Former Disney CEO Bob Chapek reportedly attempted to hide Disney’s profitability problems, by spreading costs across divisions.
- The business world was surprised on November 20 by the ousting of Disney CEO Bob Chapek for returning CEO Bob Iger, who previously ran the company for 15 years.
- Chapek reported a loss of $1.47 billion in the November 8 annual investor call. Board members responded by campaigning for him to be replaced with Iger.
- Disney+ wasn’t expected to be profitable until 2024, despite amassing 164 million subscribers, but it has still accrued $8.5 billion in losses. The company spent $30 billion on content for the service this year.
- Chapek may have disguised the full extent of Disney’s losses by shifting budgets and moving projects between different streaming platforms and TV channels.
Why it’s News
Disney owns and operates several platforms including Disney+, Hulu, and Disney Channel. The Wall Street Journal reports that Chapek aired Disney+ exclusive content on other platforms to minimize how much the company looked like it was losing.
“Shows intended to be (and billed as) Disney+ originals, including The Mysterious Benedict Society and Doogie KameÄloha, M.D., were aired first on other networks, such as the Disney Channel, so their production and marketing budgets wouldn’t be counted against Disney+,” says Comic Book Resources.
“In this way, the streaming service was seen as losing less money on original content. Chief Financial Officer Christine McCarthy, who was reportedly one of the voices behind Chapek’s removal, was ‘concerned about this strategy.’”
As we previously reported, Bob Iger is walking into a very challenging situation as he attempts to make the streaming service profitable. The problems of Disney are systematic in nature and it is unclear if Chapek or Iger could turn them around in its current state.
“Like many of its rivals, Disney is now trying to shift from a growth-oriented streaming strategy to profitability, but is doing so in a difficult economic environment and an intensely competitive market,” says The Wall Street Journal.