Disney annual report: Iger to restructure; Cable nets shed subscribers (NYSE:DIS)

Shira Smolko

Disney Logo On Shop Window

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Walt Disney (NYSE:DIS) has filled in some details from its most recent quarter with the filing of its annual report – including some commentary on its now-returned CEO Bob Iger.

Iger returned to the CEO’s role and the board Nov. 20, after just having exited Disney last December following more than four decades at the company (including 15 years as CEO).

And Iger will reorganize the company in the coming months, the annual report notes (and essentially already has, saying a day after his hire that the distribution business would be refigured) – which may bring some spending.

“As contemplated by the leadership change announcement, we anticipate that within the coming months Mr. Iger will initiate organizational and operating changes within the Company to address the Board’s goals,” Disney says. “While the plans are in early stages, changes in our structure and operations, including within DMED (and including possibly our distribution approach and the businesses/distribution platforms selected for the initial distribution of content), can be expected. The restructuring and change in business strategy, once determined, could result in impairment charges.”

In a section on media and entertainment distribution strategy, the company says it’s “significantly increased its focus on distribution of content via our own (direct-to-consumer) streaming services” vs. traditional distribution.

And while it continues to “monetize a significant amount of its content in the traditional manner,” focusing on streaming has had a number of impacts, Disney says, including making streaming exclusive content; moving shows to streaming rather than selling into the general TV/subscription video market; and doing simultaneous online/theatrical releases.

“Over time, all else being equal, these impacts will tend to increase revenue and costs at Direct-to-Consumer and reduce revenue and costs at Content Sales/Licensing and Linear Networks,” it says.

Turning to details on its cable channels, two of its key linear outlets lost subscribers from the last fiscal year. The Disney Channel shed 2M subs to land at 74M, and ESPN lost 2M to end up with 74M as well. (Given bundling effects, FX also has 74M subs, and National Geographic has 73M).

Internationally, Disney Channel has 151M subs; ESPN has 62M; Fox has 139M; Nat Geo has 289M; Star General Entertainment 180M; and Star Sports 83M.

Disney posted a disappointing end to its fiscal year, as heavy spending led streaming losses to peak though parks continued to shine.

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