Disney shares were up nearly 5% in after-hours trading Monday after the entertainment giant announced it would be shifting its entertainment strategy to have streaming be its “primary focus.”
Why it matters: The company is facing investor pressure to invest more in streaming, its strongest-performing sector. Its other business lines, like movies, parks and cable, are being heavily impacted by the pandemic.
Details: The company will rearrange its structure to focus on developing and producing original content for its streaming services (Disney+, Hulu and ESPN+), as well as for its legacy TV networks.
- The Media and Entertainment Distribution group, as it will be called, will be headed by Kareem Daniel, formerly president of Disney’s Consumer Products, Games and Publishing division. This mega-group will be responsible for producing and delivering content for theatrical, linear and streaming audiences, with a focus on streaming.
- The group will be subdivided into three units: Studios, General Entertainment and Sports. Leaders of the subgroups, as well as Daniel, will report directly to Bob Chapek, CEO of Disney.
- Studios will be led by Alan F. Horn and Alan Bergman, co-chairmen of Walt Disney Studios. Their new titles will be chairmen, Studios Content.
- General Entertainment will be led by Peter Rice, who came to Disney through its acquisition of most of 21st Century Fox in 2019. His new title will be chairman, General Entertainment Content
- Sports will be led by ESPN president Jimmy Pitaro. His new title will be chairman, ESPN and Sports Content.
Between the lines: With the announcement, Disney says that the company’s parks and resorts division will remain the same and that its streaming and international divisions will be led by Rebecca Campbell, who will serve as chairman.
The big picture: Prior to the pandemic, Disney’s business was soaring. But now, the company’s movies, parks and resorts and cable businesses are facing some of the strongest pandemic-related headwinds in the entertainment industry.
- The company recently laid off 28,000 people at its theme parks and experiences and consumer products divisions as a result of park closures in California and partial reopenings around the world.
- Its blockbuster live-action remake of the Disney classic “Mulan” was made available to Disney streaming subscribers last month due to paltry theater attendance and closed venues, but the company never revealed how it fared with streaming. Future films, like its new Pixar animated series “Soul,” will also debut via streaming.
- Advertising revenues from its cable networks continue to experience declines due to pandemic-related pressure to the advertising market.