Massive CHANGE From Disney CEO Bob Iger Seeks to Fix a Chapek “Mistake”

Now that Bob Iger is back as CEO of the Walt Disney Company — he has a long road ahead of him to “set the strategic direction” as he was tasked with.

©Alberto E. Rodriguez / Getty Images

That strategic redirection includes a massive overhaul of the company’s structure, which many expected, but what that new structure would look like remained unclear — until recently. Disney held its first company earnings call since Iger’s return, and he declared out with the old and in with the new — effective immediately.

When Bob Chapek was named CEO of Disney after being hand-picked by Bob Iger, few could have predicted the chaos that would ensue. Now that Iger is back at the helm, we’ve begun to learn more about what exactly he hopes to accomplish during the short, two-year contract he signed on for.

Bob Chapek and Bob Iger©CNBC

One reason Iger was brought back was so he could “set the strategic direction for renewed growth” at the company. In a filing with the U.S. SEC, Disney noted that “Mr. Iger will initiate organizational and operating changes within the Company to address the Board’s goals.”

©Reuters | Disney CEO Bob Iger

Iger announced the immediate restructuring of the company, and more specifically, the Disney Media & Entertainment Distribution (DMED) division. told investors that a restructuring at the company — effective immediately —  is “aimed at returning greater authority to our creative leaders.” 

Iger later said in an interview with CNBC that Chapek’s DMED “was a mistake.”

Bob Iger ©Bloomberg

Chapek created DMED when he took over as CEO in 2020, and it would be one of the decisions that led to his downfall. He was focused on cost-cutting measures to bring profits back up following the COVID-19 pandemic and mitigate losses brought on by streaming. According to the original DMED announcement from Disney, the new structure was “designed to further accelerate the company’s Direct to Consumer (DTC) strategy, in light of the rapid success of Disney+.”

©Bloomberg

Essentially, Chapek created a “newly centralized distribution group” (DMED) to oversee marketing and distribution for all content across the globe. The company’s creatives who are responsible for making content, were to focus on doing that and only that.

©Hollywood Reporter via Getty Images | Kareem Daniel, former head of DMED at Disney

Disney utilized consulting firm McKinsey & Co. to help in the efforts to “review Disney’s operations and identify redundancies and cost-saving opportunities. What McKinsey recommended, though, was that Disney take “decisions about spending on marketing and publicity for films and television programs out of the hands of studio executives and instead centralizing them in another part of the company.”

At the time, DMED was making all these decisions instead of the creatives responsible for making the content.

©Disney

But now, under Iger’s new company structure, Disney will be organized under three divisions:

Disney Entertainment

This division will be led by Alan Bergman, who was previously the chairman of Disney Studios, and Dana Walden, who was previously the chairwoman of Disney General Entertainment Content.

ESPN

Jimmy Pitaro will continue to lead ESPN as its own division.

Disney Parks, Experience, and Products

Josh D’Amaro will continue to lead Disney’s division that manages the parks, resorts, cruise lines, and consumer products.

©Josh D’Amaro

Iger stressed that the reorganization will provide “a more cost-effective, coordinated and streamlined approach” to the company’s operations. The new structure will “re-establish a direct link between content decisions and financial performance,” he said.

Essentially, Iger has just undone everything that Chapek did when he created DMED. Iger also announced cost-cutting measures to the tune of $5.5 billion during the recent earnings call. The savings will come from the layoff of 7,000 employees, as well as cuts in Disney’s marketing budgets.

©Disney || Bob Chapek

And, now that he’s taken care of restructuring the company in an effort for renewed growth, Iger can focus on his “number one priority” — improving streaming.

In November 2022, we got an updated look at the Disney+ subscriber numbers but we also learned that Disney’s streaming business as a whole had a loss of nearly $1.5 BILLION. This loss ultimately contributed to the ousting of Bob Chapek as CEO.

©Disney

That most likely led to Iger’s choice to focus on growth and profitability for streaming. Iger reiterated Disney’s previous comments that they expect Disney+ to be profitable by the end of the fiscal year 2024.

The new organizational structure announced by Iger during the call will hopefully help by relinking the creative process with the financial results. As Iger put it, Disney is putting content back into the hands of the creatives.

©Disney

There’s still a long road ahead of Bob Iger, but we’ve seen what he is able to accomplish in a short amount of time. We’ll continue to watch for updates to see if that pattern continues. Be sure to stay tuned to DFB for more Iger and Disney news.

Bob Iger Announces Immediate Restructuring of Walt Disney Company

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The post Massive CHANGE From Disney CEO Bob Iger Seeks to Fix a Chapek “Mistake” first appeared on the disney food blog.

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