Bob Iger back in the Mouse House

ALSO: Is Semafor running on bad crypto money?

Let’s talk about Disney.

The fabled House of Mouse has been around since 1923, meaning we’ll have to endure an irritating series of centenary celebrations next year. Cue a Photoshop of Goofy in a party hat (he’s almost 700, in dog years). But that also puts it in an elite roster of American companies that have endured the weathers of the 20th century. Ford (1903), GM (1908) and IBM (1911) are perhaps the others – but who can claim to have more cultural salience than Disney?

Of course, the Disney of 2023 is a long way from the Disney of 1923. Indeed, the present iteration of Disney is starkly different to the company we saw at the start of the millennium. And that’s all owed to one man: Bob Iger.

Iger, who succeeded Michael Eisner (a frustratingly similarly named man) as CEO in 2005, oversaw a major strategic refocusing of the company. The previous decades had been marked by huge investments in IRL properties, like Disney World and the Disney Magic cruise ship. This was the so called “Disney Renaissance” under Eisner, who steadied (no pun intended) the ship, after the death of Roy Disney (Walt’s big brother and the surviving founder) threatened to scupper the company. But the Disney Renaissance was a project begun in the 1980s, the pre-digital era, and by the end of Eisner’s tenure, attention had turned to the next stage. And perhaps nothing that happened under Eisner was as important as the 1991 agreement with Pixar – a digital animation studio and burgeoning competitor – to make three films under the Disney-Pixar brand, starting with Toy Story in 1996.

This led, in Iger’s early years, to the 2006 acquisition of Pixar from Steve Jobs. A steal at $7.4bn. Obviously, Disney had snaffled up smaller companies in the past (including The Muppets from the Jim Henson Company) but this marked the beginning of a new era of acquisitions under Iger. Let’s look at the major deals of the new millennium:

• 2006: Disney buys Pixar, $7.4bn

• 2009: Disney buys Marvel, $4bn

• 2012: Disney buys Lucasfilm (aka Star Wars), $4bn

• 2019: Disney buys Fox, $71bn

These deals gave Disney a huge, unprecedented, market share of audiovisual entertainment. If you want to get a sense of that, just look at the 2021 Top 10 highest grossing films in the US: 5 Marvel movies (a Spider-Man, a Shang-Chi, a Venom, Black Widow and Eternals) which constituted 5 of the top 6 moneymakers. Were things different in 2019, the last pre-pandemic year? No! 7 of the Top 10 were Disney properties (Avengers, Lion King, Toy Story 4, Frozen 2, Captain Marvel, one Star Wars or another, and Aladdin). And there was also a Spider-Man, which has some complex licensing deal with Sony, but is really a Marvel property.

This cultural supremacy became even more important when Disney waded into the streaming wars in November 2019. In hindsight, they could not have picked a more opportune moment to launch their platform. Netflix’s supremacy was being challenged, fairly ineffectually, by Amazon, but Disney was still early to the game (services from Apple, HBO, NBC etc would follow). Disney+ was originally a fairly family friendly offering. Unlimited access to Bambi and Monsters Inc to distract your kids. But it had two additional strengths. Firstly, and out of its hands, we are in a state of cultural regression, and plenty of grown adults want to watch Moana. Secondly, it had access to all of Marvel and Star Wars, which, again due to our cultural regression, are the most important properties in the entertainment market.

Add to that the fact that Fox’s content library unlocked a wealth of grown-up content (I watched Alexander Payne’s Sideways on the service a few months ago, for example) and Disney+ rapidly became a big competitor in the market. In Q1 2020, it had 26.5m subscribers. By the end of the year, that figure had risen to 73.7m. But it’s post-pandemic growth has been equally impressive (especially given the decline in the streaming market) and data in August put the number of subs at 221m – ahead of Netflix’s 220.7m. On Netflix: perhaps not since Skype have we seen a tech company squander such an enormous head start.

But then, in February 2020, just before the pandemic, Bob Iger resigned. And then, during covid, Disney’s fortunes were extremely mixed: all the parks were closed, cinemas were shuttered. So even while Disney+ was doing great, the whole company was less happy. And this year there have been further political controversies, with the Don’t Say Gay bill in Florida, which put Disney in a bit of a pickle. Employees made their voices heard and Bob Chapek, the new CEO, eventually stated that the organisation (a major employer in the state) shouldn’t have stayed silent. It began a series of boring but destructive internet memes about how Chapek was leading Disney across a new “woke” frontier.

Anyhow: the reason I’ve written this potted history now is that Chapek is out and Iger back in. Back to the future, I would say, although I believe that’s still owned by Universal.

Chapek’s problems were largely not of his own making. He inherited the chief exec position from someone who’s success in the business is legendary, which always makes the gig harder. The combination of an unforeseeable pandemic destroying large swathes of their businesses (Chapek previously led the parks division, so was presumably aware of what insurance policies were in place against Black Swans like covid-19) and hard-to-foresee political events also worked against him. And the general cooling of profitability in tech and entertainment has struck Disney. Even though I write about Disney+ as an unmitigated success (and I think it is a success, given the trends across the whole marketplace) the reality is that it has been SUPER expensive and growth has tailed off.

I am not in tears at the difficulties being faced by Disney. I think that 7 (arguably 8) of the Top 10 Box Office films in a single year is as close to monopoly as any cultural medium should want to come. Creatively, competition is good (though I concede that is not the business perspective). Within the organisation, it’s clear that senior executives felt that Chapek had lost control of the company’s direction – that they were becoming embroiled in petty and damaging political squabbles rather than focusing on the sort of expansion that has typified the past two decades.

That sort of expansion is perhaps unrealistic at present. Cinema distribution seems to be in terminal decline, while the cost of living crises around the world will likely hit both streaming platforms and holiday resorts. There’s no part of the Disney business that looks particularly resilient to these trends. But, then again, we’re always going to have a culture: and for better or worse (read: worse) the most popular cultural properties, from The Avengers to The Simpsons, are owned by Disney.

Iger’s return will be intended to steady the ship. But there’s scant risk this is a Titanic moment, not least because Paramount still handle the North American rights (though Fox have international dibs). This is a big boat in a choppy sea – and let me tell you, in a storm, a cruise liner is less likely to capsize than a dinghy. I’d rather be up on deck, listening to the violinists, than down in the roiling waters.

AFTER THE JUMP: HAS SBF’S BAD MONEY INFILTRATED THE MEDIA?

If you haven’t been following the FTX collapse then let me recommend this podcast I produce, A Long Time in Finance, on the subject.