Disney investors impatient with Iger effort; 'Mickey on a Diet'

Disney has fallen more than 15.5% since CEO Bob Iger returned in November. The shares closed last night at the lowest levels in nearly nine years.

Aug 25, 2023 - 18:30

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Disney investors impatient with Iger effort; 'Mickey on a Diet'

Updated at 8:45 am EDT

Disney (DIS) - Get Free Report shares are set to open near the lowest levels in nearly a decade Friday following a post-earnings slump that suggests investors are growing increasingly impatient with the turnaround plans of interim CEO Bob Iger.

Iger, 72, returned to the helm of the media and entertainment giant as interim CEO in November of last year. He unveiled sweeping changes for the group, including a major cost-cutting drive and a new three-part organizational structure focused on Parks, Entertainment and ESPN.

He also said Disney would restore its regular dividend, which it suspended during the peak of the pandemic in 2020, by the end of the calendar year.

Disney earlier this summer extended his contract until the end of 2026.

But Disney shares have fallen more than 10%, including an outsized 3.7% slide on Thursday, following the group's disappointing third-quarter earnings on August 9. That report flagged near-term price hikes for its Disney+ streaming service as well as falling subscribers and more operating losses.

Disney also booked around $2.65 billion in charges over the quarter, most of which were linked to removing content from its streaming platforms and killing existing licensing agreements. It also paid out $210 million in severance to laid-off workers.

"We acknowledge many execution risks including DIS’s uniquely political risk. In our view, Iger has been adeptly maneuvering to address these risks including cutting costs to improve growth, profitability, and free cash flow." said Daiwa analyst Jonathan Kess in a recent client note.

"Figuratively, Mickey is going on a diet and losing weight. We see Disney as a survivor and winner in the streaming wars."

Disney shares were marked 0.9% higher in premarket trading to indicate a Friday opening bell price of $83.19 after closing near a nine-year low of $82.47 each on the NYSE Thursday.

Amazon-Disney Talks on ESPN Venture: Report

Support for the shares in the premarket could be linked to a report from The Information, which said Amazon (AMZN) - Get Free Report was in talks with Disney that could see the online retail and tech giant collaborate with ESPN's new streaming effort.

Earlier this summer, Iger said Disney would work toward finding a content partner for ESPN that would help offset the ongoing decline in ad revenue and profit from Disney's linear networks division.

Disney also agreed terms with Penn Entertainment that would see the gambling group pay $1.5 billion over 10 years, as well as an equity kicker, in exchange for the use of brand rights, promotions and other forms of cooperation as it relaunches under a new name: ESPN Bet.