Bob Iger’s fast start back as Disney’s CEO is welcome news to shareholders like us

By Kevin Colleran On Nov 29, 2022

Bob Iger, who returned last week as CEO of Disney (DIS), told employees Monday he intends to maintain the company’s current hiring freeze. He also reiterated the need for Disney to pivot its streaming business objective away from subscriber growth at all costs and toward profitability. As shareholders for the Club, we are pleased to see Iger taking steps to fix the missteps of his predecessor. Iger’s comments, at his first townhall meeting since taking over for the fired Bob Chapek, are in line with his previously published memo to the staff of Disney Media and Entertainment Distribution last week. In that correspondence, which came less than 24 hours after his rehiring, Iger announced the departure of the group’s leader Kareem Daniel. He also wrote: “Over the coming weeks, we will begin implementing organizational and operating changes within the company. It is my intention to restructure things in a way that honors and respects creativity as the heart and soul of who we are. As you know, this is a time of enormous change and challenges in our industry, and our work will also focus on creating a more efficient and cost-effective structure.” We’re pleased to see Iger again stress this viewpoint Monday. As Club members will recall, we started calling for change at the top, following Disney’s awful fiscal fourth-quarter results on Nov. 8. Given Disney’s lack of operational focus, particularly on the streaming side of the business, we said at the time Chapek had to go. Nearly two weeks later, he was gone. While Chapek may have been a great operator on the theme park side of the operation, Iger understands that at its core, Disney is about creativity and storytelling. Moreover, Iger is clearly coming back into the role with the understanding that while subscriber growth may have been the key streaming metric in a zero-interest-rate world — in the current landscape, it’s all about profit. The previous management was simply too slow to respond to the rapidly evolving operating environment as inflation surged and the Federal Reserve raised rates as aggressively as we have ever seen in response. We look forward to learning more about how Iger plans to restructure operations in the coming months —but for now, we believe this decision to maintain the hiring freeze and stress creativity and storytelling as Disney’s primary engine for growth is a strong start. The faster Iger can show improvement in terms of streaming profitability — or at least reduce losses in the near term — the faster we will see a turn higher in Disney’s stock price. Shares were lower by roughly 3% in Monday’s down market. They’re off about 38% year to date. We have a 1 rating on Disney, meaning we see shares a buy at current levels . While it may take some time, we think the company is back on the right path — and as a result, believe the risk/reward is incredibly favorable for those willing to give Iger a few quarters to show progress as he maps out a path to streaming profitability. (Jim Cramer’s Charitable Trust is long DIS. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Bob Iger, former CEO, The Walt Disney Company

Scott Mlyn | CNBC

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