WEBVTT - Disney’s Iger Wins Proxy Vote Over Peltz With Board’s Election 0:00:00.600 --> 0:00:07.240 Bloomberg Audio Studios, Podcasts, radio news. 0:00:08.520 --> 0:00:12.880 This is Bloomberg business Week Inside from the reporters and 0:00:13.080 --> 0:00:16.640 editors who bring you America's most trusted business magazine, plus 0:00:16.720 --> 0:00:20.840 global business, finance and tech news. The Bloomberg Business Week 0:00:20.880 --> 0:00:25.800 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:27.280 --> 0:00:29.560 All right, we're going to stay with the equity universe, Tim, 0:00:29.600 --> 0:00:31.600 and one stock in particular that's down about two point 0:00:31.600 --> 0:00:32.640 two percent as we speak. 0:00:32.760 --> 0:00:34.680 Yeah, that, of course has shares with the Walt Disney 0:00:34.720 --> 0:00:37.599 Company down two point two percent thanks to a showdown 0:00:37.600 --> 0:00:40.199 between the company and it's CEO Bob Iger and activist 0:00:40.200 --> 0:00:43.080 investor Nelson Peltz and his try on fund management. The 0:00:43.120 --> 0:00:46.040 showdown came down to shareholders declaring the winner. That winner 0:00:46.360 --> 0:00:48.320 Disney and CEO Bob Iiger. 0:00:48.440 --> 0:00:50.680 Yeah, and they had the backing of big institutional investors 0:00:50.680 --> 0:00:52.920 that hold a big junk of Disney shares. We're talking 0:00:52.920 --> 0:00:56.080 about Vanguard and black Rock excuse me, who owned about 0:00:56.120 --> 0:00:59.520 fifteen percent of Disney shares. All right, with more on 0:00:59.560 --> 0:01:02.000 that out and what we need to know about Disney, 0:01:02.040 --> 0:01:03.639 what it really kind of needs to do to get 0:01:03.680 --> 0:01:06.520 back on track back with us as Bloomberg Intelligence technology 0:01:06.560 --> 0:01:10.800 media analyst Getha Ranganathan from RBI headquarters in Princeton, New Jersey. 0:01:10.800 --> 0:01:15.640 All Right, Githa, she's been busy today votes over. What's 0:01:15.680 --> 0:01:18.360 the impact of the vote and the outcome on what 0:01:18.440 --> 0:01:21.240 Disney does next, or maybe what you think it should 0:01:21.280 --> 0:01:22.240 do next. 0:01:23.240 --> 0:01:26.240 I think this is definitely I think a personal win 0:01:26.520 --> 0:01:29.320 for Bob Eiger, who has spent so much time over 0:01:29.360 --> 0:01:33.160 the past few months kind of canvassing for support, I mean, 0:01:33.319 --> 0:01:37.280 rallying all the investors. Remember, Disney has a huge, huge 0:01:37.319 --> 0:01:40.959 retail investor base. Almost forty percent of its shareholders are 0:01:40.959 --> 0:01:43.400 retail investors, and he has spent a lot of resources, 0:01:43.720 --> 0:01:46.480 more than forty million dollars kind of trying to get 0:01:46.480 --> 0:01:48.800 their support. So I think this is just, you know, 0:01:49.640 --> 0:01:51.320 a job well done for him, in a huge sigh 0:01:51.320 --> 0:01:53.720 of relief. But in terms of what the company is doing, 0:01:53.800 --> 0:01:57.400 I don't really necessarily think that this shareholder vote outcome 0:01:57.480 --> 0:02:00.400 has any impact at all on near term trends. Bob 0:02:00.440 --> 0:02:03.240 Iger has already kind of taken control of the narrative. 0:02:03.280 --> 0:02:06.640 He's gotten a lot of things moving in terms of 0:02:06.720 --> 0:02:11.000 you know, content cost cuts, cost cuts actually across the board, 0:02:11.160 --> 0:02:15.840 there's just rationalization of output. There's investments in new growth 0:02:15.840 --> 0:02:18.480 areas including you know, gaming. We saw that one point 0:02:18.480 --> 0:02:21.440 five billion investment in Epic Games. So he is doing 0:02:21.480 --> 0:02:23.680 everything to write the ship. There's obviously a new digital 0:02:23.680 --> 0:02:27.160 strategy for ESPN in place. So I think we're just 0:02:27.200 --> 0:02:30.040 going to continue to see, you know, management do more 0:02:30.040 --> 0:02:32.320 of the same. I think the one thing that's going 0:02:32.360 --> 0:02:34.320 to be a little bit different, Carol, is there's going 0:02:34.360 --> 0:02:37.680 to be intense scrutiny on this board to really come 0:02:37.760 --> 0:02:39.920 up with a good succession plan. I think that is 0:02:40.040 --> 0:02:42.600 one thing that you know, most of these activist investors 0:02:42.680 --> 0:02:45.160 kind of kept founding the table and kept saying, you know, 0:02:45.200 --> 0:02:49.080 you guys really botched succession and please don't bungle it 0:02:49.120 --> 0:02:49.840 this time around. 0:02:49.919 --> 0:02:50.320 So was it? 0:02:50.400 --> 0:02:53.760 Wait, I'm sorry, well, so was it? Do they not 0:02:54.000 --> 0:02:57.720 like that Bob Byger came back? Is that the problem 0:02:57.760 --> 0:03:00.240 that they say that when Bob Ayger left the first time, 0:03:00.280 --> 0:03:03.200 that that was the succession planning that didn't it was 0:03:03.200 --> 0:03:03.920 his place or what? 0:03:04.960 --> 0:03:07.160 Yeah, it was not so much Bob Iger coming back, 0:03:07.200 --> 0:03:10.799 but him kind of suggesting Bob Chapek and maybe the 0:03:10.840 --> 0:03:14.799 board didn't push back enough. Got it right? Because he didn't. Yes, 0:03:14.880 --> 0:03:17.760 he was a parks executive, but did he have all 0:03:17.760 --> 0:03:21.240 the experience needed for running kind of the content engine. 0:03:21.600 --> 0:03:23.360 Clearly he didn't, and that's where a lot of the 0:03:23.360 --> 0:03:26.519 missteps kind of surface, right, And so you know, there's 0:03:26.520 --> 0:03:30.160 been this constant complaint about, you know, did the board 0:03:30.200 --> 0:03:32.760 really do their job or were they just so enthralled 0:03:32.760 --> 0:03:34.880 and so enamored by Iiger that they just took his 0:03:34.920 --> 0:03:35.960 word at face value. 0:03:36.160 --> 0:03:40.120 Yeah, that's what we heard yesterday from Comptroller Brad Lander 0:03:40.120 --> 0:03:43.680 in his comments to Scarlett during that interview late yesterday 0:03:44.040 --> 0:03:46.800 about this ahead of the vote. So, what about some 0:03:46.960 --> 0:03:50.680 names here, keitha that could be floated if we're talking 0:03:50.720 --> 0:03:53.920 succession at Disney now that this proxy battle is behind 0:03:53.960 --> 0:03:56.160 Bob Iger, what are some names we should keep an 0:03:56.160 --> 0:03:59.680 eye on who's being floated around so Disney, Jim. 0:03:59.680 --> 0:04:03.040 It's typically been an internal candidate. I mean, if you 0:04:03.120 --> 0:04:05.960 go back many, many years, I mean, you know, up 0:04:06.080 --> 0:04:08.280 until nineteen eighty four, it's always kind of been an 0:04:08.280 --> 0:04:10.480 internal candidate, and so I think that's what's going to 0:04:10.520 --> 0:04:13.480 happen this time around as well. Obviously, the four big 0:04:13.520 --> 0:04:17.360 division chiefs are in play here. We're talking about Dana Walden, 0:04:17.400 --> 0:04:20.320 who hads TV. We're talking about Josh Tomorrow who has Parks. 0:04:20.720 --> 0:04:23.920 There's Jimmy Pittarro for ESPN, and then there's Alan Bergman 0:04:23.960 --> 0:04:28.560 from the film and the studio segment. The problem with 0:04:28.600 --> 0:04:31.960 Disney is it's just such a diverse conglomerate, right, It's 0:04:32.000 --> 0:04:36.280 this behemoth, and you know, Josh Tomorrow having vast experience 0:04:36.520 --> 0:04:38.840 in Parks isn't really going to help because he has 0:04:38.920 --> 0:04:41.800 absolutely zero experience in running a TV network, or in 0:04:41.880 --> 0:04:44.479 running a streaming service or even like, you know, coming 0:04:44.560 --> 0:04:46.880 up with green lighting a film. So that really is 0:04:46.920 --> 0:04:49.120 a problem. And you know that has kind of always 0:04:49.120 --> 0:04:52.400 been the persistent problem with Disney because you have these 0:04:52.760 --> 0:04:54.880 executives who are so good in one specific area, but 0:04:54.880 --> 0:04:56.839 who have absolutely no exposure on the other, and so 0:04:57.160 --> 0:05:00.599 it's going to be a really challenging you know, obviously, 0:05:00.640 --> 0:05:03.000 Bob IGO's shoe was a very big to fill. So 0:05:03.200 --> 0:05:05.200 the idea is that they're probably going to have somebody 0:05:05.240 --> 0:05:08.720 come in as a COO kind of get that experience 0:05:08.720 --> 0:05:10.000 in all the different segments. 0:05:10.120 --> 0:05:10.520 Got it. 0:05:10.640 --> 0:05:12.479 We're going all in on Disney during the first part 0:05:12.520 --> 0:05:14.520 of this hour today. From how the company prevailed to 0:05:14.880 --> 0:05:18.839 what it means now that it's triumphed over Pelts. First, 0:05:18.960 --> 0:05:21.400 Keida Disney's win was the backing of the company's two 0:05:21.440 --> 0:05:24.880 largest shareholders, none other than Vanguard Group in Blackrock. Together 0:05:25.000 --> 0:05:28.680 they control about fifteen percent of Disney's stock. Crystal c 0:05:28.880 --> 0:05:31.680 is Bloomberg News Deals reporter. She wrote about how each 0:05:31.720 --> 0:05:34.000 side campaigned ahead of the vote and the importance of 0:05:34.000 --> 0:05:37.359 the institutional backers. She's here in the Bloomberg Interactive Brokers studio. 0:05:37.680 --> 0:05:40.760 So we talked about I mentioned Vanguard and Blackrock, but 0:05:41.040 --> 0:05:43.000 talk about how they came out and support aiger ahead 0:05:43.000 --> 0:05:43.159 of this. 0:05:43.960 --> 0:05:49.280 Yeah, so we reported that Vanguard, the largest institutional shareholder 0:05:49.360 --> 0:05:53.640 with almost eight percent share, was supporting the company the 0:05:53.680 --> 0:05:58.880 management yesterday. So it's actually pretty unusual for an institutional 0:05:58.880 --> 0:06:02.800 sharewoad of to nottsard management. So that was interesting. But 0:06:02.839 --> 0:06:06.039 actually what's missing here is that the biggest voting block here, 0:06:06.160 --> 0:06:09.279 it's actually retail investors over thirty percent. Actually almost forty 0:06:09.279 --> 0:06:12.440 percent of Disney stocks are owned by retail. And you know, 0:06:12.480 --> 0:06:14.600 a lot of kids when they were born, they get 0:06:14.600 --> 0:06:17.279 a share at Disney as a present, and a lot 0:06:17.320 --> 0:06:20.440 of these are Disney fans and they tend to side 0:06:20.480 --> 0:06:23.839 with management. Actually, in any given proxy fight, over eighty so. 0:06:23.880 --> 0:06:25.840 The retail also sides with management. 0:06:26.040 --> 0:06:29.279 So any given proxy fight, eighty percent of retail investors 0:06:29.279 --> 0:06:31.200 that vote would side with management. 0:06:31.360 --> 0:06:32.160 That's just typical. 0:06:32.279 --> 0:06:34.799 It is a typical scenario. Not all of them vote. 0:06:34.839 --> 0:06:38.280 It is incredibly hard to get retail investors to actually 0:06:38.320 --> 0:06:40.359 cast their vote because a lot of them are not 0:06:40.600 --> 0:06:44.040 used to this proxy process. But this actually had happened 0:06:44.080 --> 0:06:46.080 this time as well, Like we've seen the show up 0:06:46.080 --> 0:06:49.400 from retail and those are also siding with management. And 0:06:49.520 --> 0:06:52.599 that's why we see today's result that Eiger and all 0:06:53.320 --> 0:06:56.799 Disney nominees have been re elected into have been elected 0:06:56.880 --> 0:06:57.480 into the board. 0:06:57.720 --> 0:06:59.280 It just feels like, you know, Tim, it was kind 0:06:59.279 --> 0:07:02.440 of a tortuous, long, costly fight for Disney. We know 0:07:02.480 --> 0:07:04.240 that they've been you know, going after this and then 0:07:04.279 --> 0:07:06.039 when all a said and done, you know they're still 0:07:06.080 --> 0:07:07.800 in place. But they obviously, as we heard from we 0:07:07.839 --> 0:07:10.520 talked with Githa bring an Othn of our Bloomberg intelligence team, 0:07:10.560 --> 0:07:12.600 that they've still got to make some changes, especially when 0:07:12.640 --> 0:07:13.440 it comes to succession. 0:07:13.520 --> 0:07:14.840 Yeah, I want to get to those changes in just 0:07:14.920 --> 0:07:16.720 a minute, but about it, But I still want to 0:07:16.720 --> 0:07:18.720 stick on the voting side of things. Even though even 0:07:18.720 --> 0:07:21.120 though this is, you know, Bloomberg reported this yesterday, I 0:07:21.160 --> 0:07:23.600 still think this is fascinating, Crystal, because there were also 0:07:23.640 --> 0:07:28.480 some companies and individuals who came out in a prominent individuals, 0:07:28.480 --> 0:07:31.480 prominent board members who came out in support of Nelson Pelts. 0:07:31.480 --> 0:07:34.160 It's like being picked for, you know, a volley volleyball 0:07:34.280 --> 0:07:38.200 game or dodgeball, right, who gets you gets your guests. 0:07:39.000 --> 0:07:41.840 Yeah, there's a lot of you know, we are endorsing 0:07:42.160 --> 0:07:47.680 Nelson versus we're signing with with Iiger. So there are institutional, 0:07:47.920 --> 0:07:52.040 fusional shareholders that voted with Pelts. Newburger Burman actually said 0:07:52.040 --> 0:07:54.440 in the statement that they would vote for Pelts, and 0:07:54.480 --> 0:07:59.440 they did. And again because so much of this is 0:07:59.480 --> 0:08:04.000 owned by retail shareholders, right, and there's actually no once 0:08:04.040 --> 0:08:06.920 in constitutional shareholders that had over ten percent share. So 0:08:07.320 --> 0:08:09.600 even if you get all the index, all the passive 0:08:09.600 --> 0:08:13.560 investors to vote for you, you're still you really still 0:08:13.640 --> 0:08:17.320 need to count on the retail investors. And that's what 0:08:17.360 --> 0:08:19.480 Disney is doing really well on this proxy fight, where 0:08:19.480 --> 0:08:21.960 they have gone all out in the social media campaign 0:08:22.400 --> 0:08:25.520 and you go on Spotify, you go on Instagram, You're 0:08:25.560 --> 0:08:28.600 getting all these ads of a friendly Disney's voice telling 0:08:28.640 --> 0:08:31.160 you to fight for the white proxy card, and that 0:08:31.200 --> 0:08:33.640 had actually successfully pulled someone out votes for them. 0:08:33.720 --> 0:08:35.800 Well, nothing like a media company don't knowing how to 0:08:35.840 --> 0:08:37.839 market itself, right, I mean I heard some. 0:08:37.800 --> 0:08:40.079 Of those ads yeah ahead a podcast, so I was like, 0:08:40.080 --> 0:08:41.200 why are we hearing these ads? 0:08:41.440 --> 0:08:42.240 That is weird? 0:08:42.640 --> 0:08:44.760 I mean, is it unusual for a company to be 0:08:44.840 --> 0:08:47.480 that aggressive. It's almost like, you know, before the oscars, 0:08:47.520 --> 0:08:50.800 right when the movies go out, like for Bob Iger exactly, 0:08:50.840 --> 0:08:52.760 But is it unusual to kind of reach out in 0:08:52.760 --> 0:08:53.360 that way? 0:08:53.440 --> 0:08:56.439 It is unusual because this is actually the most expensive 0:08:56.559 --> 0:09:00.480 proxy fight that we we've seen. The data is showing 0:09:00.480 --> 0:09:03.920 that Disney actually had said they spent over they budgeted 0:09:04.000 --> 0:09:07.480 forty million dollars. Yeah, this proxy tip and that goes 0:09:07.520 --> 0:09:11.280 to things like social media, post that goes to mailing, 0:09:11.520 --> 0:09:16.240 traditional mailing to their shareholder list, and those things are expensive. 0:09:16.320 --> 0:09:19.840 And now that they've won, that is finally going to 0:09:19.840 --> 0:09:22.000 be set aside, you know, and you can focus on 0:09:22.120 --> 0:09:25.240 running the company again. But it's time consuming and very costly. 0:09:25.320 --> 0:09:27.200 Okay, So speaking of that, I want to bring in 0:09:27.240 --> 0:09:30.120 a Jamie Lumley, senior analyst at Third Bridge Group, joining 0:09:30.160 --> 0:09:33.920 us from New York City. So, igers won the battle, Jamie, 0:09:34.000 --> 0:09:35.600 Now he's got to fight the wars. We just heard 0:09:35.600 --> 0:09:38.280 from Crystal. The pressure is still on. What is at 0:09:38.320 --> 0:09:39.960 the top of the agenda for him to do now 0:09:39.960 --> 0:09:41.319 that he's won the proxy vote. 0:09:42.920 --> 0:09:45.560 Well, the pressure is definitely still on. And it's hard 0:09:45.559 --> 0:09:47.560 to think of just one thing the top the agenda 0:09:47.600 --> 0:09:50.199 because it's so long. But if you had to pinpoint, 0:09:50.320 --> 0:09:52.880 one thing that I think investors will really be looking 0:09:52.920 --> 0:09:57.439 at is streaming profitability. The company's planning on finally driving 0:09:57.480 --> 0:10:00.560 profits in fiscally year twenty twenty four. This is coming 0:10:00.600 --> 0:10:04.280 after so many quarters and years of billions and losses 0:10:04.320 --> 0:10:06.720 in this segment, and we've heard Bob Ayer talk about 0:10:06.720 --> 0:10:09.679 how important the streaming transition is for the business. Really 0:10:09.679 --> 0:10:12.240 making sure that they're hitting their mark and achieving their goals. 0:10:12.360 --> 0:10:14.760 That's definitely priority number one as they move beyond this 0:10:14.840 --> 0:10:15.440 proxy fight. 0:10:15.640 --> 0:10:17.640 Yeah, it is interesting. I mean, Tommy, we're talking kind 0:10:17.679 --> 0:10:20.160 of in the newsroom. It's like they won the battle, 0:10:20.640 --> 0:10:21.800 but have they won the war? 0:10:21.920 --> 0:10:22.040 Right? 0:10:22.080 --> 0:10:24.520 They still have to make some changes. I mean, at 0:10:24.520 --> 0:10:26.280 the core of what Disney is. It's a lot of 0:10:26.320 --> 0:10:29.400 moving parts, and some are much more significant. I find 0:10:29.440 --> 0:10:31.480 it wild to see that we are looking at a 0:10:31.559 --> 0:10:33.920 Disney today that when you talk about what really moves 0:10:33.920 --> 0:10:38.800 the profit needle, it's really parks. At this point, parks 0:10:38.840 --> 0:10:39.679 are definitely huge. 0:10:39.679 --> 0:10:41.280 And if we think back to one of the big 0:10:41.320 --> 0:10:43.240 news stories at the end of twenty three was the 0:10:43.280 --> 0:10:46.280 fact that Disney is doubling its capital expenditures and it's 0:10:46.320 --> 0:10:49.400 parts and experiences business over the next decade, and sixty 0:10:49.440 --> 0:10:53.040 billion dollars is substantial, and it really shows the realization 0:10:53.120 --> 0:10:55.680 at Disney that while of course it is a priority 0:10:55.679 --> 0:10:57.400 to build out streaming to make sure that they have 0:10:57.440 --> 0:11:00.560 a transition away from the linear assets which have historically 0:11:00.640 --> 0:11:04.000 been a big profit driver. Parks have been consistent coming 0:11:04.000 --> 0:11:07.000 out of the pandemic. Domestically, it's been a strong profit driver. 0:11:07.160 --> 0:11:10.320 International has served seeing the year on year improvement in 0:11:10.360 --> 0:11:13.079 those markets. It's definitely a top priority. And one big 0:11:13.160 --> 0:11:16.480 question also that investors have is where this new capital 0:11:16.520 --> 0:11:19.200 investment is going to go. Because today, and you could 0:11:19.200 --> 0:11:22.480 hear this on the shareholder meeting today, Disney is not 0:11:22.559 --> 0:11:25.240 really given. They haven't shown their hand as to where 0:11:25.280 --> 0:11:28.080 these dollars are going to go. There are some large projects, 0:11:28.080 --> 0:11:30.800 but there's still some uncertainty as to how exactly they 0:11:30.840 --> 0:11:33.200 want to strengthen this business for the future. 0:11:33.920 --> 0:11:36.360 Jamie, what do you think this means for the succession 0:11:36.400 --> 0:11:39.240 planning at Disney, because that had come up over and 0:11:39.280 --> 0:11:42.920 over again, and not only just from Nelson Pelts, but 0:11:43.000 --> 0:11:44.480 also the other active as black Whells. 0:11:46.360 --> 0:11:46.560 Well. 0:11:46.600 --> 0:11:49.160 Certainly, if Pelts had been able to get on the 0:11:49.200 --> 0:11:51.880 board here, it would have been really interesting to see 0:11:51.920 --> 0:11:54.280 what that would do to succession planning, as it could 0:11:54.280 --> 0:11:57.320 have definitely elevated the chances of anybody who was not 0:11:57.400 --> 0:12:00.319 currently at Disney. As one of the major points Pelts 0:12:00.320 --> 0:12:03.440 has reiterated over and over again is the advantages of 0:12:03.480 --> 0:12:06.800 having an outside, fresh perspective both with Disney getting their 0:12:06.840 --> 0:12:10.800 board together have solidifying control. Here, it really turns to 0:12:10.880 --> 0:12:14.200 looking at those leading internal candidates, and there's been so 0:12:14.320 --> 0:12:17.679 much speculation about who this might be, whether or not 0:12:17.679 --> 0:12:20.520 you want to prioritize someone in the entertainment division, which 0:12:20.559 --> 0:12:23.800 needs a lot of work, or the parks business, which is, 0:12:23.960 --> 0:12:27.920 as we've highlighted, an incredible big profit driver, or sports, 0:12:27.960 --> 0:12:30.559 which is you know, another huge dynamic area with Disney, 0:12:30.600 --> 0:12:32.920 with the joint venture coming up, ESPM being lost in 0:12:32.920 --> 0:12:35.600 the flagship. There are arguments for leaders of all these 0:12:35.640 --> 0:12:38.480 divisions taking the reins, but the big question, of course 0:12:38.559 --> 0:12:41.679 is who is best suited to manage all of these altogether. 0:12:41.760 --> 0:12:43.440 Well, let me ask you that, Jamie, I mean, who 0:12:43.559 --> 0:12:45.760 is the best suited? I mean, I remember that you 0:12:45.800 --> 0:12:48.360 know what they did, right, It's always been kind of 0:12:48.360 --> 0:12:51.480 internal candidates. I remember when Jay Rozzulo was CFO and 0:12:51.520 --> 0:12:53.520 Tom Staggs was head of parks and they, you know, 0:12:53.520 --> 0:12:55.720 would switch positions so that they could learn more about 0:12:55.760 --> 0:12:58.160 the company and with the understanding that one of these 0:12:58.160 --> 0:13:00.079 guys might be the air apparent at some point. It 0:13:00.160 --> 0:13:02.880 didn't play out that way. But do you believe that 0:13:02.920 --> 0:13:05.120 it needs to be somebody internally or does it need 0:13:05.160 --> 0:13:08.040 to be somebody maybe from outside with a different look, 0:13:09.120 --> 0:13:11.319 for a different view maybe on the company. 0:13:13.400 --> 0:13:16.320 So at Thurdbridge, what we've been hearing from the experts 0:13:16.320 --> 0:13:19.960 we speak with is really just the strength and importance 0:13:20.080 --> 0:13:22.440 of Businesy's culture and determining who this is going to 0:13:22.480 --> 0:13:25.160 be and how more likely than not they're really going 0:13:25.200 --> 0:13:27.320 to lean on some of that internal muscle that they have, 0:13:27.800 --> 0:13:29.720 And if we look at some of these leaders, there's 0:13:29.920 --> 0:13:33.640 Dana Walden and Alan Bergman over leading the entertainment division. 0:13:33.720 --> 0:13:36.960 Both could potentially be a good fit to really regalvanize 0:13:36.960 --> 0:13:40.760 that business. Josh Tomorrow over experiences to really lead that. 0:13:41.040 --> 0:13:45.160 There are definitely some individuals with impressive track records who 0:13:45.200 --> 0:13:48.320 could come in here internally and lead this company. But 0:13:48.360 --> 0:13:51.200 of course it's really hard to know exactly how the 0:13:51.240 --> 0:13:54.040 board is going about this. They've been fairly hush hush 0:13:54.120 --> 0:13:57.199 about who exactly is even officially in the running here. 0:13:57.440 --> 0:14:00.360 But there are definitely some people to tap internally who 0:14:00.360 --> 0:14:02.600 could be a very strong leader, But you don't think. 0:14:02.520 --> 0:14:04.200 It should be somebody externally. 0:14:04.240 --> 0:14:08.160 Then it seems based off of what we're hearing, it 0:14:08.200 --> 0:14:11.079 is fairly unlikely Disney will turn externally. But then again, 0:14:11.640 --> 0:14:13.360 we'll have to see what the board wants to do here. 0:14:13.480 --> 0:14:16.000 Hey, Jamie, tell us take us into the economics of 0:14:16.040 --> 0:14:18.719 streaming here, Like, why is it so hard to make 0:14:18.760 --> 0:14:21.320 Disney plus profitable? I mean Netflix, Look, it took a 0:14:21.320 --> 0:14:23.920 long time, It's been many years, but Netflix is profitable. 0:14:23.920 --> 0:14:27.560 They know how to do it, and Netflix is profitable. 0:14:27.600 --> 0:14:29.680 And one thing which is amazing is that they've been 0:14:29.720 --> 0:14:32.600 turning an operating profit ever since they launched streaming in 0:14:32.600 --> 0:14:35.480 two thousand and seven, which is definitely amazing and one 0:14:35.480 --> 0:14:38.240 thing that all the streaming players, Disney included, is jealous of. 0:14:38.560 --> 0:14:40.480 And there are a couple of reasons here why it's 0:14:40.520 --> 0:14:43.680 been such a big loss leader. First of just customer acquisition. 0:14:43.800 --> 0:14:46.400 There's been such a race to have growth at all costs, 0:14:46.400 --> 0:14:48.960 to try to catch up to Netflix's scale, which at 0:14:48.960 --> 0:14:51.320 this point is looking increasingly difficult with them at two 0:14:51.360 --> 0:14:53.960 hundred and forty million Disney around one fifty one sixty 0:14:54.000 --> 0:14:58.080 for their core Disney plus offering. With that growth comes 0:14:58.120 --> 0:15:00.440 a lot of marketing so many dollars and to try 0:15:00.440 --> 0:15:02.760 to get people to come and stay. And then also 0:15:02.800 --> 0:15:05.840 the content costs. We've heard so much about how content 0:15:05.960 --> 0:15:08.440 is king and how there's been this golden age of 0:15:08.480 --> 0:15:11.520 streaming and the programming spend that it is accompanying that. 0:15:11.520 --> 0:15:13.800 That is one thing which also right now is coming 0:15:13.840 --> 0:15:16.200 to a bit of a shift over the last year 0:15:16.280 --> 0:15:19.360 or two with profitability at the forefront, with the strike, 0:15:19.480 --> 0:15:22.600 some delays and content spend. That's one area which is 0:15:22.640 --> 0:15:24.960 getting a bit of an adjustment as Disney and other 0:15:25.000 --> 0:15:28.960 players try to balance the books and not make sure 0:15:28.960 --> 0:15:32.800 that all their spend is rationalized, so between content, between marketing, 0:15:32.960 --> 0:15:36.000 between Also it does building the infrastructure for ad supported tears, 0:15:36.320 --> 0:15:38.560 making sure the technical platform is there. There are a 0:15:38.600 --> 0:15:41.080 number of major costs to make this a large, scaled 0:15:41.160 --> 0:15:42.120 and viable business. 0:15:42.160 --> 0:15:44.520 So, Jamie, I don't know if you cover Apple by 0:15:44.520 --> 0:15:47.200 any chance, but we just have a story about our 0:15:47.200 --> 0:15:49.360 own marker, I mean, just crossing the Bloomberg. Apple has 0:15:49.360 --> 0:15:52.920 teams investigating a push into personal robotics, a field with 0:15:52.920 --> 0:15:55.200 the potential to become one of the companies ever shifting 0:15:55.280 --> 0:15:58.320 next big things. This is according to people tim familiar 0:15:58.360 --> 0:16:01.080 with the situation, follows just shortly after they said we're 0:16:01.120 --> 0:16:01.640 done with the car. 0:16:01.840 --> 0:16:04.240 Yeah, Engineers at Apple have been exploring a mobile robot 0:16:04.280 --> 0:16:06.600 that can follow users around their homes, said the people, 0:16:06.600 --> 0:16:09.680 who asked not to be identified because the Skunkworks project 0:16:09.800 --> 0:16:12.400 is private. The iPhone maker has also developed in advanced 0:16:12.440 --> 0:16:16.080 tabletop home device that uses robotics to move a display around, 0:16:16.160 --> 0:16:16.600 they said. 0:16:16.760 --> 0:16:19.600 Gap efforts said to be in beginning stages, and it's 0:16:19.640 --> 0:16:22.240 unclear if the products will ultimately be released. Shares of 0:16:22.280 --> 0:16:25.440 Apple not really necessarily moving, although they look they're moving 0:16:25.480 --> 0:16:27.720 a little bit lower on this news, down about half 0:16:27.720 --> 0:16:30.120 a percent. Before we go back to Disney, Jamie, any 0:16:30.120 --> 0:16:31.360 thoughts do you follow Apple? 0:16:32.720 --> 0:16:34.560 I cover their media team. So we've got an a 0:16:34.600 --> 0:16:36.240 question about ted Lasso. 0:16:35.960 --> 0:16:41.440 On Yes, that's great, right, well played, Jamie, well done. 0:16:41.320 --> 0:16:44.320 Well done. All right, So I don't know, what is 0:16:44.320 --> 0:16:46.080 there a timeline that we have to give Disney at 0:16:46.080 --> 0:16:46.560 this point? 0:16:48.640 --> 0:16:50.760 Well, the thing which we really have to hold Disney 0:16:50.760 --> 0:16:53.800 too is definitely the streaming profitability goals. I mean seeing 0:16:53.800 --> 0:16:56.040 if they can achieve that. One of the big questions is, 0:16:56.440 --> 0:16:59.200 you know about Bob Iger's return to this company, making 0:16:59.200 --> 0:17:01.680 sure he's executed on that while also seeing the CEO 0:17:01.800 --> 0:17:05.800 transition succession happen. That's key, And then also more color 0:17:05.880 --> 0:17:10.080 about the long term operating margins for streaming. They want 0:17:10.119 --> 0:17:12.880 double digits. It took Netflix a decade to get double 0:17:12.960 --> 0:17:17.280 digit operating margins consistently. So those are definitely some things 0:17:17.320 --> 0:17:19.399 to look at, and really that year timeline is going 0:17:19.440 --> 0:17:20.960 to be key for the company. 0:17:21.440 --> 0:17:23.280 And what about the parks. They have said that they're 0:17:23.280 --> 0:17:26.840 going to spend sixty billion and revamping the park in 0:17:26.920 --> 0:17:29.240 universal studio. It's said that they are going to have 0:17:29.320 --> 0:17:32.320 some new attractions. They have a new location in Florida 0:17:32.359 --> 0:17:35.280 where it's Disney's home turf. What do you think about 0:17:35.359 --> 0:17:37.200 the sixty billion, how do you think that should be spent? 0:17:39.280 --> 0:17:41.640 So what we've been hearing from our experts is that 0:17:41.840 --> 0:17:44.760 really the priority for Disney is much more on these 0:17:44.960 --> 0:17:49.200 huge immersive experiences than one off rides, think the traditional 0:17:49.200 --> 0:17:52.200 space mountain kind of feature. They're really trying to build 0:17:52.280 --> 0:17:56.080 these new lands which have people just spend so much 0:17:56.119 --> 0:17:58.879 time in the park and drive these really engaging experiences 0:17:59.160 --> 0:18:03.679 and then also justify the increasingly expensive day passes that 0:18:03.720 --> 0:18:06.399 Disney commands at its various parks. So in terms of 0:18:06.400 --> 0:18:09.200 where this will go, Disney's announced a variety of different features, 0:18:09.280 --> 0:18:12.479 if you listen to the call today, expanding different uh 0:18:13.040 --> 0:18:16.360 you know, massive experiences in Paris and Tokyo and their 0:18:16.359 --> 0:18:19.280 international stage. So looking at some of these large scale 0:18:19.320 --> 0:18:21.639 projects is what we're going to be keeping, you know, 0:18:21.760 --> 0:18:24.240 and you're out for for Disney to really get some clarity. 0:18:24.280 --> 0:18:27.600 As for them, of course, the constant story is how 0:18:27.640 --> 0:18:31.600 do we monetize their under year history of its and 0:18:31.640 --> 0:18:34.479 their new stories and these immersive experiences are definitely one 0:18:34.480 --> 0:18:35.720 of the areas they may look towards. 0:18:35.800 --> 0:18:37.880 Hey Carroll, you know one character you will not see 0:18:38.560 --> 0:18:42.159 at Disney at the Disney Theme parks, Blue, despite the 0:18:42.200 --> 0:18:46.399 fact that Blue is streamed on Disney Plus throughout the 0:18:46.400 --> 0:18:49.400 world except for China, New Zealand and Australia not yet. 0:18:49.520 --> 0:18:50.680 Tim Stenefek, Well, they. 0:18:50.600 --> 0:18:52.280 Don't have the rights to it. They didn't, They didn't 0:18:52.280 --> 0:18:52.960 buy up the rights. 0:18:53.000 --> 0:18:55.240 So maybe just negotiations, or maybe they. 0:18:55.040 --> 0:18:57.159 Miss the last Devin Leonard in a few minutes. 0:18:57.760 --> 0:18:59.879 All I know is I've been to the park. It's 0:19:00.119 --> 0:19:03.080 a long time. My daughter was younger. I got to say, 0:19:03.200 --> 0:19:04.879