Disney is reorganizing its broad businesses under three core segments — Entertainment, ESPN and Parks, Experiences and Products — as CEO Bob Iger moves to restructure the company.
The move follows its DMED, or Disney Media and Entertainment Distribution, set up by previous CEO Bob Chapek, which usurped control over content decisions by the company’s creative executives. Now we know what the new structure will look like. It aims to return creative authority to Disney’s “world-class creative team” and its “unparalleled brands and franchises,” he said during a conference call after the company’s first-quarter earnings report.
The restructuring is a key component of a transformation that he said will help rationalize the streaming business for sustainable growth and profitability and reduce costs in a world of increased competition and global economic challenges.
DTC business without ESPN+ will remain under Entertainment.
Related: Disney Earnings Report and Restructuring – Complete Coverage
Iger said the moves announced today collectively reflect a new era of transformation for the company over the past two decades. The first was a period of rapid growth in its core IP that saw Disney acquire Pixar, Marvel and Lucasfilm. The second, from 2016, was Disney’s move into streaming with its acquisition of 20th Century Fox and the subsequent launch of ESPN+ and Disney+.
The booming parks and resorts segment, which includes cruise ships and consumer products, as well.
With linear networks declining and sports rights costs rising, ESPN has been targeted by Disney investors such as Third Point’s Daniel Loeb, who said it should be shut down but later retracted that opinion, citing a global audience for “potential as a stand” in advertising and subscriber revenue. It’s a stand-alone business and another vertical for Disney to reach.”
Another activist, Nelson Peltz, is currently engaged in a proxy battle for a seat on Disney’s board.
ESPN+ had 24.9 million paid subscribers at the end of last year, up 2% from 24.3 million the year before. It is offered alone or in a bundle with Disney+ and Hulu.