Disney investors await CEO Bob Iger’s revival plan with Q1 on tap

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

Uneasiness is rife at the entertainment group, with investors saying they expect Iger to outline a new vision for the company he built and ran for 15 years, according to employees and company observers.

“This is Bob Iger’s first public presentation. Everyone is going to listen,” said Bank of America analyst Jessica Reiff Ehrlich. “This is the right place to do it. This is the right time.”

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

The company urged its shareholders to reject Peltz’s bid, noting in a Feb. 2 letter that the board has the right combination of experience, expertise and vision to lead Disney through an unprecedented period of change. Can be guided. He also endorsed Iger’s leadership, adding that Disney achieved a 554 percent shareholder return during his previous tenure as CEO.

Disney and Iger are under pressure from activist investor Nelson Peltz, who has launched a proxy war to get him on the board.

Shortly after returning as CEO in November, Iger announced plans to restore decision-making power to the company’s creative executives. The change resulted in the departure of Kareem Daniels, head of the Disney Media and Entertainment Distribution Group, which Iger’s predecessor, Bob Chapek, had created to stabilize budgets and distribution for the studio’s content.

In Disney’s famously tight-lipped culture, even senior executives say they don’t know what’s coming. Restructuring talks are taking place at the company’s highest levels, including general entertainment chief Dana Walden, film chairman Alan Bergman, ESPN’s Jimmy Pataro and chief financial officer Christine McCarthy.

Streaming strategy, awaited update on ESPN.

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

Disney+ logo
Investors have started prioritizing profits over subscriber growth since last year.
AFP via Getty Images

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

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

“I’m not expecting the numbers to change, but I’m expecting a thoughtful conversation that’s honest about these businesses,” said Michael Nathanson, media analyst at SVB MoffettNathanson.

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

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

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