I have heard this sort of management arrogance before

Investment Analysis Clubs Macro Economic Trends and Risks
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When I was at the pump seal company, I heard honchos dismiss anyone’s concerns with “I know things you don’t”, or “I understand things you don’t”, without ever explaining what those “things” were.

When i was at Radio Shack, I heard President Bernie Appel dismiss concerns about competitiveness with “I’ve been in this business 40 years and I know everything”

A while back, Nelson Peltz criticized Disney management, for, among other things, gouging the daylights out of their customers. Not a good look for a supposedly family friendly company.

What does Iger say about Peltz’s criticism?

“Peltz does not understand Disney’s businesses and lacks the skills and experience to assist the board in delivering shareholder value in a rapidly shifting media ecosystem,”

There is that narrative management loves, insisting it has a monopoly on knowledge and wisdom, and arm-waves away critics with “delivering shareholder value”.

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They refused Peltz a seat on the board of directors.

Peltz may break up Disney before it is done.

The brief bit of reading I did mentioned the TV businesses were doing badly. That was ESPN and Disney +. I think Fox as well. That is what Iger is complaining about. It is a cheap and not intelligent shot at Peltz’s lack of TV experience. Peltz has another sort of native intelligent Iger does not have as much of corporate valuations.

adding considering how bad that side of the mouse’s house is doing and the Fox purchase Iger needs to politely shut his pie hole.

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At first Peltz wanted Disney to spin of ESPN. Good for a short term cash bump, terrible for long term health. Live sports is one of the few things that’s still working for television, and having it as part of the Disney+ bundle is gold for the mouse house. (Peltz has decided, apparently after doing some thinking, that spinning of ESPN would be a bad move after all.)

It’s clear that “traditional TV” is going away, but the future remains unclear except that streaming will continue taking a bigger and bigger bite. If Disney doesn’t have a major streaming service they will lose one of the most important legs of their business: the ability to cross promote and cross merchandise their IP via free tv, paid tv, cable tv, etc.

Much the growth of their theme parks (and cruise lines) is also based on exploitation of their historical IP, and if you don’t keep refreshing it it goes stale. Ask King Features Syndicate how they’re doing these days now that Betty Boop is 50 years past the sell-by date. ‘Refreshing it” means bringing it back for a new audience every few years, as Disney has done with its older animation catalogue, but it also means finding new properties which can translate into multiple venues: theatrical, film, ad supported tv, streaming, parks, cruise lines, merchandise, and more.

The Fox acquisition was pricey, but it gave them enough heft, (combined with brand magic and ESPN) to become, almost overnight, the second largest streaming service in the country; presumably that business will turn profitable before any of the other newcomers, and if there are to be only 3 or 4 survivors (just like cable programmers, just like TV networks) then Disney had better have the firepower to be one of them.

Peltz would be bad news for Disney (*arguably already is, although for all the wrong reasons.) They kicked out Chapek because he spent large while his economy cratered (thanks to Covid.) He also did some bone-headed moves like getting in a feud with the governor of Florida (no comment for political reasons, but I’m on Disney’s side here.) Add the loss of theme park revenues, extraordinary spending, and bad politics and he was cashiered. Iger is pretty good, and should reap the rewards of Chapek’s untimely ouster.

Iger has already begun addressing the “parks too expensive” meme, perhaps not substantially yet but he clearly recognizes the issue. Pulling in content spending some while bumping the streaming price and adding a free (ad supported) tier should pay results in 12-16 months. Recall ABC already has ties with every single major television advertiser that’s ever been, something Netflix does not have; they also know what the agencies want, how they want it, and (hopefully) how to price it to maximize results. It’s too soon to tell, but I am absolutely sure that Iger knows a lot more about this than Peltz, so yeah, I’d politely tell him to take a hike as well. If I had to pay greenmail I’d probably do that, up to a point, but I’d be willing to tough it out, too. Iger knows hardball, he can smack a fast pitch as well as most.

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@steve203
I dunno. I kind of read it as saying that Peltz is unqualified to sit on the board, not that the board or Iger think they know it all. Being on the Board of Directors of a large public company isn’t a job that just anyone can hold.

In a quick look at his business experience, it all seems to be in the selling of not-quite commodity goods. Produce, frozen foods, fast foods. Since making his fortune in those businesses, he has been an investor, trying - with mixed success - to get on the boards of various industrial companies. I didn’t see any entertainment experience in his bio.

So Iger’s claim that he isn’t qualified to sit on the board of an entertainment giant doesn’t seem to be unreasonable at first glance.

I agree that management arrogance can be an issue. I just don’t see it here.

–Peter

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If TV is not making it and the other streamers are not making it so well…and streaming means fewer or no commercials…why is this ever supposed to work? I get the debt load will be less. But then it all needs refreshing.

Heard something interesting on much more profitable video games. The older titles are all coming back as redone with more robust specs and polish. They are worth a fortune.

The difference between TV programming and video games one is all software. The other is really all infrastructure. Now if Disney can socialize the losses that would be magic.

This is still infrastructure costs. All of it. Peltz is better at understanding the overlays of making a profit out of it. Iger is not really proving himself in a tougher situation.

I’d be surprised if there was much of a profit out of the streaming in 16 months. The reason is ABC. The ads will do one or two things, turn some people off or come up against ad blockers of whatever flavor. In other words the value of the ads in the digital world is dropping. The audience information is generalized now, another drop in value.

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Sticks in my mind that ESPN was having some difficulty a few years ago. I remember posting something on the old Disney board about “ESPN without the S”

As for their IP, can they really make Star Wars and Marvel sequels to infinity? I remember how weak the Star Trek sequels became. I recorded “Enterprise” off the air a few years ago. Working my way through it now as I pedal my exercise bike in the morning. Know what? It isn’t very good. There was an ep of DS9 where I did what I had never done before on a first run Star Trek anything: turn it off half way through, it was that bad. Yes, there are some eps of TOS that I hate, mostly from the third season, but some are truly a delight, like “Errand of Mercy”. TNG got to that level with “Inner Light”, but I don’t remember a single standout ep of DS-9, or Voyager, or Enterprise.

As for the parks, management justifies the price increases as a strategy to prevent the parks being overcrowded. If they are worried about overcrowding, my suggestion would be build another US park, not roger customers harder and harder.

Steve

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This WSJ article why Peltz would not be welcome to the board.

Mr Morrell a Disney corporate affairs executive worked just 4 month before being fired. Morrell leave due to a public relations implosion that led to employee protests and pitted the company against Gov DeSantis.

When the payout are associated with the termination agreement Morrell made $176,746 a day.
The Disney CEO Chapek never recovered from the political fallout & he was fired. No indiction what his golden parachute was.

The revelation of Mr Morrell’s pay comes as Disney faces renewed criticism over its executive compensation, which activist investor Nelson Peltz has described as “over the top.”

The cost of those management woes came into focus in Tuesday’s filing, which doubled as a rebuke to Mr Peltz’s demand for a board seat and changes to how the company operates.

Yep can’t have this guy on the board! He don’t understand the business! Kerist! He believe Disney execs are paid too much! Sheesh!

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ESPN is not worth anything.

Some years ago when Disney thought of spinning it off in the cable days ESPN proved worthless.

Basically cable TV was bundled and people got ESPN whether they wanted it or not. Disney got paid. Now al la carte most households wont take ESPN.

ESPN has to way over pay for the sports league contracts. It is really a bad asset.

Peltz is right because ESPN demands working capital. ESPN really does not sell merchandise or theme park rides.

Iger is not making much of his case based on ESPN. Did Iger come from ESPN? I think he did. I watched Iger on the Masterclass program. He is a great CEO. That does not mean he is as great a capitalist as Peltz regardless of you or I knowing Iger’s name better.

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Bundling is where the money is at for the cable company. The cable company sez look at all the stations you get. The customer "yeah but I don’t want or watch most of them.

Dish Network gained customers and revenue when it first started out by offering a la carte channel selection for the customer. I picked 12 channels that I watched a lot. Then they went to a bundle system, but I was grandfathered in. Then eventually they said I had to choose a bundle. That’s when the Dish Network Satellite dish came off the roof.

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That was that stooge Brannon Braga’s fault. He was the worst writer on TNG by far. His episodes are all just cringe worthy. Somehow he wound up taking over the franchise and managed to destroy it. My dog has more talent than that guy.

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The problem is it is no longer really cable TV. The offer for a few years now is internet TV which is cheaper.
I do not have a TV or service but the cost would be about $2300 in this area. Now internet TV is closer to $1200 with no bells and whistles.

There are still the HBO ad ons. The internet TV comes with…wait for it…the internet…

Really nothing new but that is where the competition has taken those companies.

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Not the worst. Worst ever thing inflicted on Star Trek was J J Abrams. Watched one of his Trek films. Said “what the heck is this?” So-called “reimagining”? Harrumph! If you are going to start with a clean slate, and spew out some third rate trash that doesn’t respect the ground laid by Gene Roddenberry, don’t call it “Star Trek”.

Remember the last Trek movie that Shatner was in, “Generations”? Kirk ran into the new, Picard Star Fleet. Kirk and Scotty are trying to resolve the situation, and they keep getting excuses why one plan after another can’t be done. That is a long, long, way, from the Kobayashi Maru, where Kirk received an award for original thinking. Can’t do that in Picard’s Star Fleet.

Steve

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Not all of them. He did write All Good Things… and Cause and Effect, which are certainly solid episodes of the series (I’ve always had a personal soft spot for the latter).

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I’ll give you one guess who wrote that one.

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I confess, I looked. Berman and Braga. Not surprisingly, they had no active role in the best TNG ep “The Inner Light”.

Several years ago, I was copying old VHS tapes onto DVD, and discovered I had recorded “Inner Light” off the air, twice. I had to laff at the number of “executive producers”, “producers”, “assistant producers”, “associate producers”, “senior producers”, “junior producers”. Seems like, when they saw the quality of that story, every publicity hound at Paramount wanted his name on it.

Two things about the ending of that ep: some decent acting by Stewart, giving Riker a “go away” look, and gripping the flute as he hangs on to the memory of his life on the planet, and Frakes doing the best thing he ever did on Trek: shut his mouth and get out of the scene.

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ESPN is worth north of $40 billion. That was one reason Peltz wanted Disney to sell it, it would be a quick hit of cash. After it was explained to him that it’s a necessary component - at least for now - to propel Disney above others in the streaming wars, he has changed his mind. But make no mistake, he’s not there for the future of the company, he’s there to make a quick score.

It’s more profitable than Fox, which might be why Murdoch launched Fox Sports Network along with a half dozen regional sports networks. I don’t know where you’re getting your information, but it’s wildly wrong. They were having financial trouble way back in the 80’s when owned by ABC, and Cap Cities briefly considered jettisoning it, but it quickly turned black and hasn’t looked back.

Blame that on the programmers. They caught on to the strategy of “if you want this [desirable] channel, you also HAVE to carry these others that we have. You don’t have to pay as much for them but you HAVE to carry them. The two biggest hitters for cable fees are ESPN and Fox News, both of which get roughly $6 per month per subscriber, and yes, that’s whether the subscriber watches them or not. (The cable MSO also gets a few local commercial slots, so they can’t make some money that way as well.)

TV is “making it”, it’s just in decline and has been for 40 years. It’s still hugely profitable, but looking to the future as people cut the cord, the future is streaming. Nobody knows exactly how that’s going to play out yet, but people have shown a desire to pay for commercial free programming, and there is a significant set that wants “free with ads” which is just starting. However I’m willing to opine that except for a few niche networks superserving small audiences, streaming services will collapse into 4 or 5, perhaps a few more giant companies. It’s like Blockbuster, once they have the “inventory”, the Mom & Pop shop can’t compete, and that’s why there’s such a rush now to build library. You have Paramount+, Peacock, Disney+, Hulu, Netflix, Roku, Discovery+, YouTube, and a bunch of others clamoring to get in on the gold rush. Most won’t make it. “Radio” was a pretty good business for 100 years. TV has been a pretty good business for 75 years. Streaming will probably be a pretty good business once it shakes out and they figure out pricing, costs, and so on.

No, but they can exploit them for-practically-ever. Disney is still selling Cinderella. They’re still getting syndication revenues for the Mickey Mouse Club. The Pixar library, Marvel, StarWars will continue to reap revenues for decades, with only minor sales expenses involved. Sometimes, as with Disney’s early animation, they find a new avenue (live action film, Broadway, Cruise lines). If you don’t have the stable you have to invent everything. They’re still inventing, but they also need war horses in the stable.

Outrageous, but if he had a contract, which most executives at that level do, typically the only way to get rid of them without buying out the contract is for malfeasance, dishonesty, or moral turpitude. If they decided he was “the wrong guy”, they buy him out and get on with things. This has likely happened at every major corporation in the country, and often multiple times. You stilll pay the director if the movie turns out crappy, and the architect still gets a check if new tenants don’t like the building. That’s life.

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Is ESPN losing subscribers?

ESPN continues to suffer amid the pay-TV industry’s migration to skinnier programming bundles, with ESPN and ESPN 2 each losing around 2.2 million subscribers since February, according to just-released Nielsen data. Since February 2011, Nielsen said, the flagship ESPN has lost more than 11.3 million customers.

https://www.fiercevideo.com/cable/espn-has-lost-another-2-2m-subs-since-february-nielsen-says

Goofy the 11.3 million since 2011 does not count because generally until recently there were larger bundles. More recently with smaller bundles ESPN losing subscribers has only just begun.

I am not wildly wrong. You are outdated.

Just a wild guess Peltz is tried to get on the board and work with Iger who if memory serves was with ABC sports not ESPN prior to Disney. So keeping sports was creating some working room with Iger, just a guess. It was not for the money in ESPN.

As for Peltz being in it for a quick buck. I see a list of companies that needed his skillset.

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The linked article is from seven years ago. Anything more recent?

DB2

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ESPN + is taking up some of the slack by gaining subscribers but that is cannibalism. That will level off fast. Is ESPN + cheaper than the larger bundle? Yes in a major way overall…or as revenue for Disney. As I said an older subscription to Comcast cable with no bells and whistles was $2200 or more. Now Comcast Internet TV is around $1200 if it has not edged up slightly this year. While some will want ESPN +, the loss of the larger bundling is major for ESPN. Only 20% of households want ESPN at all. That stat is from the older report Disney had commissioned to evaluate selling ESPN.

BTW it was that older Disney commissioned report for divesture that reported as a summary there was no value in ESPN if the channels were not in larger bundles.

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Of course they have, people are cutting the cable cord. On the other hand, people are subscribing to ESPN+, which costs $10 per month, all of which goes to Disney. So they may have fewer “subscribers” but more subscription revenue. And while a portion of their income is driven by “watching” I would submit that a large portion of ESPN “former subscribers” never watched anyway (I am one of them), but nearly ALL of ESPN+ subscribers do.

Which would you rather have, more phantom subscribers for whom you get smaller dollars, or more real subscribers for whom you get larger dollars?

https://www.statista.com/statistics/1054451/espn-plus-subscriber-us/

(PS: ESPN+ has gone from 1.4m subscribers to 24.5m since 2019. By my count that’s $243,000,000 dollars coming in every month . Of course a lot of that goes back out for programming costs (rights fees), but every cable channel and streaming service has those costs.

You just have to get over yourself. Sports broadcasting is a good business; in terms of television attraction on broadcast, cable, or streaming it’s one of the few great businesses left. Even Peltz now agrees. I’m glad he learned something, maybe someday you’ll catch up too.

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