urged advertisers to start their streaming strategy with Disney.

Also Read: More Coverage From CES 2024

Ferro said that 2023 was Disney’s year for investments in ad technology, including the global expansion of Hulu content into Disney Plus.

“We’re not slowing down,“ Ferro said. ”This commitment means a better experience for consumers and better performance for you.” 

Disney has built its one ad tech stack to monetize its streaming assets, including Hulu, Disney Plus and ESPN Plus.

“It was made for you to buy once and deliver everywhere,“ Ferro said. “We’re not renting or borrowing someone else’s technology. We own it.

“Unlike others who just recently decided to get into advertising as part of a new business strategy, Disney has been in it since the beginning,” she added in a pointed reference to Netflix, the company Disney’s streaming business is chasing.

Ferro noted that more than half of new subscribers to Disney Plus are choosing its ad-supported tier. Viewers of the ad tier are spending almost the same amount of time with content as those not seeing ads, she said.

She added that since Disney began testing the Disney Plus-Hulu combination last year, “bundle subscribers are loving having Hulu and Disney Plus.”

The combo will also be good for advertisers “simplifying and maximizing advertiser impact across two of the top streaming services in the world with the best originals, deep libraries and an unmatched commitment to consumers.” 

Joe Earley, who heads Disney’s direct-to-consumer business, said that since the beta launch of Hulu on Disney Plus, engagement with Hulu content in the Disney Plus app is “beating even our own expectations and continues to grow week-over-week.”

He said consumers are watching more hours and a wider variety of programming.

Hulu will officially be a part of the Disney Plus app in March, he said.

The foundation of Disney’s tech stack is the dedicated Disney Ad Server, said Ajay Arora, senior VP of streaming for Disney Streaming.

“A modern technology platform requires more than just state-of-the-art ad decisioning,” Arora said. “That’s why ours draws on data from a truly unique audience graph, with thousands of audience segments, allowing you to target and reach your consumers.

 “This stack has to be agile to work in any way you want to do business,” he added ”So we’ve made automation a key part of our offering, with self-service and programmatic opportunities as core features.”

Measurement is built directly into the platform as well.

“When you combine decisioning, data, automation and measurement, it gives you a massive competitive advantage in meeting your business needs,” Arora said.

Disney also announced its latest move into T-commerce with Gateway Shop.

“It lets the viewer go from interest to action to purchase without ever leaving the viewing environment, It’s streaming commerce without disruption,” Arora said.

Gateway Shop is in testing mode now, and Disney is seeing a boost of up to 5 times the engagement by using the Gateway capabilities.

Viewers will be able to “Shop the Stream,” and Disney will help marketers with the Disney Experience Composer, a set of tools to create immersive ad experiences.

Disney said that its spending on tech has generated results for advertisers.

“Across thousands of campaigns leveraging Lucid, Innovid and Affinity measurement solutions, Disney delivered across the board,” Dana McGraw, senior VP, audience modeling and data science, said. 

“At the top of the funnel, Disney surpassed industry norms for ad recall, brand consideration, purchase intent and brand favorability in every category,” McGraw said.

Disney’s lower funnel metrics also look good. She said data from Affinity Solutions shows that Disney delivered a spend rate lift 2 times greater than campaign norms, while measurement by Innovid demonstrated Disney overperforming in campaign response rate across categories like retail, financial services and pharma. 

Advertisers will be getting results from their campaign in real time through new dashboards. 

“With Innovid, we’re currently in beta on a customizable solution that gives advertisers the ability to immediately learn whether your creative is working,” McGraw said. 

“We optimize towards the ‘winner’ in real time, which increases the return on your investment with Disney,” she explained. “Currently, we can empower this solution for web/app attribution results. Disney and Innovid are also working together on incorporating other signals as part of this effort including purchase data.” 

Saying the Magic Words

No Disney presentation would be complete without a bit of magic, and Ferro introduced ad clients to Disney’s Magic Words, which taps into the moods and emotions its content generates.

“This new technology allows us to analyze scenes and visuals across the Disney library,“ Ferro said. “Think about every reference, every line of a dialogue, every emotion, the context of each scene … Through the power of this context — brands can capture a specific moment, mood or emotions and personalize your messaging around that emotion.”

For example, think of a scene with characters at the kitchen or restaurant talking about being hungry.

“Now imagine you’re a brand running across our portfolio … or wanting to connect with food culture,” Ferro said. “You will be able to run an ad buy that optimizes your creative to a contextual mood within these collections of scenes that deal with food or dinner conversation.”

Disney Magic Words will be available this upfront to beta partners and be expanded by the end of the year, she said.

The Walt Disney Co. said it made a deal with ValueAct Capital Management as it fights off a proxy fight led by activist investor Trian Fund Management and former Disney executive Isaac Perlmutter.

ValueAct, a San Francisco-based investment fund, had been reportedly building a stake in Disney of undisclosed size. Trian and Perlmutter, the former chair of Marvel Entertainment, own 44 million Disney shares. 

ValueAct has agreed to support Disney CEO Bob Iger and the Disney board’s recommended slate of directors at the company’s 2024 meeting.

Disney also signed a confidentiality agreement with ValueAct, enabling ValueAct to receive information about Disney, have meeting with directors and executives and consult on strategic matters.

ValueAct previously invested in Spotify, The New York Times, 21st Century Fox, Nintendo, Microsoft, Adobe and Salesforce.

Disney’s stock price has plunged as cord cutting has eaten into the linear TV businesses and the cost of competing in streaming has created barrels of red ink.

Under pressure from shareholders, Disney has cut $7.5 million in costs and reduced headcount by about 5,000. 

Trian, seeking two seats on Disney’s board, complained the company’s shares have lost $70 billion in value since February, further cost-cutting is needed and the board needs executives with more media experience.

Disney has alleged that Perlmutter, whose employment at Marvel Entertainment was terminated by Disney earlier this year, has a “longstanding personal agenda” against Iger.

Another hedge fund, Blackwells Capital, plans to nominate three directors for Disney’s board.

“ValueAct Capital has a track record of collaboration and cooperation with the companies it invests in, and its co-CEO, Mason Morfit, has been very constructive in the conversations we’ve had over the past year,“ Iger said. “We welcome their input as long-term shareholders.”

Last year, Iger indicated that Disney’s linear businesses, including ABC, its entertainment cable networks and its TV stations, might not be core assets, setting up the possibility of a sale. Iger later walked that back, indicating that those assets might still have value to the company.

Disney is also in the process of creating a standalone, direct-to-consumer version of ESPN and combining Disney Plus and Hulu into a streaming business that can compete with Netflix.

“Disney is the world’s leading entertainment company. It has the best intellectual property, sports brand and parks & experiences assets in the industry,” said Morfit, who is chief investment officer for ValueAct as well as co-CEO. “As legacy technologies transition to digital platforms, we believe Disney can lead the media industry forward. We could not be more excited to partner with Bob and the board to help create long-term sustainable shareholder value.”

Blackwells said its board nominees are: Jessica Schell, a former Warner Bros. Discovery and NBCUniversal executive; Craig Hatkoff, a real estate investor and co-founder of the Tribeca Film Festival, and Leah Solivan, a venture capitalist and technology investor who founded TaskRabbit and sold it to Ikea.

“Blackwells’s highly qualified candidates have the necessary backgrounds and expertise to support Mr. Iger’s efforts constructively and complement the board,” Blackwells said. “The Trian nominees, and the reductive nature of its campaign do not provide shareholders those benefits.”

Blackwells also criticized Trian for flip-flopping, self-interest and personal quarrels that have no place in a boardroom. 

“We call on Mr. Peltz to end his peacocking so that Disney can focus on its bright future, and not be dragged backward in time," Blackwells chief investment officer Jason Aintabi said. 

"Disney’s current leadership is invaluable to its shareholders, and our three exceptional candidates are being nominated along with a business proposal specifying that any incumbent director outvoted by Blackwells’ nominees be immediately added back to the Board following the 2024 Annual Meeting,” Aintabi said. "This campaign provides shareholders a necessary alternative to what would otherwise be a solipsistic sideshow.”

Disney said its board governance and nominating committees will review the proposed Blackwells nominees and provide a recommendation to the board as part of its governance process.

“Disney has an experienced, diverse, and highly qualified Board that is focused on the long-term performance of the company, strategic growth initiatives including the ongoing transformation of its businesses, the succession planning process and increasing shareholder value,” the company said in a statement.

The Walt Disney Co. defended its record as activist investor Nelson Peltz of Trian Fund Management is teaming up with former Disney executive Isaac Perlmutter to mount a potential proxy fight.

Trian said it owns $3 billion worth of Disney stock and talked on Thursday with Disney CEO Bob Iger. Trian said Disney’s board was willing to meet, but turned down a request to put Peltz, Trian’s founder and CEO, on the board.

“Since we gave Disney the opportunity to prove it could ‘right the ship’ last February, up to our re-engagement weeks ago, shareholders lost about $70 billion of value,” Trian said. “Trian intends to take our case for change directly to shareholders.”

Disney stock closed up less than a point  Thursday. After the close of trading, Disney's board said it would pay stockholders a cash dividend of 30 cents a share.

In a statement, Disney said that Perlmutter, who was fired as chairman of Disney’s Marvel Entertainment unit as part of Disney’s cost-cutting program, owns 25 million of the 44 million Disney shares Peltz claims to control.

“This dynamic is relevant to assessing Mr. Peltz and any other nominees he may put forth as directors, as Mr. Perlmutter was terminated from his employment by Disney earlier this year and has voiced his longstanding personal agenda against Disney’s CEO, Robert A. Iger, which may be different than that of all other shareholders,” Disney said.

Disney also said that it has cut $7.5 billion in costs since Iger returned to the company and now plans to go from “a period of fixing to a new era of building.”

The cost-cutting plan convinced Peltz to back off from plans to mount a proxy battle last year. 

The company added that “with one of the strongest balance sheets in the media sector, Disney expects free cash flow to approach pre-COVID levels in fiscal 2024, and the Board and management are steadfast in our commitment to ensuring The Walt Disney Company’s long-term success for the benefit of all our shareholders.”

On Wednesday, Disney announced that it added James Gorman, CEO of Morgan Stanley and Jeremy Darroch, former group chief executive of Sky, to its board.

“Their appointments reflect Disney’s commitment to a strong board focused on the long-term performance of the company, strategic growth initiatives, the succession planning process, and increasing shareholder value,” the company said.

Disney said its board will recommend that shareholders vote for its slate of directors at the company’s upcoming meeting.

Mark Parker, chairman of Disney''s board, said the dividend was a sign things were improving at Disney.

“This has been a year of important progress for The Walt Disney Company, defined by a strategic restructuring and a renewed focus on long-term growth,” Parker said.   “As Disney moves forward with its key strategic objectives, we are pleased to declare a dividend for our shareholders while we continue to invest in the company’s future and prioritize meaningful value creation.”

Amy Lehman was promoted to senior VP of ad platforms at the Disney Entertainment & ESPN Technology unit.

Lehman, who had been VP, product management, ad platforms, now oversees the product, software engineering, operations and partnerships behind Disney’s advertising platforms.

Disney also said that Ajay Arora is getting added responsibilities as senior VP of commerce, growth and identity. He had been senior VP of product, commerce and experimentation.

In his new role, Arora leads a new team focused on creating more frictionless user experiences and driving subscription, engagement, and monetization across streaming and digital products.

“Ajay and Amy are incredibly talented technologists and strong leaders who will help us continue to build the future of Disney’s media products and businesses,” said Aaron LaBerge, president and chief technology officer, Disney Entertainment & ESPN Technology. “They, and the world-class teams they lead, will play key roles in how we expand on the foundations we've built and accelerate innovations for our industry-leading commerce and advertising platforms.”

Lehman joined Disney from Hulu in 2019. Before that she was with Adobe.

Arora joined Disney in 2021 from Netflix. Before that he was with Amazon’s Audible unit.

When — and not if — ESPN goes direct-to-consumer, subscribers to the pay TV bundle will still have access to its programming, The Walt Disney Co. CEO Bob Iger said.

Speaking on Disney’s earnings call Wednesday, Iger continued to be certain that ESPN would become a streaming service, but didn’t say when. 

“Our plan when we bring ESPN direct to the consumer — which is inevitable, it’s going to happen, we're planning for it — is to try what I'll call a soft landing,“ he said.

That means that Disney would continue to make ESPN available a part of the bundle, while also releasing a version of the network “on a true a la carte basis in DTC form,” he said.

“It is our hope that it will serve basically the consumer in two ways, in the traditional way and in a new way and we'll obviously see in terms of where we end up the blend of basically consumers that stay in the bundle and those that leave,” Iger said. 

Over the longer term, “as we model basically ESPN into the future, we see that in some cases it will continue to be sold as part of the bundle.”

Iger added that Disney has been talking with a number of entities that could strengthen an ESPN DTC service.

“I can say that there's significant interest out there,“ Iger said. ”There are obviously complexities to it, but not hurdles that are so high that we can't jump over them. And we're going to continue to explore it. And I would imagine we'll have more to say about this in the coming months.” 

Such entities could provide technology, marketing support or content, Iger said. 

On the call, Disney noted that despite worries about falling subscribers, ESPN’s revenue and operating income have grown in each of the past two years.

“We feel we have an excellent hand, by the way, and could do it [shift to streaming] without that,“ Iger said. “But why not explore strengthening our hand?”

The Walt Disney Co. added 7 million “core” Disney Plus subscribers in the fourth quarter and said it still expects its streaming business to break into profitability by the fourth quarter of fiscal 2024.

Disney’s direct-to-consumer business had a $420 million operating loss in the company’s fiscal fourth quarter, which was 70% smaller than the $1.4 billion loss posted a year ago. In the third quarter, Disney had $512 million in DTC losses.

DTC revenues were up 12% to $5.04 billion thanks mainly to higher subscription revenue because of price increases and subscriber gains. DTC ad revenue rose 4%.

Including ESPN Plus, Disney's streaming businesses lost $387 million.

At the end of the fiscal fourth quarter, Disney Plus had 112.6 million “core” subscribers, up from 105.7 million in the third quarter.

Also Read: Cable Subscribers Would Still Get ESPN After It Goes Direct to Consumer

Disney Plus Hotstar subscribers fell 37.6 million subscribers from 40.4 million subscribers in the third quarter. 

Domestic Disney Plus subscribers rose to 46.5 million from 46 million at the end of Q3.  

The ad-supported version of Disney Plus added 2 million subscribers in the quarter to reach a total of 5.2 million. More than 50% of subscribers signing up in the quarter signed up for the ad-supported version of Disney Plus, the company said.

ESPN Plus had 26 million subscribers, up from 25.2 million in the third quarter.  

Hulu had 48.5 million subscribers, up from 48.3 million subscribers in the third quarter. Hulu’s SVOD-only subscribers dipped to 43.9 million from 44 million. Hulu Plus Live TV had 4.6 million subscribers, up 300,000 from 4.3 million subs last quarter.

On the company’s earnings call, CEO Bob Iger said Disney will launch a beta version of a Disney-Hulu bundle in December. A full version is expected to launch in March.

Iger also said Disney continues to “evaluate options for each of our linear networks.” The linear networks could be noncore assets, he said in July, targeted for a possible sale.

At present, though, “our review of the business thus far has uncovered significant long-term cost opportunities, which we're implementing while continuing to deliver high-quality content,” Iger said.

Interim chief financial officer Kevin Lansberry said Disney’s enterprise-wide content spent in fiscal 2023 was $27 billion, in line with guidance, and about $3 billion below the prior year as the company “significantly reduced our spend on entertainment content.” For 2024, content spending is expected to be $25 billion, he said. 

Overall, Disney had fourth-quarter net income of $264 million, or 14 cents a share, compared to $162 million, or 9 cents a share, a year ago. 

Fourth-quarter revenues rose 5% to $21.2 billion.

Disney’s entertainment segment posted operating income of $236 million after taking a $608 million loss a year ago. Revenues rose 2% to $9.52 billion.

Domestic entertainment affiliate revenue decreased by 4%, including a 1.5% hit because of the blackout with Charter Communications.

Disney’s sports businesses, including ESPN, had operating income of $981 million, up 14%. Revenues were flat at $3.9 billion.

ESPN had operating income of $953 million, up 15%. Revenues rose 1% to 3.8 billion, with domestic ESPN linear advertising up 1%, despite losing Big Ten football and the Charter blackout.

Disney’s Experiences business had operating income of $1.8 billion, up 31%. Revenues were up 13% to $8.2 billion.

“Our results this quarter reflect the significant progress we’ve made over the past year,” Iger said in the company’s earnings release. “While we still have work to do, these efforts have allowed us to move beyond this period of fixing and begin building our businesses again.”

Iger said the company is on track to achieve about $7.5 billion in cost reductions, about $2 billion more than initially targeted.

“As we look forward, there are four key building opportunities that will be central to our success: achieving significant and sustained profitability in our streaming business, building ESPN into the preeminent digital sports platform, improving the output and economics of our film studios and turbocharging growth in our parks and experiences business,” Iger said. “We have already made considerable advancements in these four areas and will continue to move forward with a sense of purpose and urgency, and I’m bullish about the opportunities we have before us to create lasting growth and increase shareholder value.”

The Walt Disney Co. named Hugh Johnson as senior executive VP and CFO, effective December 4.

Johnson is vice chairman and CFO of PepsiCo, where he’s worked for 34 years.

He succeeds Christine McCarthy, a 23-year Disney veteran who stepped down in June after playing a role in convincing Disney’s board to remove CEO Bob Chapek and bring back former CEO Bob Iger to lead the company.

Johnson becomes a key adviser to Iger as he looks to right the Disney ship, which is dealing with big streaming losses, declining revenue and profits at its traditional media networks and facing a decision about what to do with its ESPN sports business. Disney also recently agreed to pay more than $8 billion for Comcast’s stake in Hulu and is fending off a potential proxy fight from activist investors.

“Hugh’s well-earned reputation as one of the best CFOs in America and his wealth of leadership experience in both financial and operational roles overseeing a diverse portfolio of top global brands make him a perfect addition to Disney’s senior leadership team,” Iger said. “His expertise will serve Disney and its shareholders well as we continue the transformative work we are doing to drive growth and value creation.”

In the interim, Kevin Lansberry has been acting CFO. 

“I would also like to extend my sincere gratitude to Kevin Lansberry, who stepped into the CFO role on an interim basis earlier this year,” Iger said. “Kevin has provided steady leadership and invaluable counsel to our executive management team, and he will continue to be one of our company’s most important financial leaders as he returns to his role as CFO of our Disney Experiences segment.”

Johnson joined PepsiCo in 1987. He left the company to serve as VP, retail, at Merck before returning in 2002.

“Disney is such a storied company, with the most beloved brands in the world and a strong financial foundation to support the company of the future that Bob and his team are building,” Johnston said. “Very few companies have withstood the test of time that Disney has, making the company as rare as it is special. I share Bob’s enthusiasm for Disney’s future, and I am incredibly excited to join this management team in this moment of opportunity and possibility.”

The Walt Disney Co. said it will acquire the 33% of Hulu owned by Comcast’s NBCUniversal unit.

Disney and Comcast had an arrangement in which Comcast could force Disney to buy the stake, and Comcast exercised that right on Wednesday, Disney said.

Under terms of the agreement, Disney said it expects to pay NBCU a floor price of about $8.61 billion for the 33% stake in Hulu. 

The price may change as the value of Hulu is being appraised under terms of the two companies’ agreement. If the value is higher than $27.5 billion, Disney will pay Comcast the difference between the floor value of the stake and its fair-market value.

Disney said it expects the appraisal process will be completed during the 2024 calendar year.

The acquisition of full ownership of Hulu “will further strengthen Disney’s streaming objectives,” Disney said.

Disney has been in control of Hulu since it acquired most of the assets of 21st Century Fox in 2019 for $71.4 billion in stock.

Since then, Disney and Comcast have feuded about Hulu’s strategy and value and there was some question about whether Disney would want to buy the remaining or if somehow Comcast would wind up with Hulu.

More recently, Disney has taken steps to include a Hulu section on its Disney Plus streaming service.

Hulu was started in 2008 by Fox, Disney, NBCUniversal and Time Warner as a streaming service to rival the upstart Netflix.

Charter Communications reported higher third-quarter earnings, but its fee dispute with The Walt Disney Co. resulted in a loss of video customers.

Unlike Comcast, whose stock sunk yesterday as it lost residential broadband subscribers, Charter said it added 57,000 internet customers. It also added 6,000 small and midsized business broadband customers.

Cord-cutting continued to eat into Charter’s video business, with 320,000 customers dropping cable TV, leaving it with 13.8 million Spectrum residential video subscribers. The company said the blackout of programming from The Walt Disney Co. was responsible for about 100,000 of those losses.

Also Read: CEO Chris Winfrey Says Charter Wants More Deals Like Disney’s

Third-quarter net income was $1.3 billion, of $8.42 per share, up from $1.2 billion, or $7.51 a share, a year ago. 

Revenue rose 0.2% to $13.6 billion.

Programming costs were down 9.6% to $276 million, including a $61 million benefit resulting from the temporary loss of Disney programming during the September blackout.

Video revenue fell 8.6% to $4 billion. Third-quarter residential internet revenue increased 3.7%.

Charter added 577,000 residential mobile lines, an acceleration from last year’s 382,000 additions. Revenue from mobile rose 33.8% to $581 million.

“We continue to make significant progress against the multi-year strategic initiatives we outlined last year,” CEO Chris Winfrey said. “These initiatives drive continuing improvements in the quality of our products, and when combined with our customer-friendly pricing and packaging and high-quality service, will drive significant, long-term growth in shareholder value.”

Breaking out ESPN’s financial results for the first time, The Walt Disney Co. said that the sports-programming titan had operating income of $1.89 billion for the first nine months of the company’s fiscal year, down 8% from the same period a year ago.

The disclosure, in a filing with the Securities and Exchange Commission, is the result of a reorganization at Disney that sets up the company’s sports business as a separate division.

ESPN revenues were up 3% to $12.6 billion for the first nine months of the fiscal year

ESPN has been squeezed by higher costs for sports rights and flat revenue as cord-cutting erodes its cable TV subscriber base.

In the U.S., ESPN's operating income is down 4% to $1.9 billion. Revenues are up 2% to $11.4 billion.

So far this year, Disney’s new sports group, which includes ESPN and Star India, has generated affiliate-fee revenue of $10.8 billion, advertising revenue of $4.4 billion and subscriber-fee revenue of $1.1 billion.

Disney is reportedly engaged in talks to sell Star in India.

NOTE: An earlier version of this story mistakenly included losses at Star in ESPN's operating income and revenue results.

The Walt Disney Co. and Charter Communications ended the network carriage dispute that resulted in a blackout with a unique deal that involved the media company’s streaming properties as well as its traditional television networks.

Disney agreed to provide Charter with the streaming services that the cable operator argued had programming that its subscribers already paid for, while Charter got flexibility to drop some of Disney’s lower-rated, “long-tail” cable networks.

Net-net, Charter will be paying more to Disney, with the increase in wholesale fees for streaming exceeding cuts in payments for cable networks that are being dropped, most analysts have concluded.

MoffettNathanson analyst Robert Fishman looked at the Charter deal and has tried to game out how a similar deal would work out for other media companies.

Bottom line: the deal probably benefits Disney, but will be a tougher pill to swallow for its rivals.

The Charter deal would lead to several long-tail networks vanishing. S&P Global Intelligence listed some of those networks, and estimated when they would face the axe, based on when deals were up for renewal.

Fishman looked at the revenue those networks generate and how much that revenue means to their parent companies. He also weighed that loss against the upside of increased carriage of those media companies’ direct-to-consumer services.

“The most obvious risk to all media companies following the Charter renewal is exposure to longer-tail networks that could be dropped in future renewals,” Fishman says in his report.

Fishman estimates that U.S. affiliate fees for Disney account for about 17% of the company’s revenue. By comparison, affiliate fees represent 48% of Fox’s revenue, 22% of Comcast NBCUniversal’s revenue and 21% for both Warner Bros. Discovery and Paramount.

For Disney, those long-tail networks — Baby TV, Disney Junior, Disney XD, Freeform, FXM, FXX, Nat Geo Wild and Nat Geo Mundo — represent 8% of affiliate fees. 

For NBCU, networks like Universal Kids, Oxygen, Syfy and E! Account for 17% of affiliate fees. Paramount networks MTV2, TeenNick, Nicktoons, VH1 and Nick Jr. account for 16% of affiliate fee revenue. Similarly at WBD, Discovery Family, Discovery Life, American Heroes, Travel, Destination America, Cooking Channel, Motor Trend, Science, truTV and Boomerang represent 15% of affiliate fees.

Fishman doesn’t see any of Fox’s cable networks at risk of being dropped.

Losing carriage of the long-tail networks would also cost media companies advertising revenue. For WBD, this would impact 10% of ad sales; for Disney, 9%; for Paramount, 7%; and for NBCU, 5%.

Adding affiliate fee and ad sales for those long-tail networks, Fishman figured 13% of WBD’s linear business revenue is at risk. That’s more than the 12% for NBCU, 11% for Paramount and 8% for Disney.

While distributors like Charter are saving money by dropping long-tail networks, Fishman argued, they will be paying single-digit percentage increases in how much they pay for the cable networks they continue to carry.

He estimated that would leave Disney’s affiliate revenues down 1% to 15.4 billion. The drops would be bigger elsewhere, with NBCU down 17% to $7.5 billion; Paramount down 16% to $5.4 billion; and WBC down 12% to $7.9 billion. Fox’s affiliate revenues would grow 8% to 7.7 billion.

What happens to streaming revenue as DTC services become part of a cable subscription is a bit more complicated. Fishman assumes that future deals will give the 60% of cable customers who don’t currently subscribe to the various streaming services and that viewers who already have the ad-supported versions of streaming services independently will drop them, rather than pay twice.

Fishman sees Disney Plus subscriber revenue rising 5% in the Charter deal, even at wholesale price levels. But other services would see less of a gain because distributors would argue that more of their programming is already including in the cable bundle, notably NFL football now on Paramount Plus and Peacock.

Fishman estimates that under this scenario, WBD subscription revenue would be flat at $3.9 billion, Paramount Plus would drop 6% to $2.8 billion and Peacock would fell 13% to $1.3 billion.

(AMC would get a big boost on a small base — up 33% to $700 million — with the added distribution cable operators could provide to AMC Plus, Fishman noted.)

All in, looking at traditional TV affiliate-fee and ad revenue and streaming subscription revenue, Disney is the only winner, while WBD sees revenues dropping 8%, Paramount down 13% and NBCU 17% lower.

Fishman notes that affiliate fees are high-margin revenue. “On the flip side, a reduction to DTC subscription revenues could have a bigger long-term impact to streaming profitability with the need to reassess associated content spending to drive subscriber growth,“ he said. “Although, this would be at least partially offset as including streaming services within the Pay TV bundle offering would help substantially reduce churn.” 

In terms of earnings, Fishman is cutting his estimate for WBD by 4% for 2023, 2% in 2024 and 2% in 2025.

Ar Paramount, the earnings forecast is 1% lower for 2023, 2% in 2024 and 5% for 2025.

“At Fox, we are decreasing our FY 2024 by 2% estimates to better incorporate weaker ad trends at cable networks and higher corporate costs, but we leave our affiliate and retrains forecasts unchanged as the company stands to take an increasing share of the overall pie as distribution partners tighten the screws with their other content partners,” Fishman said.

Mofftet Nathanson is maintaining its “buy” ratings on Disney and Fox, its “neutral” ratings on WBD, AMC and Netflix and its “sell” rating on Paramount, but it is lowering its target prices for Fox, AMC and Paramount.

Byron Allen, who put in a $10 billion bid for The Walt Disney Co.’s traditional TV assets, said he’s ready to buy when Disney is ready to sell.

Allen, speaking on CNBC, said that he has spoken with Disney CEO Bob Iger, but Disney has indicated that it is not yet ready to sell the assets, which include ABC, local TV stations and cable networks like FX and National Geographic, and it might decide not to.

But Allen said that when Disney does decide to sell, obtaining financing for the $10 billion deal will not be a problem. “There’s plenty of capital to buy assets like this,” he said.

The real problem with any deal involving Disney’s television assets is obtaining government approvals and Allen Media Group is more likely to be able to pass regulatory muster than other potential buyers, he said.

“A lot of folks out there have plenty of cash, but they can’t do it,” Allen said. “I don’t think the tech companies can get it done. Tech companies can’t buy a lemonade stand. I don’t think Washington, D.C., is going to roll out the red carpet for them. A lot of the media companies are too big to do it and I don’t think D.C. will be supportive of private equity and hedge funds buying these types of assets.”

Allen said ABC and the local stations were important assets because so many people still get their news from the network and its stations.

“They’re going to be really careful with who they approve and it’s going to be an owner-operator like me,“ he said. “I’ve invested a little over a billion dollars buying ABC, NBC, CBS and Fox affiliates around the country. Local news is very important.”

Allen noted that Iger, who indicated in July that the television assets may not be “core” to Disney, has not yet decided to sell them. 

“Bob and I have been talking for some time,” Allen said. “We said we’re ready to go when you’re ready to go. Now they may never be ready … but if they are serious about doing it, we’re ready to go.”

Even if Disney decides not to sell, Allen said there were other television assets that are likely to go on the block.

“Folks are going to need to sell so they can fund their streaming initiatives,” he said. “We believe in linear and streaming. We’re seeing something we’ve never seen before. These 100-year-old legacy companies are having to reinvent themselves. They’re trying to build a new airplane while they’re flying their old airplane mid-air.”

Allen said the traditional media assets are still valuable and that he would be able to run them in a more efficient manner.

"I'm a firm believer that Americans are never going to wake up and say: ‘I don’t want local news. I don’t want college football. I don’t want NFL football,’ ” Allen said. “So I’m highly confident that these local television stations are going to have a great deal of value well into the next decade.”  

Allen added that he started his company from his kitchen table. “I’ve had to learn how to produce things very efficiently and I’ve been able to take certain assets and spend less to achieve more,” he said. “So I think we can do quite well if given the opportunity to buy an asset like this.”

When Charter Communications took on The Walt Disney Co. it was risking a huge backlash from its cable TV customers, according to a new report from Beta Research. That’s because Beta’s survey found that three of the networks blacked out in the three-week dispute — ESPN, ESPN2 and Disney Channel — were the three networks most viewers described as a must-have channel.

Charter said it was prepared to walk away from ESPN and the other Disney cable channels, but subscribers don’t seem to feel the same way.

Beta regularly surveys cable subscribers about what channels they must have. In the latest survey conducted in June, ESPN was mentioned by 74% of viewers, ESPN2 was mentioned by 67% of subscribers and Disney Channel was mentioned by 66% of those responding.

Among the other networks cited by subscribers as “must-have” included Discovery Channel, ID, Nickelodeon, National Geographic, History, Weather Channel and Food Network.

To viewers, ESPN’s value was $2.45 a month, higher than any other channel. Disney gets more than that from cable operators for ESPN. ESPN was followed by Disney Channel at $2.15 a month and ESPN2 at $2.15 a month.

Also Read: Disney and Charter Patch Up ‘Broken’ Pay TV Model, Sign Distribution Agreement

In the survey, 48% of adult respondents said that ESPN was important to their enjoyment of cable, more than any other channel.

ESPN also scored high when people were asked about their five favorite cable networks. ESPN was first among men, named by 37%. It was also mentioned by 15% of women, tying it for sixth on the list.

The other favorite networks named by men were History, Discovery, Comedy Central and ESPN2.

Women’s top favorites were Food Network, ID, HGTV, Lifetime and Disney Channel.

Beta Research spoke to 1,500 cable and satellite subscribers aged 18 and up in June in preparing its report, which covered 42 basic cable networks.

Comedian and media mogul Byron Allen has made a $10 billion offer for ABC and other linear networks owned by The Walt Disney Co., a spokesman for Allen and Allen Media Group confirmed.

TV station owner Nexstar Media Group, which bought The CW network, also has expressed interest in buying ABC and its stations from Disney.

Disney CEO Bob Iger at an investment conference in July said that the company’s linear networks, including ABC, may longer be “core” businesses for Disney, indicating a sale or a spinoff was being considered.

Disney has been at the center of the changes affecting the TV business. It jumped into streaming with Disney Plus, gaining millions of subscribers but losing billions along the way. It is also considering selling a stake in ESPN. 

Disney’s networks were blacked out in a dispute with Charter Communications, which declared the cable bundle was broken and that it was content to proceed without ESPN and other Disney channels as long as their best content was going towards its streaming properties.

The dispute was resolved before the opening Monday Night Football game this week, with Disney letting Charter drop some Disney cable channels and resell Disney Plus and ESPN Plus.

The Allen bid, first reported by Bloomberg, is for the ABC Television Network and the eight ABC Owned Television Stations, plus cable networks including FX and National Geographic.

Allen, who has already acquired The Weather Channel and a group of TV stations, has said he’s prepared to spend as much as $10 billion to buy stations and other TV assets.

The bid is reportedly based on an 8 times multiple of estimated earnings before interest, taxes, depreciation and amortization (EBITDA) generated by the Disney TV businesses. The price could be adjusted based on the actual EBITDA figures.

Disney did not respond to requests for comment on the bid by Allen. Disney has said it is considering strategic alternatives for the TV business, but no decision about a sale has been made.

There was also a report that Disney has held talks with Nexstar about selling ABC and the stations.

Former Nexstar president Tom Carter, now an adviser to Nexstar chairman and CEO Perry Sook, told an investment conference earlier this week that there would be “little friction” if Nexstar tried to buy the ABC stations. “We think there could be some opportunities depending on how things fall out.”

 Wells Fargo analyst Steven Cahall estimates the ABC network and its owned-and-operated stations generate about $2.2 billion in retransmission-consent fees from distributors and programming fees from affiliates, plus $2.7 billion in advertising revenue, for a total of about $5 billion. 

Cahall estimates that the network breaks even in terms of EBITDA and the stations generate about $565 million in EBITDA.

“Any buyer of ABC would require long-term programming agreement for current shows from Disney’s studios and ESPN sports currently on ABC,“ Cahall said. “We think this would all justify an EV/EBITDA multiple closer to 8 times.” 

Cahall said he thought investors would be in favor of Disney shedding its lower-growth linear TV assets.

Charter Communications, with popular programming from The Walt Disney Co. blacked out from its 14.7 million subscribers, sees its talks with Disney as a chance to fix a broken TV model.

“Disney and Charter have the opportunity to work together on transforming the industry for the long-term benefit of both companies and consumers — but we are either moving forward together, or moving on,” Charter said in a presentation for investors and analysts released Friday.

Part of that plan is an agreement that lets people who don’t like sports buy a bundle of programming that doesn’t force them to pay for expensive networks like Disney’s ESPN.

Without a new type of agreement Charter execs said they could see moving ahead without Disney content, including not paying retransmission fees for Disney's ABC broadcast stations.

Also Read: Charter To Drive Down the Cost of Pay TV With Groundbreaking New Distribution Strategy for Regional Sports Networks

 On a call with analysts and investors Friday morning, Charter CEO Chris Winfrey apologized to Charter subscribers for the blackout.

“I'm sorry that Disney has removed its programming from your lineup and for the majority who don't actively watch Disney content, I'm sorry Disney has made you pay for channels you don't watch,” Winfrey said. 

“We've almost always avoided these kinds of disputes and disruption to your service. We had to draw a line in the sand on your behalf. We haven't been able to stop  programmers from increasing the cost of their channels and your packages, but we think that making sure you get value and flexibility and the programming you pay for well, that's worth fighting for.”

In terms of financial impact, Charter said it is currently paying about $2.2 billion in annual programming costs to Disney, not including the impact of advertising revenue for both parties

It said only about 25% of Charter video subscribers regularly engage with Disney content. 

“Disney pulled its content which will impact our operations and financials,” Charter said.

In the short term, the blackout means a reduction in programming costs, but there will be other costs, including more calls from customers and customer credits. 

Over the longer term, Charter said its concerns include maintaining its long-term relationships with subscribers, finding alternative video solutions for its connectivity customers. 

“Cash flow from video has already declined significantly and video ultimately cash flow neutral without structural changes,” Charter said.

On the other hand, agreeing to what Disney is willing would not turn out well. “Forcing customers to pay for Disney content they opted out of, or don’t view and pay even higher rates, would negatively impact our connectivity relationships,” Chater said.

Charter states that the “multichannel video product is too expensive and packages don’t meet consumer needs” and notes that “customers are leaving the traditional video ecosystem and losses have accelerated.”

According to Charter’s presentation, the cable video ecosystem is broken because of a chain of events that started with the failure of TV Everywhere. 

That led to the proliferation of unauthenticated proliferation. Netflix rose and programmers started to withhold their VOD libraries from multichannel video programming distributors (MVPDs) like Charter.

Content moved to SVOD and programmers launched unprofitable direct-to-consumer products.  In the pursuit of profitability, the programmers are raising the price of their streaming products, selling ads, and reselling their content to other SVOD services.

“Programmers are caught in a self-imposed dilemma as they have moved content to their DTC products for short-term profit maximization and their management teams are not incentivized to drive business for the long-term,” Charter said, describing the vicious cycle that erodes the value of pay-TV for nonsports viewers and encourages them to leave pay TV for SVOD.

At this point in the cycle, “renewing a traditional distribution agreement with higher costs, limited packaging flexibility and no additional value ignores the realities of the changing marketplace and will simply accelerate the decline of video subscription and advertising revenue,” Charter said.

Charter said it still believes that “a compelling Charter-branded video product offering can be a captivating part of our portfolio of connectivity services and appealing to customers,” and laid out what it called its “vision for the future of video.”

To get to that future, “distributors and programmers need to work together to entice and reward customers to utilize bundled subscription products – most programmers simply will not be able to profit/survive solely on a-la-carte streaming revenue and need a hybrid, customer centric model,” Charter said.

This approach will benefit programmers, MVPDs and customers, Charter said.

Charter said that right now, it and Disney are the right parties to start moving down the road toward this new customer-centric video model.

It notes that both companies are at a “crossroads with their video strategy” with Disney looking at a hybrid approach for ESPN that embraces streaming options.

“A new model creates the pathway for Disney to stabilize its linear losses and grow its DTC business, ultimately preserving cash flows,” Charter said.

But at this point, Disney is sticking to the traditional approach in its negotiations with Charter. 

“Disney offered a traditional long-term deal and has not seriously engaged on Charter’s transformational partnership proposal,” Charter said. Disney is insisting on high penetration payment minimums despite its own a la carte offerings, forcing Disney channels into packages where they are not included today, against consumer will and requiring additional large rate increases by forcing DTC service inclusion and additional payment to existing linear customers. That offers little incentive to sell DTC apps to broadband customers, Charter said.

“Disney’s traditional approach would result in a dramatic increase of cost to consumers — many of whom don’t view, want or even subscribe to Disney/ESPN content,” Charter said.

Charter said offered to accept Disney market rate increases in exchange for bundling ad-supported DTC apps with packaged linear products, and lower penetration payment minimums to provide packaging flexibility to customers. 

Charter has also offered to market the Disney DTC apps to its broadband customers. Disney declined, Charter said.

Charter said it also offered a shorter extension of the current contract to further discuss the benefits of Charter’s proposal, which Disney declined. 

 Responding to the Charter presentation, Disney offered its view of the negotiations, saying that Charter has refused to enter into a new agreement with us that reflects market-based terms” and that “contrary to [Charter’s] claims, we have offered Charter the most favorable terms on rates, distribution, packaging, advertising and more.”

Disney added that it has proposed creative ways to make Disney’s direct-to-consumer service available to Spectrum TV subscribers. But Disney emphasized that its linear and direct-to-consumer services are not the same, meaning that a subscriber to one ought not be entitled to both.

“We value our relationship with Charter and we are ready to get back to the negotiation table to restore access to our unrivaled content to their customers as quickly as possible,” Disney said.

Bottom line: To many seasoned observers this Charter-Disney dispute does not seem to be the typical fee negotiation between a distributor and a programmer. 

 “It's a big deal: a Cable MVPD is pushing to undo norms for linear networks/stations,” said analyst Steven Cahall of Wells Fargo.

“Charter has drawn a line in the sand and is either prepared to drop major content sources to protect earnings, or rewrite the linear script. With some MVPD contagion, none of this is constructive to media. Long term, this could mitigate cord cutting, but the uncertainty for now is incremental,” he said. 

Looking ahead as this situation evolves, most at risk are companies that generate a larger share of revenue from traditional distribution, Cahall said. Those include Paramount, Warner Bros. Discovery and Fox. Those also have sports rights that have to be parsed between exclusivity with pay-TV and streaming. 

With The Walt Disney Co. drowning in red ink at its direct-to-consumer business, CEO Bob Iger admitted he’s envious of the profit margins posted by streaming leader Netflix.

On Disney’s third-quarter earnings call with analysts Wednesday, Iger was asked what is the company’s long-term expectation for direct-to-consumer sales in terms of profit margins, given that Netflix was more profitable when its streaming business was at about the same revenue level as Disney’s.

For the quarter ended in June, Netflix had $8.187 billion in revenue and operating income of $1.827 billion, for a 22.3% operating margin.

Disney had $5.25 billion in direct-to-consumer revenue but posted a loss of $512 million in the quarter. (The loss was half the size of the $1.06 billion loss posted a year ago.)

Iger noted that Disney was, relatively speaking, just getting started in the streaming business.

“Our streaming business is still actually very young,“ he said. “In fact, it’s not even four years old. It launched in November 2019. And we love to have the margins that Netflix has.”

Netflix lost money as it built its streaming business. And Iger noted that Netflix has built those margins over the years they’ve been in the business.

“They've done so because they figured out how to really carefully balance their investment and programming with their pricing strategy, and what they spend in marketing,” Iger said.

“Because we're new at all of this, we actually have not really achieved the kind of balance we know we need to achieve in terms of cost savings and pricing, and money spent on marketing, and of course all the other things that we're looking at from a technological perspective that grows engagement with our customers,” Iger said.

Iger said that having a recommendation engine could help increase consumption and improve performance.

“I can't emphasize enough the time we’ve put in managing cost,“ Iger said. “And we've done a tremendous job in a short period of time, exceeding the cost reductions we said we were going to achieve. And that’s obviously a major step in the direction of improving our margins.” 

Disney will be raising prices on the ad-free versions of its services, implementing controls over password-sharing and growing its advertising business in order to make streaming more profitable, he added.

“I’m reasonably optimistic and hopeful that we will be improving our margins in this business significantly over the next few years,” he said. “I’m not going to make any further predictions on that, except the good news is we know how much work we have to do.”

During the call, Iger took umbrage when an analyst asked about a report speculating Disney could be acquired by a big tech company.

“I’m not going to speculate about the potential for Disney to be acquired by any company, whether it’s a technology company or not,” he said. “Obviously, anyone who wants to speculate about such things would have to immediately consider the global regulatory environment. I'll say no more than that. It’s not something that we obsess about.” 

The Walt Disney Co. reported a $460 million loss in the second quarter, as the company reduced its streaming losses but took massive charges as part of its restructuring. 

The loss for Disney’s fiscal third quarter was equal to 25 cents a share and included $2.65 billion in charges as it looks to reduce costs. A year ago, the company reported net income of $1.4 billion, or 77 cents a share.

Revenues rose 4% to $22.3 billion.

Disney cut its direct-to-consumer losses in half to $512 million from $1.061 billion a year ago. There were smaller losses at Disney Plus, higher operating income at Hulu and a smaller loss at ESPN Plus, the company said.

Direct-to-consumer revenue rose 9% to $5.525 billion.

The improvement at Disney Plus was due to higher subscription revenue and a decrease in marketing costs. Programming and production costs were higher while advertising revenue dipped, the company said.

At the end of the fiscal third quarter, Disney Plus had 105.7 million “core” subscribers, up 1% from the end of the previous quarter.

Disney Plus Hotstar subscribers fell 24% to 40.4 million subscribers from 52.9 million.

Domestic Disney Plus subscribers fell 1% to 46 million from 46.3 million at the end of Q2.

During the company's earnings call, CEO Bob Iger said that as of the end of Q3, the company has signed up 3.3 million subscribers to its ad supported Disney plus option. “Since its inception, 40% of new Disney Plus subscribers are choosing add supported products,” Iger said. 

Iger also said that the company would be announcing price increases for its streaming services, but that pricing for the stand alone ad-supported Disney plus and Hulu offering will remain unchanged.  

 Streaming advertising is growing faster than traditional advertising, and Disney is trying to encourage customers to subscribe to its ad-supported products, Iger said.

ESPN Plus had 25.2 million subscribers, down from 25.3 million in the previous quarter.

Hulu had 48.3 million subscribers, up from 48.2 million subscribers last quarter. It had 44 million SVOD-only subscribers, up from 43.7 million last quarter. Hulu Plus Live TV had 4.3 million subscribers, down 100,000 from 4.4 million in the previous quarter.  

“Our results this quarter are reflective of what we’ve accomplished through the unprecedented transformation we’re undertaking at Disney to restructure the company, improve efficiencies, and restore creativity to the center of our business,” Iger said.

“In the eight months since my return, these important changes are creating a more cost-effective, coordinated and streamlined approach to our operations that has put us on track to exceed our initial goal of $5.5 billion in savings as well as improved our direct-to-consumer operating income by roughly $1 billion in just three quarters,” Iger said. “While there is still more to do, I’m incredibly confident in Disney’s long-term trajectory because of the work we’ve done, the team we now have in place, and because of Disney’s core foundation of creative excellence and popular brands and franchises.” 

 Iger identified three business areas that will drive business growth over the next five years: Those are the film studios, the parks business and streaming. “All of which are inextricably linked to brands and franchises,” he said.

Disney interim CFO Kevin Lansberry said that content spending for the year is expected to come in at $27 billion, less than the company’s previous guidance. 

Lansberry said the decline was because of lower spending on produced content in part due to the writers and actors strikes.

The company expects to be able to recommend that the board declare a “modest dividend” by the end of the year, he said.

Last month, Iger opened a can of worms by saying in an interview that Disney’s TV and cable networks are not growth businesses and may no longer be “core” parts of the company.

He also said Disney would be looking for strategic partners for ESPN as it heads towards becoming a direct-to-consumer business. 

Disney has reportedly talked to sports leagues about becoming partners with ESPN. ESPN also announced a deal with Penn Entertainment to launch sports books under the ESPN Bet brand that will bring ESPN $2 billion over 10 years. 

Iger reiterated those plans during the earnings call. "We're considering potential strategic partnerships for ESPN looking at distribution, technology, marketing, and content opportunities where we retain control of the ESPN. We receive notable interest from many different entities and we look forward to sharing more details at a later date when we are further along in this process," he said.

Iger brought back former senior Disney execs Kevin Mayer and Tom Staggs as advisers to the company as it plots its streaming and sports strategies.

Iger also caught flak for calling the demands by striking writers and actors “unrealistic” and “disruptive.”

SAG-AFTRA president Fran Drescher shot back that “it’s so obvious that he [Iger] has no clue as to what is really happening on the ground with hard-working people that don’t make anywhere near the salary he is making.”

Iger was more conciliatory in his prepared remarks during the earnings call.

"Nothing is more important to this company than its relationships with the creative community. And that includes actors, writers, animators, directors, and producers. I have deep respect and appreciation for all those who are vital to the extraordinary creative engine that drives this company and our industry," Iger said. "And it is my fervent hope that we quickly find solutions to the issues that have kept us apart these past few months. And impersonally committed to working to achieve this result."

Operating income at Disney’s Media and Entertainment Distribution division fell 18% to $1.134 billion, as revenues fell 1% to $14 billion.

Disney’s linear networks’ operating income plunged 23% to $1.889 billion as revenue fell 7% to $6.69 billion.

Operating income at Disney’s domestic channels was down 14% to $1.78 billion, with declines in both broadcasting and cable.

The decrease in broadcasting was due to lower results at ABC and the owned television stations, both of which reflected lower advertising revenue, the company said.

Lower operating income at cable was due to higher sports programming and production costs and lower affiliate revenue, partially offset by a modest increase in advertising revenue.

Domestic linear network affiliate revenue decreased by 2%, with a 6% decline in subscribers partially offset by 4% increases in contractual rate increases.

Disney’s Parks, Experiences and Products division had operating income of $2.425 billion, up 11%. Revenue rose 13% to $8.326 billion.

Bob Iger, since returning as CEO at The Walt Disney Co., has determined that linear television — including ABC, local television stations and entertainment-focused cable networks — may no longer be core businesses for the company.

“They may not be core,” Iger said, speaking on CNBC from the Allen & Co. conference. 

“Yeah, there’s clearly creativity and content that they create that is core to Disney, but the distribution model, the business model that forms the underpinning of that business, and that has delivered great profits over the years is definitely broken,“ he said. “And we have to call it like it is, and that’s part of the transformative work we're doing.” 

Also Read: Disney Board Extends Bob Iger’s CEO Contract Through 2026

Since returning to the company last year, Iger said, he found that the linear TV business has been more disrupted than he expected, becoming what he termed “no-growth businesses.”

Iger did not say when he might dispose of Disney’s TV businesses or who might buy them.

Iger continued to say that Disney will inevitably create a stand-alone, direct-to-consumer version of ESPN.

“ESPN: If you look at today's media landscape, sports stands very, very tall in terms of its ability to convene millions and millions of people all at once,“ he said. “There’s almost a guarantee that that occurs. It's an advertiser’s dream. There’s a great demographic there and it lends itself to technology in many ways, both in terms of coverage, distribution and consumption. And our position in that business is very unique. We have a great brand. We've had a great business, and we want to stay in that business. That said, we’re going to be open-minded there, too, not necessarily about spinning ESPN off but about looking for strategic partners that could either help us with distribution or content, but we want to stay in the sports business.

“There’s so much more that can be done with it in terms of the way it's distributed, the way it’s consumed,“ he added. “It’s interesting just thinking about the Apple announcement of a few weeks ago, and what the possibilities there — that device lends itself to in terms of sports. So I think it's a business that, you know, we want to stay in.”

Disney already has a partner in ESPN with Hearst, which owns 20% of the sports business.

Iger said a new potential partner for ESPN would have to come to the table with value. 

“Whether it’s content value, whether it’s distribution value, whether it’s capital, whether it just helps de-risk a business to some extent, but that wouldn't be the primary driver,“ he said. “But if they come to the table with value that enables ESPN to make a transition to its direct-to-consumer offering, then we’re going to be very — we’re going to be very open-minded about that.” 

Iger also reiterated that Disney would prefer to own Hulu rather than sell it, possibly to Comcast, which owns a third of the streaming service.

“I spent a lot of time looking at that as part of the future of our streaming business, and ultimately concluded that we would be better off having Hulu than not having Hulu,” Iger said. “And in fact, the plan is for Hulu to be available starting the end of this calendar year as part of the Disney Plus offering. So in terms of the path to profitability of that business, which obviously has tremendous amount of focus on and a lot of attention, combining Hulu and Disney Plus is a major step in that direction.”

The Walt Disney Co. said its board extended Bob Iger’s contract to serve as CEO for two additional years through December 31, 2026.

Iger returned to the company last year as CEO, replacing his successor Bob Chapek.

Iger’s main mandates were to find a long-term successors as CEO and to boost profitability, mainly by cutting losses at the company's streaming business. Iger promptly announced a plan to reduce costs by $5.5 billion, in part by laying off 7,000 of the company’s employees. 

“Time and again, Bob has shown an unparalleled ability to successfully transform Disney to drive future growth and financial returns, earning him a reputation as one of the world’s best CEOs,” said Mark G. Parker, chairman of The Walt Disney Co. “Bob has once again set Disney on the right strategic path for ongoing value creation, and to ensure the successful completion of this transformation while also allowing ample time to position a new CEO for long-term success, the Board determined it is in the best interest of shareholders to extend his tenure, and he has agreed to our request to remain Chief Executive Officer through the end of 2026.”

Iger was a highly successful leader for Disney. During has first 15 years as CEO, the company acquired Pixar, Marvel, Lucasfilm and 21st Century Fox and launched the Disney Plus streaming service.

“Since my return to Disney just seven months ago, I’ve examined virtually every facet of our businesses to fully understand the tremendous opportunities before us, as well as the challenges we’ve been facing from the broader economic environment and the tectonic shifts in our industry. On my first day back, we began making important and sometimes difficult decisions to address some existing structural and efficiency issues, and despite the challenges, I believe Disney’s long-term future is incredibly bright,” said Iger.

“But there is more to accomplish before this transformative work is complete, and because I want to ensure Disney is strongly positioned when my successor takes the helm, I have agreed to the Board’s request to remain CEO for an additional two years. The importance of the succession process cannot be overstated, and as the Board continues to evaluate a highly qualified slate of internal and external candidates, I remain intensely focused on a successful transition,” Iger said.

The Walt Disney Co. said that senior executive VP and chief financial officer Christine McCarthy will step down to take a family medical leave of absence.

Disney said Kevin Lansberry, currently executive VP and CFO of Disney Parks, Experiences and Products, will become interim CFO, effective July 1.

McCarthy will continue as a strategic adviser to the company while on leave. She will assist in identifying a new CFO and help with the transition.

“Christine McCarthy is one of the most admired financial executives in America, and her impact on The Walt Disney Company during 23 years of dedicated service cannot be overstated,” Disney CEO Bob Iger said.

“Christine has served as a key strategic anchor during a period of great transformation, and she and I have discussed her desire to ensure an orderly and successful CFO succession in advance of the company’s transition to its next chief executive officer,“ Iger said. “She is stepping down from her CFO role as she takes family medical leave, but has graciously offered to move into an advisory position to assist her successor in assuming the duties she has so expertly handled these many years.” 

McCarthy, who has been with Disney since 2000, reportedly played a role in encouraging Disney’s board to oust CEO Bob Chapek, clearing the way for Iger to return to the company as CEO.

“I am immensely grateful for the opportunity Bob provided me to serve as CFO of this iconic company and am proud of the work my talented team has done to position Disney to capitalize on the business possibilities that lie ahead,” McCarthy said. “Although I am leaving the CFO role, I look forward to helping with the transition and will always be rooting for the success of my extended Disney family, who have shown time and again that determination, teamwork and the pursuit of excellence are an unstoppable combination.”

While Lansberry serves as interim CFO, Disney said it will be conducting a search of internal and external candidates to find a permanent replacement for McCarthy.

“Kevin has been with the company for more than three decades and is a trusted lieutenant to Christine,” Iger said. “Having expertly served as CFO at our largest business segment since 2017, he has my complete confidence, and I look forward to working with him during this transition.”

At its upfront presentation Wednesday, The Walt Disney Co. said the popular online sports program The Pat McAfee Show is coming to ESPN.

The show will air live weekdays on ESPN, the ESPN App, ESPN Plus and on YouTube through ESPN’s YouTube channel starting in the fall. He will also continue in his role as an analyst on ESPN's College GameDay.

McAfee, a former NFL punter, is walking away from a $120 million deal with FanDuel to join ESPN, according to The New York Post. 

Also Read: Disney Upfront Presentation Features Scripted Stuff Near the End

“Pat is a proven talent. He and his team have built The Pat McAfee Show into one of the most engaging programs in sports and all of media,” ESPN chairman Jimmy Pitaro said. “It’s a destination for athlete interviews and breaking news, and the centerpiece of a growing community of sports fans. We’re honored to bring Pat and the show to ESPN through a multifaceted, multiplatform approach.”

McAfee said staying on YouTube was important and that he agreed to make the deal after meeting with Disney execs including Disney CEO Bob Iger, Pitaro and Burke Magnus, ESPN’s head of content.

“A lot of people are wondering why would you ever want to do that when you run a couple of hundred-million-dollar valued company with full independence and the ability to kind of do whatever I want, whenever I want with my crew,” McAfee said at the Disney upfront.

The answer was because Pitaro was “one of the only people that I talked to that truly understood what the future of sports media is going to look like,” McAfee said.

McAfee said that digital media is able to reach millions of people, which ESPN in linear is still, at this point, attracting more people than ever.

“The future obviously says that linear television’s going to be dead,” McAfee said. “ESPN the channel won’t be able to exist. But when is that?” 

It could take decades before ESPN disappears and McAfee said he didn’t want to miss the boat while ESPN is still a powerhouse. 

He said the Disney and ESPN execs embraced the vision of embracing both the present and future of ESPN and that means simulcasting on YouTube.

“My show has been a YouTube show. We've been able to influence, we've been able to build our community, we've been able to generate a group of humans that will ride with us wherever we go,” McAfee said. “Jimmy, Burke, Bob understood that 98% of all male GenZers use YouTube on a daily basis, so being live there and on ESPN, we should be able to reach the entire world hopefully, if I don't f–k it up . Which I might have just did by saying the F-word in this room.”

McAfee was one of the numerous personalities appearing at Disney’s upfront, which didn’t have actors in attendance because of the strike by the Writers Guild of America, which picketed the event.

Providing a level of showbiz buzz were sports personalities including Serena Williams, Damar Hamlin, Joe Buck, Troy Aikman and Peyton Manning, newsmen including David Muir and George Stephanopoulos, reality show hosts Jesse Palmer and Ryan Searest and two of the Kardashians, Kim and Khloe.

Ad Sales president Rita Ferro wanted Disney’s advertising technology to also be a star of the show.

Ferro acknowledged that media companies and their ad clients were facing “difficult challenges,” adding that “as the past years have taught us, you must be prepared to meet every moment, no matter how tough. And Disney is prepared to meet every moment.”

She said that Disney’s success is based on both its content and “a sophisticated tech and data stack that enables best-in-class personalized experiences and advertising that compliments it.”

Disney has built and owns its new tech stack, as well as an audience graphic that’s built for streaming with 250 million identifiers representing 112 million households.

“This enables targeting with precision,” Ferro said.

Disney is working to automate the ad-buying process. “Over one-third of our advertising transactions today happen programmatically and close to half of these are using real-time ad decisioning,” she said.

That gives buyers more control. “That’s why we know every single upfront deal this year will have programmatic at its core,” Ferro said.

Disney Plus, which launched its ad-supported tier in December, rolled out additional ad-targeting capabilities last week.  

“It will have more coming your way,” Ferro said. “Our goal is ultimately to have Disney Plus have the same leading capabilities as Hulu.”

Bob Iger, CEO of the Walt Disney Co., didn’t mince words when asked about the company’s legal battle with Florida Gov. Ron DeSantis.

Disney has sued DeSantis after the governor took steps to assert control over the Reedy Creek Improvement District, the special district where Walt Disney World is located.

“This is about one thing and one thing only, and that is retaliation against us for taking a position on pending legislation,” Iger said after being asked about the situation during Disney’s earnings call Wednesday. “We believe that in taking that position we are merely exercising our right to free speech.”

Iger said that Disney contributes to Florida tourism, is one of the state’s biggest employers with above-minimum wage jobs and pays $1.1 billion in state and local taxes, and yet is being singled out.

“Does the state want us to invest more, employ more people and pay more taxes or not?” he asked.

Iger said Disney has plans to invest $17 billion in Florida over the next 10 years.

Iger noted that Disney is not the only company operating in a special district. He said there are over 2,000 such districts, created to encourage business. One is occupied by Daytona Speedway, another by The Villages, a large retirement community.

“If the goal is leveling the playing field in the uniform application of the law or government oversight of special districts needs to occur or be applied to all special districts,” the Disney CEO said. “There’s also a false narrative that we have been fighting to protect tax breaks as part of this. But in fact we are the largest taxpayer in Central Florida.”

Iger said Disney has had a “terrific” relationship with the state for 50 years.

“While it is easy to say that the Reedy Creek special district that was established for us over 50 years ago benefited us, it is misleading to not also consider how much Disney benefited the state of Florida,” Iger said.

A new clue as to whether The Walt Disney Co. might buy Comcast’s minority stake in Hulu may have surfaced as Disney CEO Bob Iger announced that Hulu content would be available to subscribers through the Disney Plus app.

The announcement, made during Disney’s second-quarter earnings call Wednesday, prompted analysts to ask if Disney had decided to buy the 30% Hulu stake, worth about $9 billion. Disney and Comcast have an agreement that gives Comcast to sell the stake to Disney in 2024. Disney can also initiate buying the stake from Comcast.

When Iger returned as Disney’s CEO last year, he said that everything was on the table as far as Hulu was concerned.

“I have now had another three months to really study this carefully and figure out what is the best path for us to grow this business and it is clear that a combination of the content that is on Disney Plus with general entertainment is a very positive, is a very strong combination from a subscriber perspective, from a subscriber acquisition subscriber retention perspective and also from an advertiser's perspective,” Iger said.

But he warned that didn’t mean a decision had been made regarding buying Comcast’s Hulu stake.

“I don't want to be in any way predictive in terms of when or how that ends up,” Iger said. 

“I can say we have had some conversations with them, already they have been cordial and they are aimed at being constructive, but I can’t tell you and I can't really say where they end up, only to say that there seems to be real value in having general entertainment combined with Disney Plus and ultimately Hulu is that solution,“ he said. “We are bullish about that.”

The Walt Disney Co.’s plan to eliminate 7,000 staffers is hitting ESPN this week.

Returning chairman and CEO Bob Iger announced the layoffs as part of a cost-cutting effort designed to boost profits and satisfy activist investors. 

The first of three scheduled waves of layoffs took place in March. This second wave was expected to be the largest. A third wave is planned to end by the start of the summer and will also include ESPN staffers who are not in talent roles.

ESPN will be making decisions about retaining talent after the third wave of layoffs is completed.

“We must further identify ways to be efficient and nimble. We will continue to focus our workforce on initiatives that are most closely aligned with our critical priorities and emphasize decision-making and responsibility deeper into the organization,” ESPN chairman Jimmy PItaro said in a memo to staff Monday.

“To those that will be leaving ESPN, I want to thank you for your many contributions and reinforce that the company is here to support you during this challenging transition. Please reach out to your HR Partner if you have any questions,” Pitaro said. “While these decisions were made with considerable thought, I also want to recognize that we understand that this has been a long — but thorough — process with a lot of uncertainty. This type of action impacts everyone. Thank you for your continued patience.”

Layoffs are also taking place at other Disney divisions this week.

The Walt Disney Co. said that Joe Earley will oversee Disney Plus and Hulu as president, direct-to-consumer, Disney Entertainment, replacing Michael Paull, who is leaving the company.

Disney has been cutting costs and looking to make its streaming businesses profitable.

Earley had been president of Hulu. The company said it  is looking for someone to replace Early in that post.

Disney said Earley will be working closely with content teams around the company to expand Disney’s streaming efforts with impactful and resonant programming. 

He will report to Alan Bergman and Dana Walden, co-chairmen of Disney Entertainment 

“Joe has proven himself to be an extraordinary asset and is uniquely positioned for this role as we guide Disney’s streaming strategy into the future,” said Bergman and Walden. “His vast industry experience and deep understanding of what sets our prestigious portfolio of brands apart will be essential as we build on our robust direct-to-consumer efforts. Joe is a talented, passionate leader, committed to creative excellence, and we look forward to partnering with him in this next chapter.”

Earley joined Disney in 2019 to oversee Disney Plus marketing and operating as it was being launched. He was name president of Hulu in January 2022.

“Helping launch Disney Plus was a once-in-a-lifetime experience, and Hulu has been inspiring and rewarding,” said Earley. “I’m incredibly grateful to Dana and Alan for their confidence and the opportunity to lead both of these incredible teams during this time of transformation across the streaming landscape.”

Paull joined Disney from Amazon as CEO of BAMTech. He was named president of streaming in 2022. 

Some things just go better together, and Needham analyst Laura Martin believes Apple and The Walt Disney Co. are two of those things.

“Combining Apple’s distribution footprint of 1.25 billion unique customers with Disney’s 570 million consumers reached each year would drive 15% to 25% valuation upside for Apple shareholders,“ Martin said in a research note.

Apple and Disney have long worked together. Disney was one of the first companies to put its video content on Apple’s iPod and Mickey and Minnie Mouse are featured on Apple Watches. Disney also acquired Pixar, the animation studio led by Apple founder Steve Jobs.

Martin argues that here are many other ways that a combination of Apple’s products and technology would benefit from a closer connection to Disney’s content and fan base. In fact, in her report, Martin provides a list of the Top 10 ways Disney is additive to Apple shareholders.

1.) Better Consumer Data: Most of Apple’s data is about individual behavior on a smartphone. By contrast, Disney’s data is about families. “We would argue that families are more important units to track than any one individual because many purchase decisions are made based on the influence of family members,” Martin says. “Disney’s complex network model has better predictive power about future purchasing decisions, we believe.”

2.) Bundling: Bundling can double lifetime value (LTV), by lowering churn, according to Martin’s calculations. “By combining Apple’s hardware/software bundle with Disney’s streaming bundles as well as discounting admissions to its assets in the physical world, we calculate that Apple’s churn could fall by 50%.”

3.) More Consumer Touch Points: During the pandemic, consumer use of mobile phones fell and connected TV usage rose. Disney earns money from all screens, and therefore has been hedged as consumers chose new delivery outlets.

4.) Creative Teams: There is almost nothing fungible (i.e., no substitutes) about hit storytelling teams such as Marvel, Star Wars, Pixar and Disney animation, Martin said. 

5.) Library Value: Disney’s owned animation library has been largely written down to zero over the past 20 years, but it is nearly priceless. “More recently, Disney tells us that they spend approximately $30 billion on content each year (of which $10 billion is on sports). Its return on capital for film content is second to none,“ she said.

6.) Hedge Against Tech Obsolescence: “We believe Disney’s content represents is a hedge against Apple’s potential technology obsolescence risks,“ Martin wrote. “We believe that high-quality content libraries always become more valuable over time because AAA film and TV content can be used to differentiate new technologies, content services, and/or distribution competitors over time.” 

7.) No Substitutes for Disney’s World-Building Content: Disney owns premium intellectual property, including several franchises. 

8.) Disney Character IP Rights: Disney's portfolio includes all Winnie the Pooh characters, Mickey & Minnie Mouse, Goofy, Donald Duck, the Disney Princesses, Frozen, Toy Story and Cars. These are usable in perpetuity to create the next new films, TV series, theme park attractions or Broadway shows. They are free to use forever, because Disney owns the IP.

9.) Marketing Prowess: Within mobile devices, Apple is excellent. However, its marketing pitch is mostly based on camera quality, chipsets, speeds, brightness and other technological superiority-based marketing points. And, after a consumer buys their first smartphone from Apple, 80% “renew” within five years, Martin estimates. “Although impressive, this level of renewals does not require great marketing. By contrast, Disney’s marketing team is required to create comprehensive narratives for every TV show, film, streaming show before the consumer allocates money to it.”

10.) No Legislative or Regulatory Risks: “We believe Disney has minimal regulatory or legislative risks in the near term, whereas Apple has many regulatory risks from the EU, U.S., regional, state and local governments,“ Martin said. “The more loyal super-fans and consumers a company has, the more immune they are to government intervention, we believe.”

Martin also argued Apple would be better at managing costs than Disney has been.  Disney CEO Bob Iger is currently cutting costs and has begun the layoffs of 7,000 staffers.

Martin noted that Apple’s operating expenses were 33% lower than Disney’s in 2022, even though its revenues were nearly five times larger than Disney’s.

“Based on Comcast's acquisition of NBC and Discovery's acquisition of Scripps Networks, we believe Apple could conservatively cut out 15% of total combined costs, post-merger,“ Martin said. “In addition to eliminating duplicative positions, real estate, studio space, film & TV slates, etc. We believe combining these two companies would lower the customer acquisition costs for every consumer-facing product in the combined company portfolio, post-merger.”

Martin added that Disney has tons of ad space. It sells most of it, but also uses it to promote its own products and services. Apple’s marketing costs would plummet with access to Disney’s advertising assets, she said.

Apple’s current enterprise value is $2.6 trillion, compared to Disney’s $209 billion, which means Apple can acquire Disney but Disney can’t acquire Apple. 

“Apple is currently valued at a material premium to Disney on virtually every metric,” Martin says. “If Apple buys Disney using its higher-valued share, this will be anti-dilutive to Apple shareholders on a price/earnings basis as well as on an enterprise value/revenue and enterprise value/EBITDA basis.” 

 Disney stock was up more than 1% in midday trading. Apple was up 0.5%. ■

As part of its initial effort to eliminate around 7,000 jobs and reduce cost by $5.5 billion, The Walt Disney Co. has eliminated the division charged with developing business around the nascent “metaverse.” 

About 50 workers from the so-called “Next Generation Storytelling and Consumer Experiences” division were let go. Mike White, the former Yahoo executive who led the venture, will be retained and deployed in another capacity. 

The move was first reported by the Wall Street Journal and subsequently confirmed by numerous other outlets. Disney's current CEO, Bob Iger, sent a note to staff Monday outlining the broader scope of the upcoming layoffs. 

The next-gen storytelling division was built and championed last year by former Disney CEO Bob Chapek. And its demise marks the second major dismantling of a recent Chapek creation by Iger, who replaced Chapek in November amid his abrupt ouster. 

Iger's first move in returning to Disney’s CEO office was to axe the Disney Media and Entertainment Distribution division, led by Chapek lieutenant Kareem Daniel. 

Outlining Disney’s “strategic pillars” in a lengthy staff memo sent 14 months ago, Chapek highlighted what he saw were opportunities in the metaverse for Disney as it reached its 100th birthday. 

“Since Steamboat Willie, we have been the world’s foremost innovative storytellers,” Chapek wrote. “That must continue as technology evolves, giving our creative teams new canvases like the metaverse on which to paint.”

It’s unclear as to what Disney’s nascent metaverse group was working on. Certainly, Disney isn't the only large TMT company to explore metaverse opportunities. Facebook, for example, which recently restructured in a way such that its parent company is now called Meta Platforms, is notably all in on this brave, new world of storytelling few of us understand. 

To date, however, no one has yet proven that there can be a wildly profitable business built on the metaverse in the near term. ■

The Walt Disney Co. this week is starting to implement the layoff of 7,000 employees planned by CEO Bob Iger as part of his effort to bolster profitability at the company.

Employees impacted in the first of three waves of layoffs are being contacted over the next four days, Iger said in a memo to staff.

The next round of layoffs will happen in April. That will be the largest round of staff reductions.

The company expects to complete the layoffs before the beginning of summer, Iger said, adding that the company aims to make to process “supportive and smooth.”

Iger announced plans to restructure the company and cut costs during the company’s fourth-quarter earnings call in February. At the time, Disney was under pressure from an activist investor who wanted it to take steps to boost profits and raise the prices of Disney shares.

“As I shared with you in February, we have made the difficult decision to reduce our overall workforce by approximately 7,000 jobs as part of a strategic realignment of the company, including important cost-saving measures necessary for creating a more effective, coordinated and streamlined approach to our business,“ Iger said in the memo. “Over the past few months, senior leaders have been working closely with HR to assess their operational needs, and I want to give you an update on those efforts.

“The difficult reality of many colleagues and friends leaving Disney is not something we take lightly,” he continued. “This company is home to the most talented and dedicated employees in the world, and so many of you bring a lifelong passion for Disney to your work here. That’s part of what makes working at Disney so special. It also makes it all the more difficult to say goodbye to wonderful people we care about.”

Iger asked staffers who aren’t impacted by the layoffs to continue delivering exceptional entertainment to audiences and guests around the world. 

“I want to acknowledge that there will no doubt be challenges ahead as we continue building the structures and functions that will enable us to be successful moving forward,” he said. “I ask for your continued understanding and collaboration during this time.”  

Disney shares were trading at $94.93, up nearly 1%,  in midday trading Monday. ■

Disney CEO Bob Iger said streaming is a business in which not everybody’s going to win.

Speaking at the Morgan Stanley media investment conference Thursday, Iger noted that other companies at the conference had all predicted that their streaming business would be highly profitable in a couple of years and that they will increase their sub counts by tens of millions.

“It can’t possibly happen,” Iger said. “There are six or seven well-funded, aggressive streaming businesses out there, all seeking the same subscribers, in many cases competing for the same content. Not everyone’s going to win.”

Iger wanted investors to know that they can count on Disney emerging as a winner.

“I am extremely bullish on some of our streaming prospects, notably Disney Plus, which grew at such a meteoric rate,” Iger said. 

He said that in order to make the direct to business profitable Disney had to rationalize costs  and attract more subscribers. “I think one of the key things that we have to figure out is a pricing strategy that makes sense,” he added. “In our zeal to grow global subs I think we were off in terms of that pricing strategy and we’re now starting to learn more about it and adjust accordingly.”

Also Read: Wall Street Welcomes Bob Iger’s Plan To Slash Costs at Disney (UPDATED)

Disney also controls Hulu and will have to make a decision by next year about whether or not to buy out Comcast’s 35% stake in the business for upwards of $9 billion.

“We’re really studying the business very, very carefully,” Iger said. “We have a good platform in Hulu. We have very strong original programming, highly awarded original programming, some delivered by FX, which is great.”

Also Read: Buy? Sell? Analyst Suggests Disney, Comcast Go 50-50 On Hulu

Hulu is also very attractive to advertisers, he added. 

Iger previously said that either buying Comcast’s stake or selling all of Hulu was on the table. Comcast president Michael Cavanagh similarly said he’d be happy selling Comcast stake to Disney under their existing agreement, but he’d be open to other arrangements.

“The environment is very, very tricky right now and before we make any big decisions about our level of investment, our commitment to that business, we want to know where it could go,” Iger said. “The whole streaming business, other than Netflix, which is relatively mature, is a nascent business for most of us.”

The maturing of the streaming business is coming at the same time as a lot of people are still consuming media on traditional platforms. 

“I’ve said publicly that the future of linear, I don’t believe is very bright and eventually everything will migrate to streaming. We’re not quite there yet. And so you have an erosion of a traditional platform and its economics and some growth in the new platform but not the kind of compelling growth it will all need to be profitable. It’s just a tricky period of time,” he said. 

Iger noted that it was possible that Hulu was a good fit with Disney’s other assets as it shifts its strategy from funneling all of its content to its streaming properties to a more balanced approach.

“It’s already clear to us that the exclusivity that we thought would be so valuable in growing subs, well, it wasn’t as valuable as we thought,” he said. Content can actually exist on on a traditional platform and the streaming platform quite well without doing damage to either one.”

He pointed out that the comedy Abbott Elementary has a very different audience when it airs on ABC compared to when it streams on Hulu. 

“The media age on ABC is substantially higher than the median age of the Abbott Elementary viewer on Hulu by about 30 years,” he remarked.

He said having show like that on both platforms would help amortize the cost of content better and there would also be a positive marketing impact. The Fox animation shows including The Simpsons remain among the most popular shows streaming  on Disney Plus, even though they’ve all been seen on the Fox network, he added. 

Iger also talked up the future of ESPN. “One of the reasons we’re optimistic is we know theI power and popularity of live sports, not just to consumers but to advertisers,” he said.”ESPN’s ratings have actually held up nicely particularly when you consider the erosion of the platform that they’re on.”

ESPN Plus at this point is a flanker to the ESPN brand, but “down the road, at some point, I think it’s inevitable, because of what’s happening with the media world and technology, ESPN will become a direct-to-consumer business. 

At a time when the business model for the regional sports networks appear to be crumbling, Iger was upbeat about ESPN.

“When you combine the strengths of live sports and the brand and the value of advertising, you can create a business tha’s not subscriber dependent but dependent on advertising and subscriber revenue. I think there’s reason to be bullish.

One of Iger’s most important job returning to Disney for a second terms as CEO is to take another shot at picking a successor. 

“I’m confident that we’ll identify the right successor at the right time,” he said. ■

Dana Walden, named co-chairman of Disney Entertainment under the new structure being implemented by The Walt Disney Co. CEO Bob Iger, has made changes to senior management of the company’s television brands.

John Landgraf remains chairman of FX Content and FX Productions and also will oversee National Geographic and Onyx Collective.

Simran Sethi becomes executive VP, programming and content strategy for ABC Entertainment and Freeform.

Also: Bob Iger Sets ‘Transformation’ at Disney With Big Job Cuts Ahead

Walden said the changes will enable her to focus on her newly expanded role.

“Great stories are the lifeblood of our company, and I will remain deeply connected to the creative side of our business,” Walden said in a memo outlining the changes. “As we begin our new chapter together, I have the utmost confidence in this team of proven and formidable leaders. I am very grateful to Bob for reuniting and realigning our company in such a meaningful way.”

Also getting new titles as part of the new structure are Tara Duncan, now president of Onyx Collective; Craig Erwich, now president of Disney Television Group; Debra OConnell, president of networks and television business operations; and Eric Schreier, president of Disney Television Studios and Global Original Television Strategy.

Here is Walden’s memo:

Dear Colleagues, 

Since the announcement of Disney Entertainment, I’ve spent time thinking about how to organize my team in a way that will enable me to focus on my newly expanded role, in partnership with Alan. I will continue to rely on the same incredible leaders who have delivered hit after hit onto our platforms and into our rich library, but have made some changes to our structure, which are outlined below:

■ Onyx Collective remains a huge priority, and as its impressive roster of creators and series continues to grow, Tara Duncan will now focus exclusively on Onyx.

■ National Geographic Content recently earned its third Oscar nomination and has attracted some of the biggest stars to its impressive slate of series and doc films. Courteney Monroe will now oversee all aspects of the brand, including its digital footprint and iconic magazine, along with its original content strategy.

■ Tara and Courteney will now report directly to John Landgraf, combining the strength of three prestigious brands.

■ As Tara’s focus shifts to Onyx, Freeform programming and development will be combined with ABC Entertainment, and Simran Sethi will oversee both. This represents Simran’s return to a brand she helped launch. She will continue to report to Craig Erwich.

■ Over the past six months, Ayo Davis and Craig have worked together very successfully on Disney Branded Television streaming originals. Ayo will continue to report to Craig for streaming, and now that structure will expand to also include the development and programming of Disney Channel and Disney Junior.

■ Debra OConnell, who recently joined my leadership team, will continue to oversee networks and ABC Owned Television Stations, and will add research, labor relations and TV business operations to her purview.

■ Disney Television Studios will remain under Eric Schrier, who will expand his responsibilities to include our global original television strategy, working closely with our talented regional leaders.  

Great stories are the lifeblood of our company, and I will remain deeply connected to the creative side of our business. As we begin our new chapter together, I have the utmost confidence in this team of proven and formidable leaders. I am very grateful to Bob for reuniting and realigning our company in such a meaningful way.

I want you all to know how much I appreciate your passion and your pursuit of excellence, which will be key to our success in the months and years ahead. 

Warmest regards, 

Dana 

Rebecca Campbell, chairman of international content and operations, at The Walt Disney Co., has decided to leave the company after 26 years.

The move comes as CEO Bob iger starts to implement the reorganization of the company he announced in Wednesday’s earnings call. The reorganization is paired with $5.5 billion in cost cuts, including the elimination of 7,000 jobs.

Iger said that he asked Campbell to stay on through June to help with the transition.

Campbell was responsible for expanding the international content creation pipeline through the development and production of entertainment and sports content in local markets throughout Asia-Pacific, EMEA, India and Latin America. Additionally, she also managed the company’s international linear channels, local ad sales, and local distribution outside the U.S. She also oversees the Disney Plus Hotstar business in India.

Also: Disney Shakes Up Streaming Team With Rebecca Campbell, Michael Paull, Joe Earley In New Roles

In the new structure head of streaming Michael Paull will now report to Dana Walden and Alan Bergman, the co-chairs of the entertainment division created by Iger.

Iger sent a memo to staff about Campbell’s decision to leave the company.

“Over the years, I’ve worked with Rebecca in so many different roles, and beyond the meaningful impact she has had in each of them, I’ve always appreciated her willingness to take them on graciously, enthusiastically, and with an impeccable degree of professionalism — wherever and whenever she was called to serve,“ he said. “Her talents and expertise, and her warmth and sense of humanity will be missed.”

Previously, Campbell served as chairman, Direct-to-Consumer and International Operations, where she oversaw the launch of Disney Plus throughout EMEA, APAC and Latin America.

In her own memo to staff, Campbell said she was looking forward to leisurely travel, self-reflection and quality time with her family.

“My time at Disney has been nothing short of transformative, affording me the opportunity to grow in a variety of roles and work alongside with and learn from some of the most talented, dedicated, and exceptional people I have ever known,“ she said. “From my days at WPVI-TV in Philadelphia and WABC in NY, looking after our owned television station group, moving to London to lead the EMEA team, and then running Disneyland, DTC and most recently International Content & Operations — it has been a wonderful, magical ride sprinkled with faith, trust, and pixie dust.

“Bob Iger has asked me to remain through June to support the reorganization and I’m more than happy to help,“ she said. “I will always be grateful to him for his exceptional leadership, invaluable wisdom, and cherished friendship. And I truly believe that the organizational changes that he has announced are positioning the company for a very bright future.” ▪️

As The Walt Disney Co. gets closer to announcing earnings on Wednesday and holding Bob Iger’s first call with analysts since his return to the company, predictions about what will transpire are heating up.

Evercore ISI media analyst Vijay Jayant is expecting Disney to beat consensus expectations with its first-quarter numbers. More importantly, Jayant is predicting Iger will come through on the cost cuts Wall Street and investors are looking for.

“There is an opportunity for Disney to use the current advertising downturn to take cost out of the linear business,” Jayant said. 

He estimates that if Disney cuts costs to the same degree as NBCUniversal has planned for 2023, that could translate into $1.3 billion in savings over the next several years.

“Additionally, there is opportunity for Disney to improve studio results through a combination of rerouting some direct-to-streaming movies to theaters, better execution and potential windowing changes,” Jayant said. “We see an opportunity to improve studio result by about $500 million by returning the studio to 2020/2021 levels of profitability over the next five years.”

A report by Bloomberg suggested that Disney is also considering licensing some of its films and movies to third parties in an effort to generate additional revenues.

Jayant has raised his fiscal first-quarter estimate for Disney revenue to $23.7 billion, which would be up 17.7% from last year. He lowered his estimate for operating income to $2.2 billion.

The numbers might not be the most important thing Wall Street is looking for.

“We expect 1Q fiscal year 2023 results will take a backseat to management’s updated strategic and operational visions following the recent leadership change and ongoing proxy battle with an activist,” RBC Capital Markets analyst Kutgun Maral said. “Given Bob Iger’s return as CEO was less than just three months ago, we assume the full contours of the new plan are still being shaped and could take more time to be fully articulated to investors.”

In broad strokes, Maral also is looking for a path to direct-to-consumer profitability, a company-wide cost transformation initiative, particularly at the linear networks, and upping operating income growth.

Maral is also looking to see how Iger restructures the company’s media and entertainment division. Iger has said his goal was to give creative executives more control. “From the outside, it’s sometimes difficult to appreciate what implications a profound shift like this might have on a company,” Maral said. “What does management expect?”

On another big-picture issue, Maral does not think this is the right time to spin off ESPN. 

Across linear, we think it would be a highly difficult and complicated process to separate ESPN from the rest of the company’s portfolio,” he said. “Perhaps more importantly, we think Disney is still in the early days of tapping into the opportunity with streaming sports and the benefits of being able to drive the broader Disney DTC bundle with Disney Plus and Hulu.”

Maral continues to think Disney will report revenue of $23.3 billion for the quarter — a bit lower than the Wall Street consensus — and operating income of $2.51 billion, 2.8% below consensus.

He predicts net added subscribers to core Disney Plus will come in at 1.5 million, also lower than the consensus of 2.2 million. 

Despite the pessimism about Disney’s first-quarter numbers, he considers himself bullish on the stock. Maral set a target price of $130, up from Friday’s close of $110.71.

Last week, in a letter to shareholders urging them to support the company’s slate of directors and reject a bid by Nelson Peltz for a seat on the board, Disney said the board is currently “overseeing important strategic changes that our CEO Bob Iger is executing, such as putting more decision-making into the creative teams, implementing a cost reduction plan, prioritizing streaming profitability and improving the guest experience in our parks.”

On the other hand, Peltz “has demonstrated that he does not understand Disney’s businesses and he lacks the perspective and experience to contribute to the objective of delivering shareholder value in a rapidly shifting media ecosystem,” the letter said. “We are skeptical of his motives and believe he would be disruptive at a crucial period for Disney.” ■

Investor Nelson Peltz, whose Trian Partners bought $800 million worth of stock in The Walt Disney Co., said the company should buy the stake in Hulu it doesn’t already own from Comcast.

Peltz is seeking a board seat and generally wants to see Disney cut costs.

But in an interview on CNBC’s Squawk on the Street, Peltz said Disney has to buy Hulu “or they have to get out of the streaming business.”

“Unfortunately, that means this company is going to have a debt load going forward for several years,“ he acknowledged. “So that cash has got to come from somewhere.”

On Wednesday, Disney said it was urging shareholders to reject Peltz’s candidacy for a board seat and to vote down bylaw changes proposed by Trian.

Petlz met with Disney executives and said they offered him an opportunity to be a board observer, but not a voting position as a director. “They want to hear what I’ve got to say, but they don’t want me voting on governance,” he said.

Last year, former Disney CEO Bob Iger returned to the company, replacing his handpicked successor Bob Chapek. Iger has made cutting costs among his priorities at the company.

The company also said that chairman Susan Arnold will be stepping down, replaced by Nike chairman Mark Parker. Peltz criticized Parker for voting for Disney’s acquisition of 21st Century Fox and for supporting a bid for Sky.

Peltz said Disney lost $50 billion in Fox. “It took the dividend away” and left the company’s balance sheet “a mess,” he said. ■