Walt Disney (NYSE:DIS) witnessed a decline in its shares, hitting a 6-1/2 month low on Monday and experiencing a drop of over -1% this year. This performance pales in comparison to the S&P 500 ($SPX) (SPY), which has enjoyed a robust increase of more than +18% during the same period. Investors are hopeful that CEO Iger, in his second stint, can steer the company toward a turnaround. Under Iger’s initial 15-year tenure as CEO, which concluded in February 2020, Disney’s stock price surged nearly sixfold. Nevertheless, the company now confronts more intricate challenges compared to Iger’s previous tenure.
During his brief time as CEO, former Disney CEO Chapek oversaw a -28% decline in Disney’s share price, largely due to the Covid-19 pandemic’s impact on the temporary closure of theme parks, the film studio, and the cruise business. While the current CEO Iger, who recently extended his contract for two more years until December 2026, has yet to reverse the company’s fortunes, Disney’s share price has experienced a decline of -6.8% since his return in November. In contrast, Netflix (NASDAQ:NFLX), a direct competitor in the streaming industry, has seen a 56% increase in its stock price.
CEO Iger is currently facing challenges in revitalizing Disney’s fortunes. In an effort to cut costs, he has implemented measures such as budget reductions and layoffs, while Netflix continues to attract subscribers. This week, Iger announced plans to sell approximately one-third of Disney, considering Disney’s linear TV assets as non-core. Additionally, the company is exploring options to restructure or sell its TV and streaming business in India, as well as seeking a strategic partner for ESPN. Prior to the pandemic, Disney’s media networks accounted for 35% of its revenue ($24.8 billion) and over 50% of its operating income ($7.5 billion).
However, Iger’s ability to turn around Disney is constrained by the declining cable TV industry. Even Disney’s streaming business has been underperforming, and in the just-ended fiscal third quarter, it is projected to incur a loss of approximately $800 million. Initially, Disney+ attracted customers with competitive pricing upon its launch in 2019, but now the company is attempting to raise prices without losing subscribers, especially after experiencing a loss of 4 million subscribers last quarter.
Disney is also grappling with the aftermath of several setbacks in its film division, as well as the strike initiated by Hollywood actors and writers affecting multiple media companies. Previously, Disney relied heavily on its cable networks for revenue, but the profits from these networks have been steadily diminishing.
Nonetheless, some analysts maintain their belief in CEO Iger’s ability to revive Disney. Needham & Co expressed confidence, stating that Iger’s continued leadership until 2026 offers a higher signal quality regarding Disney’s path and provides a “reasonable investment timeframe” for the company to rebound.
Featured Image: Unsplash @ Tyler Nix
Author Faith Yakubu 
