Saint Bob Speaketh
At this point, one thing is crystal clear: Bob Iger is good at this. I caught a snippet of his interview yesterday morning on CNBC, and it's obvious he is very comfortable explaining his decision-making. Contrast that with the often stilted delivery of Bob Chapek, you can see the dynamic difference in personality. I'm not the only one who feels this way. The stock is up, so Wall Street is happy, and Nelson Peltz, the activist investor who was gearing up for a proxy fight, backed off this morning after Iger's interview stating plainly that he is pleased with the plans announced on Wednesday's earnings call. All in all, a good day for Bob Iger and Disney. Friend of Hollywood Breaks and Ankler Columnist, Sean McNulty, has a great rundown of the finer points of the earnings call in his The Wake Up newsletter, which you can find here.
The broad strokes are this: revenue was up, beating estimates, income was below expectations but not concerningly so, the cash bleed from streaming has slowed, and the parks are crushing it. Additionally, they've re-org 'd the company, yet again, into three divisions: Film/TV (including Hulu and Disney+) headed up by Alan Bergman and Dana Walden (her ascent continues apace), ESPN and ESPN+ under current ESPN Chief James Pitaro, and the ass-kicking Parks and Experience division headed up by Josh D'Amaro. The big news aside from the re-org and the part that pleased the Street and Mr. Peltz was the massive cost-cutting. Iger made no bones about it: Disney spent like drunken sailors, and now, it's time to get sober. They're targeting over $5 billion in cuts with about $2.5 billion in Admin costs, which includes a larger than expected 7k in layoffs and $3 billion in content cuts. So what does all of this mean? As McNulty points out, if you work in marketing across any aspect of Disney, it's probably time to update that resume. The chatter on the call focused heavily on all the extraneous marketing spending, so reading between the lines, marketing across all divisions may be seeing a bulk of the cuts. It's widely expected that the parks division, which was hammered during the early days of COVID, will be spared this time around, which makes sense given their rapid financial recovery post-COVID.
The decisions have been made, and as mentioned, investors and the Street appear to be happy with Iger's moves. He has laid out a plan to reset much of what Chapek had put in place and believes that streaming will still achieve profitability by 2024. Let's see if this all comes to pass, including if he does step aside after two years as his contract stipulates. Now the way forward has been set; the next question will become the matter of succession. Who will take the chair once Iger vacates? Clearly, the front runners are Bergman, Walden, Pitaro, and D'Amaro, but let's not forget CFO Christine McCarthy, who will be charged with identifying the savings and cuts to reach that $5 billion marker. The other division heads will now be fully accountable for meeting these strategic objectives. Let the bake-off begin!
It's Getting Real
In addition to the news of the coming layoffs at Disney, UTA announced yesterday it was also making cuts. It's becoming a pattern, with more layoffs across the industry each week. I'm hard-pressed to remember a time when there was such a constant stream of job losses across such a short period—all in all, not the greatest news. Many of you, including yours truly, have been a part of the boom and bust of working in the entertainment industry, but so much has changed over the last few years.
When I was let go from New Line years ago, the industry was still in a growth cycle, so even though the initial panic of being laid off was a bit unsettling, I knew there would be another opportunity waiting for me on the other side. So there was, but we are now in a completely different reality. Thousands upon thousands of people are losing their jobs, and there are not enough jobs available to enable them to get back on their feet. This is not to say that all is hopeless. I'm a case study of ways one can pivot to continue their career, but there will be more struggles than successes if the industry continues in its current state. Richard Rushfield has a solid column addressing some of the fundamentals the industry needs to manage now that the utter destruction foretold by COVID has subsided. The old and, frankly, new business models need to be fixed. We need to find a new way to keep the business growing, not stagnating. It remains to be seen if the current crop of leaders can achieve any of that, but at least Iger has been willing to admit that mistakes were made, and righting the ship must be the priority. This is the only way to return growth to the industry so that those who have or will be pink-slipped can forsee a light in all the darkness.
Pages from the Commonplace Book
This week, we turn to the author of the beautiful short stories, The Legend of Sleepy Hollow and Rip Van Winkle, Washington Irving, who offers some advice on facing adversity and trouble in life:
"Great minds have purposes, others have wishes. Little minds are tamed and subdued by misfortune; but great minds rise above them."
I have a sneaking suspicion from conversations with some readers and listeners of Hollywood Breaks that most of you fall under the great minds category. Remember, to paraphrase Harvey Dent borrowing from theologian Thomas Fuller in The Dark Knight; it's always darkest before the dawn.
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