Disney’s Iger looks to make streaming profitable

STORY: As Bob Iger steps back into the top role at Walt Disney, one of the CEO’s first tasks will be to slow the losses at its streaming service.

The legendary chief executive who transformed Disney into the most powerful entertainment company on the planet will need to show how quickly he can cut costs and restore profitability, analysts say.

In the last reported quarter, losses for the streaming platform more than doubled to $1.5 billion, with shares dropping 40% so far this year.

Disney+ has become a sore spot for the media company as it spends heavily on content to attract subscribers.

Analysts are also pointing to ESPN as another target for deep cost cuts, including a review of all the upcoming sports rights as the network loses cable subscribers.

The return of Iger - who led the company for 15 years and launched Disney+ in 2019 - came as a shock to investors Sunday evening, as Disney announced CEO Bob Chapek’s ouster.

But some brokerages are raising concern over Iger’s two-year contract, questioning whether it’s enough time to transform the business – and find a successor.

Iger’s appointment evoked the return engagements of other iconic CEOs such as Steve Jobs, when he went back to run Apple.

Dan Ives, the managing director for Wedbush Securities, says for Disney — bringing back Iger makes sense.

"I think he understands this company basically better than probably anyone on earth. He has instant credibility. But this is this is not going to be easy. I mean, this is going to be a turnaround story for the next 12, 18 months and similar to when jobs took back over Apple. You know, I think Iger faces some difficulties ahead. But ultimately, this is his baby. And he, you know, I think ultimately saw what was happening. And, you know, really, the clock struck midnight. It was time for him to get back in the pilot seat."

Iger’s return has given a boost of confidence to investors, with shares up more than 5 percent in midday trading on Monday (November 21).