|Bigger isn’t always better.
That’s a lesson Disney’s Bob Iger is learning as he signals plans to shrink the Mouse House amid a tumultuous time for the company.
Iger, in his second tenure as Disney CEO, highlighted what’s in (film studios, parks, and streaming) and what’s out (TV networks) during the company’s most recent earnings.
It’s a marked shift for Iger, who grabbed headlines during his first tenure as boss for high-profile acquisitions like Marvel and Pixar.
But desperate times call for desperate measures. Disney’s stock is down nearly 30% over the past 12 months, in addition to broader headwinds like two Hollywood strikes and weak box offices.
However, changing a company with a market cap north of $155 billion doesn’t happen overnight. Insider’s Lucia Moses mapped out how Iger is looking to streamline Disney. From selling off networks like ABC and FX to deciding what to do with ESPN, there are many potential changes and plenty of risks.
In many ways, Iger’s plans for slimming down Disney represent the calm before the storm.
The short-term goal is undoubtedly to boost Disney’s ailing stock price. But shedding struggling businesses could also be a pretext for getting Disney in shape for a much larger deal.
Apple has long been rumored as a potential buyer of Disney. The two companies have history — Iger sat on Apple’s board for eight years — and would be a natural fit, experts have speculated. Disney provides the content Apple needs, while the tech giant offers distribution channels.
It could be the first of many similar tie-ups. Media companies are realizing they’ll never get the scale they need to be profitable in the streaming era without some help.
The pressure to get a deal done — plus a content drought due to the ongoing strikes — would likely favor the buyers.
But the real winners in a dealmaking frenzy, as always, are investment banks. After more than a year of an abysmal M&A market, bankers would welcome deals to help broker and finance.