In 2019, The Walt Disney Co. celebrated several major successes, including the launch of Disney+ with 10 million subscribers on Day 1, a massive $71 billion acquisition of Fox’s entertainment assets and the release of “Avengers: Endgame,” the second-highest-grossing movie ever. These achievements showcased Disney’s ability to leverage its intellectual property (IP) across various platforms, from theaters to theme parks and streaming.
Fast forward almost four years, and doubts have emerged about the wisdom of consolidating all these assets under one roof. CEO Bob Iger has pondered whether Disney has grown too large for its own good. Some Wall Street voices are even advocating for a breakup.
Disney’s parks business is showing signs of slowing down, its linear TV division is on a decline, and Disney+ subscriber growth has lost momentum. Dinsey appears to have lagged behind its competitors at the box office, leading to a nine-year low in its stock price and underperformance compared to the S&P 500.
MoffettNathanson analyst Michael Nathanson has questioned the company’s structure, proposing the creation of two Disney entities: one focused on parks, Disney+ and studio intellectual property and the other encompassing everything else, including linear networks, ESPN+, Hulu SVOD, Hulu Live TV and Disney+ Hotstar.
“So why not make a clean break?” Nathanson asked Iger on the earnings call Aug. 9.
Iger remains tight-lipped about the future structure of the company, emphasizing the examination of strategic options for ESPN and the linear networks.
Iger has identified three pillars that will drive Disney’s growth in the coming years: film studios, the parks and streaming. ESPN, in particular, is set to undergo a full transition to become a direct-to-consumer platform. Nevertheless, analysts and media experts warn that this journey could be challenging, primarily because of the high costs of sports rights and the potential resistance from consumers who already subscribe to multiple streaming services.
Splitting the company into two entities could…