An examination of Bob Iger’s return to his old post as CEO of Disney shows the extent to which he and the board of directors are at fault for the company’s problems. As the management of now former CEO Bob Chapek floundered, the board did not do a proper CEO search or promote anyone from Walt Disney Company’s (NYSE: DIS) management. They went to Iger and reinstalled him in a matter of hours. They turned their backs on the fact that one of America’s most famous CEOs had blundered late in his former tenure.

One proof that Iger caused some of Disney’s problems is that he has only been gone from management for months and not years. He left his post as executive chairman in December 2021. Unlike an outside chairman, he remained a major presence in the management of the entertainment company. Iger remained deeply involved in decisions, which made it difficult for Chapek to move out of Iger’s shadow. 

Of the long list of mistakes Iger made, the primary one is how Disney+ was launched. Iger believed it could be among the dominant streaming services in the world. He gambled that content from Disney, Pixar, Star Wars, and Marvel would create industry-leading demand. As subscribers grew, the count showed he was partially right. 

However, Iger priced Disney+ much too low, which made moving prices to a level at which the business was profitable face major hurdles. Disney+ started to take subscribers in November 2019. The Covid-19 pandemic drove people indoors and helped lift subscriber counts across all major streaming services. 

Subscriptions to Disney+ were priced at $6.99 per month. Iger gambled that he could get market share at the cost of profits. Most of Disney’s streaming competition was priced between $10 and $15 monthly. Disney botched the chance to increase to those levels without driving churn up, and subscriber counts down. Its chance to make money was trapped by its low price point.

 

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Iger did not take advantage of the depth and breadth of Disney’s content. He paid billions of dollars for Pixar, Star Wars, and Marvel. When he had his chance, he failed to capitalize on these investments. He also did not take advantage of the instincts that led him to buy all of those franchises. 

It was Iger who painted streaming as a critical business. When it was first available, he said, “It’s going to be the most important product our company has launched in a long time, certainly in my tenure.” Its chances of making large sums of money were stillborn. 

As Iger returns, he won’t have the magic to make Disney+ a contributor to earnings. He will have to sharply cut costs in the division in an attempt to change that. And those cysts will make it less attractive to subscribers in a period when the streaming competition has surged. 

Iger will turn out to be a poor choice.

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