We learned how to use excel without a mouse and found out that it’s an absolutely useless skill. Gen X bosses really don’t care about anything, do they?

We’re covering our most favorite boy/company duo in the whole world today:

❤️ Bob Iger and Disney ❤️ 

You’re gonna feel smarter after this one, we promise.

NOTES

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Alright, let’s get to it.

Disney and Iger: A 3-Part Breakdown

1. State of Iger’s 2nd Tenure

Listen, we’re ‘fans’ of Iger primarily because of his 1st tenure as Disney CEO: he took big swings (Pixar, Marvel and made them into big successes. He was looking forward in a lot areas and their strategy was really coherent:

Great content with great distribution while embracing technology. And spread that across the world. It was executed to near perfection.

Obviously, a zero interest rate environment and a healthy economy is a great tailwind, but now everyone seems to be out on him. But not us. We love u, Bobby. Till the very end.

No but seriously, shit has been going sideways. Here’s why:

1. Disney’s cable assets are in a continuous decline
   

2. The specter of a recession has screwed with customer spending on streaming
   

3. Flops: Do YOU remember Pixar’s last good movie? What about Marvel’s? (we don’t really care about this, tbh)
   

4. The Fox deal was a dud.
   

5. Nelson Peltz is still a problem for the company, and we think it’s a legitimate worry, so much that their new CFO is from a company that successfully fended him off.

2. “So what’s the strategy now?” A half-assed answer

Well, the directive is probably ‘steering a company through tough times’ as everyone and their sister predicts a recession next year.

We think it looks something like this:

1. Cut costs (Disney has already done this; you can never rule out more cuts)
   

2. Make streaming work/optimize distribution:
   

   • Disney is going to emphasize a D2C strategy to foster growth in the face of its declining cable offerings

   • That means doubling down on distribution. That’s Disney+, ESPN+, and its eventual acquisition of Hulu (more on that below).

3. Wheelin’ and Dealin’ at Mickey’s Clubhouse

We got about 6 readers emailing the both of us whenever ESPN/Disney does cuts.

Here’s your response: The last round of cuts? Probably needed to pay Pat McAfee.

While Disney has plenty of cash on its balance sheet, the following deals are 2 big factors to keep in mind when considering its current strategy.

I. Focusing on Distribution: Disney and the Hulu Deal

We’re going to dive into this in another newsletter. But here’s our take:

1. Disney expects to pay at least $8B+ for this thing (the company has the money: ~$11B on its balance sheet)
   

2. Hulu is one of the few profitable streaming services with a solid subscriber base (~50m) and tons of content.
   

3. The deal isn’t so much proactive as Disney being backed into a corner by Comcast due to the terms of its deal, but if Disney can buy a self-sustaining streamer with a solid base of paying subs, then you can never have too many avenues for distribution/cross-selling of your content.

II. Focusing on Distribution: ESPN’s Future

Another thing we could spend an entire newsletter on.

1. Mentioning Disney’s declining cable assets, ESPN is still a cash cow, albeit a diminishing one.
   

2. With cable down, streaming up - Disney is planning to go full D2C with ESPN sometime in 2025
   

3. That being said, Disney is looking to shop a minority stake in ESPN
   

4. Our take? Having ESPN on cable and nowhere else is having a first class cabin on the titanic. Expenses go up every year and cable subs go down.
   

5. They gotta sell to either T-Mobile, AT&T, or Apple. Selling a part of ESPN to one of these players gives you a 1-2 punch: a cash injection AND a world class distribution avenue to smartphones.

Yikes, just give us the TL;DR

Sigh Fine.

1. Disney’s getting mediocre/bad press because shareholders/media don’t see the vision clearly, probably because ‘managing costs and fixing problems’ isn’t as sexy as buying Studio Ghibli or something
   

2. The company has to find a way to maximize revenue per subscriber now that streaming is a mature market.
   

3. Also, it needs to solve for its diminishing returns on cable to ensure its future profits, which most likely means partnering with a huge distributor, like a telecoms/technology company

Wow, that was easier than we thought. Ok Bye.

What AI made this week

Have a great week!

Ahmed and Peter