Reacting to a tumultuous 2020 and looking to establish a corporate structure suited to the transformations to come, the Walt Disney Co. has introduced a major streamlining of its media and entertainment businesses.
Under the new structure, the focus will be on developing and producing original content for the company’s streaming services as well as for legacy platforms. Distribution and commercialization will be centralized into a single global unit called Media and Entertainment Distribution. It will be led by Kareem Daniel, a 14-year company veteran and former president of consumer products, games and publishing.
COVID-19 has ravaged Disney more than any other media company, given its direct impact on theme parks, travel, theatrical moviegoing, TV advertising, live sports and other longtime income sources. Streaming has been a bright spot, but it is thus far a money-losing endeavor for Disney, by design. In the spring of 2019, the company advised investors that it would be years before Disney+ and other streaming platforms turn a profit. Disney+, which launched last November, has already reached the threshold of the company’s five-year subscriber forecast, with 60.5 million paying customers as of August.
The MED group will be responsible for all monetization of content—both distribution and ad sales—and will oversee operations of the company’s streaming services. It will also have sole P&L accountability for Disney’s media and entertainment businesses. In the official announcement of the reorg Monday, Disney said it has scheduled an investor day for December 10 when it will lay out further details about its new structure and plans for 2021 and beyond.
Disney shares, which have been in a holding pattern after recovering from pandemic trauma early in the year, rose 5% in after-hours trading on the news of the new structure. Just last week, Disney investor Daniel Loeb, who runs hedge fund Third Point, wrote Chapek a letter urging him to do away with the company’s shareholder dividend and redirect that $3 billion a year into streaming content.
Under the new plan, content creation will be managed in three distinct groups: Studios, General Entertainment and Sports. They will be headed by current execs Alan Horn and Alan Bergman, Peter Rice, and Jimmy Pitaro. Along with Daniel, they will report directly to Disney CEO Bob Chapek.
Horn and Bergman will have the titles of Chairmen, Studios Content. Their group will focus on creating branded theatrical and episodic content based on the company’s franchises for theatrical exhibition, Disney+ and Disney’s other streaming services. Contributing to the effort will be the Walt Disney Studios, including Disney live action and Walt Disney Animation Studios, Pixar Animation Studios, Marvel Studios, Lucasfilm, 20th Century Studios and Searchlight Pictures.
Rice, the longtime Fox exec who was among a handful of influential figures from the company to be given sizable roles after the 2018 merger with Disney, will be chairman of general entertainment content. He will focus on creating general entertainment episodic and original long-form content for the company’s streaming platforms and its cable and broadcast networks. The group will include 20th Television, ABC Signature and Touchstone Television; ABC News; Disney Channels; Freeform; FX; and National Geographic.
Pitaro, who came on to lead ESPN in 2018 soon after the abrupt exit of John Skipper, will be chairman of ESPN and sports content. His focus will be on ESPN’s live sports programming, as well as sports news and original and non-scripted sports-related content for the cable channels, ESPN+ and ABC.
Disney Parks, Experiences and Products will continue to operate under its existing structure, led by its chairman, Josh D’Amaro, who will still report to Chapek.
Rebecca Campbell, who succeeded Kevin Mayer as head of Direct-to-Consumer & International, will now be chairman of international operations and direct-to-consumer. In the new scheme, the two components to her title will no longer be run on a combined basis. Campbell will report to Chapek on global activities and to Daniel on direct-to-consumer operations for Disney+, Hulu and ESPN+.
Bob Iger, in his role as executive chairman, will continue to oversee creative endeavors, as he indicated was the plan when he passed the CEO baton to Chapek last February.
“Given the incredible success of Disney+ and our plans to accelerate our direct-to-consumer business, we are strategically positioning our company to more effectively support our growth strategy and increase shareholder value,” Chapek said. “Managing content creation distinct from distribution will allow us to be more effective and nimble in making the content consumers want most, delivered in the way they prefer to consume it. Our creative teams will concentrate on what they do best—making world-class, franchise-based content—while our newly centralized global distribution team will focus on delivering and monetizing that content in the most optimal way across all platforms, including Disney+, Hulu, ESPN+ and the coming Star international streaming service.”
There was no immediate indication of layoffs, though that remains a threat for virtually all players in media and entertainment as they navigate through the coronavirus pandemic and the resulting economic downturn. Two weeks ago, Disney laid off 28,000 workers in its theme park unit due to the ongoing closure of Disneyland in California and lackluster business at DisneyWorld and other Florida parks.
In an interview with CNBC late Monday, Chapek said the number of layoffs resulting from the media business restructuring would be fewer in number than those in the parks unit. He also said the reorg was not a response to COVD-19, but rather that the virus “accelerated the rate at which we made this transition. But we were going to make this transition anyway.”
WarnerMedia and NBCUniversal have also cut costs and initiated layoffs this year. Like Disney, they are traditional companies dependent on revenue from theatrical box office, TV advertising and carriage of their networks through pay-TV, all of which have been upended by COVID-19. At the same time, media companies are significantly ramping up their efforts in the streaming arena in an effort to close the gap with Netflix. NBCU launched Peacock in April ahead of a national rollout in July. WarnerMedia debuted HBO Max in May. That push into streaming has gotten all the more difficult in 2020 as the fundamental economics of companies’ core business undergo dramatic changes.
Disney’s new distribution group will be responsible for the P&L management and all distribution, operations, sales, advertising, data and technology functions. It will also manage operations of the company’s streaming services and domestic TV networks, and collaborate with the content creation teams on programming and marketing.
Daniel, a 14-year Disney veteran, has held positions in consumer products, games and interactive experiences, publishing, studio distribution, and Walt Disney Imagineering. As president of Walt Disney Imagineering Operations, Product Creation, Publishing and Games, he was responsible for steering synergistic efforts like Star Wars: Galaxy’s Edge areas at Walt Disney World and Disneyland; Toy Story Land at Walt Disney World and Shanghai Disneyland; and Pixar Pier and the upcoming Avengers Campus at Disney California Adventure Park.
He was also SVP of Strategy and Business Development for Disney Consumer Products and Interactive Media and before that VP of Distribution Strategy at Walt Disney Studios. At the film studio, where he worked closely with the leadership team to develop the company’s film content distribution strategy across multiple platforms and played a key role in the commercialization of the studio’s films.
During 2020, the company has redirected three major film titles — Hamilton, Mulan and Soul — from global theatrical play to Disney+. Mulan cost $30 extra to Disney+ subscribers, while the others are included with the $7 monthly subscription price.
“I’m honored to be able to lead this new organization during such a pivotal and exciting time for our company, and I’m grateful to Bob for giving me the opportunity,” Daniel said. “It’s a tremendous privilege to work with the talented and dedicated teams that will comprise this group, and I look forward to a close collaboration with the outstanding and incredibly successful team of creative content leaders at the company, as together we build on the success we’ve already achieved in our DTC and legacy distribution business.”
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October 13, 2020 at 03:29AM
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Disney Streamlines As COVID-19 Woes Continue, Creating Single Media and Entertainment Distribution Unit Led By Kareem Daniel - Deadline
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