Disney wants to do a Netflix, rejigs operations to focus on streaming

Walt Disney Co. is shaking up its operations to refocus on the thriving Disney+ business, redoubling its push to become a global streaming giant like Netflix Inc.

The company is putting its TV networks, film studio and direct-to-consumer divisions inside one big group called Media and Entertainment, Disney said on Monday. Existing content chiefs will continue to oversee their businesses, but they will now be directly able to choose what movies and TV shows air on Disney’s growing lineup of streaming services.

“It’s about streamlining the decision making, looking at it from a 50,000-foot view,” Chief Executive Officer Bob Chapek said in an interview, “as opposed to a movie that’s made in the studio, therefore it goes to the studio, or a television show that’s made at ABC studios, therefore goes on ABC.”A new star, Kareem Daniel, who previously headed up consumer products within the theme-park division, will now take over distribution for the Disney+, ESPN+ and Hulu streaming services. The move also helps diversify Disney’s mostly White management ranks: Daniel is one of the most prominent Black executives at the Burbank, California-based company.

Investors applauded the makeover, sending Disney shares up as much as 5.5 per cent in late trading. Shareholders such as Third Point’s Dan Loeb have urged the company to put more resources into streaming. He sent a letter last week to Chapek saying it was time to move on from movie theaters, which he compared to horse-drawn carriages.

Loeb’s campaign didn’t spur Monday’s changes, which Chapek said have been in the works for months. The investor has also called for Disney to redirect its dividend money toward streaming, but the company already suspended the payout in July and hasn’t committed to future ones.

Loeb said Monday he was happy that Disney is concentrating on its direct-to-consumer business.

“We are pleased to see that Disney is focused on the same opportunity that makes us such enthusiastic shareholders,” he said in an emailed statement.

This isn’t the first major shake-up for Disney in recent weeks. Rocked by a slowdown at its theme-park and cruise operations, Disney said late last month that it was laying off 28,000 workers. The company hasn’t been able to reopen its parks in California yet, hampered by state restrictions. Chapek said the reorganization could result in additional job reductions.

Other media giants, including AT&T Inc.’s Warner

Media and Comcast Corp.’s NBCUniversal, have been cutting employees as well, trying to weather a pandemic-fueled slump that’s hurt advertising, movies and in-person attractions.

Reporting Changes

Though Disney may now have fewer divisions reporting financial information, the company intends to break out results to continue to give investors clarity about individual businesses. It plans to hold a virtual investor day on Dec. 10, following its quarterly earnings report on Nov. 12.The changes underscore how important streaming is becoming to Disney and the whole media industry. Traditional TV networks such as the company’s ABC and Disney Channel are seeing viewers and cable-TV subscribers shift to on-demand services, including Netflix. But Disney has quickly become one of the biggest streaming providers itself. The company’s Disney+ platform, launched just last November, has already signed up more than 60 million subscribers.

The company has rearranged its organizational structure twice now in as many years, a sign of how quickly the media landscape is shifting. In May of 2018, Disney created the direct-to-consumer division, giving its new head, Kevin Mayer, control of not only its streaming efforts but advertising and distribution for existing networks such as ABC and the Disney Channel. After Mayer departed earlier this year, Disney began shifting some of that authority back to its TV network chiefs.

Less Friction

The current changes address sources of friction between the creative executives and the ones running the online businesses, giving managers like Peter Rice, who heads the company’s traditional TV business, more control over what shows will appear on Hulu and Disney+. Jimmy Pitaro, who runs ESPN, can now make sports programming decisions at ESPN+, and Alan Horn and Alan Bergman, who run the company’s very successful movie studio, will now pick films for the streaming operations.

Rebecca Campbell, who earlier this year was promoted to head the company’s direct-to-consumer division, will continue to supervise Disney’s international channels. She now reports to Daniel on decisions regarding the streaming businesses.

Like others in Hollywood, Disney has been testing different distribution models for its films because consumers are still reluctant to return to theaters. Disney released “Mulan,” its live-action remake of the 1998 animated hit, online last month. It charged Disney+ users an additional $30 to buy the film.

‘Mulan’ Outcry

Chapek declined to say how many people paid for the picture, but said an uproar surrounding the movie’s filming -- it was shot in a region of China where human rights abuses have allegedly occurred -- affected sales. That was true both online and in Chinese theaters, he said.

“Certainly the controversy had an impact, in terms of the difference between what we saw before the controversy and what we saw after,” Chapek said.

Still, the “Mulan” release was a learning experience, he said.

“We were pleased with the results,” Chapek said. “When we contemplate new ways of going to market with our content to consumers, we’ve got a lot more information and data.”