Bob In, Bob Out
Disney sees a huge leadership change as it aims to make the streaming service profitable; its impact on India will slowly unfold
X ROLLING BACK THE sands of time, it’s Bob taking charge back from Bob again at The Walt Disney Company. After a tumultuous two-year stint in the corner office, Bob Chapek has been replaced by his predecessor Bob Iger, 71, as the CEO of the entertainment conglomerate. Iger, who spent more than two decades at Disney, including 15 years as CEO before stepping down in 2020, is back at the helm for another two years.
The numbers for the direct-to-consumer (D2C) business for the quarter ended September 30, 2022, seem to have sealed
Chapek’s fate. While revenue surged 9 per cent, its losses increased 2.3 times. The growing D2C business, led by the Disney+ streaming service, saw an 8 per cent increase in year-on-year revenues, but losses during the quarter more than doubled to $1.5 billion. This makes the management’s stated desire of making the streaming service profitable in 2024 appear ambitious. The other rub is Disney’s stock price at around $99, down 37 per cent since January 1, 2022, and a reflection of perhaps how the market is now more focussed on profitability and not just subscriber numbers.
Ironically, just five months ago, Disney’s board had extended Chapek’s contract. It is broadly expected that fixit man Iger will now focus much of his time on reducing costs and restructuring the balance sheet with the objective of getting the streaming business in the black as quickly as he can. The impact on the Indian operations, however, is not clear yet. In June 2018, Disney acquired Rupert Murdoch’s 21st Century Fox, which among its other businesses, also gave it Star India, in a deal with a total size of $71 billion.
The streaming service here, Disney+ Hotstar, is also in the red. It reported a 5 per cent YoY growth in revenue in FY21—the latest available figures—at `1,671 crore, while losses surged 66 per cent to `601 crore from `362 crore in FY20. Most of its revenues come from cricket. The loss of the digital rights for the marquee Indian Premier League (which was won by Viacom18 for the next five seasons) will hit its revenue growth, and in the process profitability as well. The network has had to settle for the television broadcast rights, for which the outgo was `23,575 crore; this is for a five-year period. In contrast, the broadcasting business had revenues of over `12,000 crore with a net profit of `1,395 crore in FY21. How Disney goes about its streaming business and what the eventual impact will be on its Indian operations is still to become clear. What is clear though is that Disney is betting on Iger’s encore to fix its script.