Disney Investors Await CEO Bob Iger’s Plan With First Quarter

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

As angst grips the entertainment conglomerate’s rank and file, investors expect Iger to redefine the vision for the company he built and led for 15 years, company employees and observers said.

“This is Bob Iger performing in public for the first time. Everyone will be listening,” said Bank of America analyst Jessica Reif Ehrlich. “This is the right place for it. Right now”.

Disney and Iger are under pressure from activist investor Nelson Peltz, chief executive of Trian Fund Management, who has launched a fiduciary battle to put him on the board. He blamed the company for poor financial results despite its global reach and strong entertainment brands.

The company urged its shareholders to reject Peltz’s offer, noting in a Feb. 2 letter that the board of directors has the right combination of experience, skills and attitudes to guide Disney through an unprecedented period of change. He also backed Iger’s lead, adding that Disney generated a 554% shareholder return during his previous tenure as CEO.

Shortly after returning as CEO in November, Iger announced plans to return decision-making power to the company’s creative executives. This change led to the departure of Karim Daniel, head of the Disney Media and Entertainment Distribution team formed by Iger’s predecessor Bob Chapek, to consolidate the budget and distribute the studio’s content.

In Disney’s famously silent culture, even top executives say they don’t know what’s in store for them. Discussions on the restructuring are being held at the company’s highest level, with entertainment CEO Dana Walden, board chairman Alan Bergman, ESPN spokesman Jimmy Pitaro and chief financial officer Christine McCarthy participating.

Streaming strategy update pending, ESPN

Wall Street is waiting for Iger to evaluate Disney’s streaming business, which he launched with an announcement in 2017 that the company would create its own consumer-facing service. The company has amassed a total of 235.7 million subscribers across its trio of streaming services – Disney+, Hulu and ESPN+ – even as losses soared to $1.5 billion in the most recent quarter.

Investors have begun to prioritize earnings over subscriber growth since last year, when Netflix reported its first loss of subscribers in more than a decade. Disney said it expects its consumer-facing service to reach profitability in fiscal 2024.

ESPN, Disney’s longtime cash cow, is another Wall Street business. The sports network found itself caught between a decline in cable TV subscribers and an increase in fees paid to sports leagues.

“I don’t expect the numbers to change, but I do expect thoughtful and honest conversations about these ventures,” said media analyst Michael Nathanson of SVB MoffettNathanson.

Wall Street analysts expect first-quarter earnings of 78 cents per share, up from $1.06 a year ago, and revenue of $23.37 billion, up from $21.8 billion a year earlier.

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