Berliner Tageblatt - Disney seeks old magic in return of ex-CEO

Iger's return comes as Disney is trying to negotiate an uncertain era, where investors have lost faith in some of the most storied names in US media as companies bleed cash in the hunt for customers to streaming platforms.

Disney's board of directors rehired Iger for a two-year contract that will add to the 15 years he ruled over the company until 2020, when he handed the reins to Chapek.

But Disney's share price has slumped 40 percent this year and Chapek was unceremoniously fired after less than three years in the top job, much of it struggling to fill the big shoes left by Iger.

Iger's leadership was extraordinary even by Hollywood's standards.

The 71-year-old led Disney to new frontiers when he bought the Star Wars and Marvel franchises and launched the Disney+ streaming service to rival Netflix head-on.

He also bought 21 Century Fox from media baron Rupert Murdoch and held on to sports network ESPN despite calls to sell it, maintaining an empire that stretched from theme parks to local TV stations and cruise ships.

The return of Iger was cheered on by Wall Street, with Disney's share price surging by six percent on Monday, and analysts recommending the stock for the first time since he exited the company.

- 'Not guaranteed' -

But some analysts were not so sure, warning that the world that Iger left in early 2020 -- before Covid-19, before the streaming wars -- had changed.

"The bold move might feel like the right one, however the business is at a different phase of growth," said Paolo Pescatore, analyst at PP Foresight.

"It will take time and immediate success is not guaranteed."

The core problem for Iger will be to turn a profit at Disney+ when, according to the latest figures in November, it burned through four billion dollars in just 12 months.

Launched in early 2020, Disney+ streams all that the Star Wars and Marvel franchises and Disney have to offer, releasing new content at a furious rate, but that weighs heavily on finances.

On the positive side, the Disney+ platform continues to gain subscribers and had 164 million customers at the end of September.

But the financial hole has put pressure on Disney's other sectors: Theme parks and merchandising have succeeded for now to keep the Disney group in the green.

- 'Expensive' -

The pressure has grown worse as the economic outlook sours.

Households are winnowing down entertainment subscriptions to just one or two, a cold reality that has seen the Netflix share price plummet by 50 percent in a year.

For Jonathan Kees of Daiwa Capital Markets America, Disney's current troubles are also a result of choices made by Iger.

"Iger pushed for the creation of Disney+, which has become an expensive business venture," the analyst said.

As for the 2019 purchase of 21st Century Fox, "that purchase alone loaded up the Disney balance sheet with an incredible amount of debt, which is not what investors are valuing in this current stock market."

And even under the hugely respected Iger, Disney will face pressure from activist investors looking for quick results.

The Third Point fund, which increased its stake in Disney this summer, is among the most vocal on the matter.

Dan Loeb, its founder and CEO, has previously demanded that Disney hive off the ESPN sports media business from the rest of the group before reversing his position.

And according to the Wall Street Journal, the return of Iger is decried by activist fund Trian, which acquired more than $800 million worth of Disney shares after the stock market tumbled after poor results.

"At the end of the day, it's his legacy that's at stake," Pescatore said.

A.Gasser--BTB