In a little less than a year's time, Disney (DIS 1.15%) CEO Bob Iger will celebrate his 15-year anniversary at the helm of the powerful media and entertainment empire -- perhaps his last anniversary as such if he retires in 2021, as is currently the plan. Fifteen years is a long time, and Disney has accomplished some ambitious plans on Iger's watch.
The most ambitious might be in this final year with the company's streaming ambitions under the Disney+ banner coming to the fore. Nevertheless, to understand where Disney is headed, investors need to know how it got to this point. Therefore, here's a look at the biggest moves Mickey, Iger, and friends have made in the last decade and a half.
Media assets, real estate, and -- most importantly -- intellectual property
Though Disney was already a massive enterprise when Iger took the reins in late 2005, the entertainment conglomerate has still been a growth endeavor. That shows up in the expansion -- both organic and acquired -- that has taken place under his purview.
- Just a couple months after Iger took over, Disney announced it would be purchasing the animation studio Pixar for a net amount of $6.3 billion in January of 2006. The deal ended a long-standing agreement in which Disney handled box office distribution for the studio, bringing the animators that introduced the world to Toy Story, The Incredibles, and Monsters Inc. directly in house. It also brought in one Steve Jobs to Disney's board of directors, who was CEO of Pixar at that time. Disney's animation business had been struggling in the years up to that point, and the purchase has been a runaway success ever since. Pixar has continued to churn out hits that have grossed billions at the global box office, and Disney has integrated Pixar's popular characters into its theme parks and merchandising operations.
- In 2009, Disney bought itself a 30% stake in streaming partnership Hulu -- which was initially devised by NBC Universal (now part of Comcast (CMCSA 2.25%) and News Corp. (part of Fox; we'll get to that later). In exchange for a cash infusion, Disney promised to prop up the fledgling service's content with its ABC and Disney Channel shows.
- The end of 2009 brought the first Earth-shattering and world-altering events Disney was responsible for over the last decade: its purchase of Marvel for $4.2 billion. Though the X-Men universe stayed with Fox and Spider Man with Sony (SNE +2.44%), Disney has done just fine developing stories featuring the more than 5,000 beloved Marvel superhero characters. The Marvel Cinematic Universe, as it's now called, is 23 movies strong, with TV series to boot, and still going. Avengers: Endgame, released in the spring of 2019, also now holds the record for global gross box office receipts, bringing in a $2.8 billion haul. Disney's $4 billion price tag could go down as one of the best deals (maybe even a steal?) of all time.
- Disney's theme park in Hong Kong opened just a month prior to Iger taking over from previous CEO Michael Eisner, and Mickey's first attraction in China was a big success. The company followed up on that by breaking ground in 2011 on a new resort on mainland China in Shanghai -- costing $5.5 billion and opening five years later in 2016. The 1,000-acre park has continued to update and expand as Disney's properties have grown and has been a key area of growth for the largest parks, experiences, and products reporting segment. The division brought in $26.2 billion in revenue -- more than a third of the total -- in the 2019 fiscal year, good for nearly half of the company's total operating profit.
- If owning the world's most valuable superhero property wasn't good enough, Disney followed up its 2009 purchase with the acquisition of the world's most successful sci-fi and fantasy franchise: Star Wars. Parent company Lucasfilm was taken for $4.1 billion in the autumn of 2012, also giving Disney control over Indiana Jones and the studio's extensive entertainment technology. While the numbers have been good -- new Star Wars movies have grossed billions at the global box office since Star Wars: The Force Awakens was released in December 2015 -- it hasn't been a perfect story for the galaxy far, far away. A couple of disappointments like Solo: A Star Wars Story underperformed expectations, and Iger has since concluded that less may be more with the property. Star Wars takes a multiyear hiatus from the silver screen after Star Wars: The Rise of Skywalker in December 2019, although the company will still be active elsewhere -- like via its two largest-ever single-themed park expansions, Star Wars: Galaxy's Edge at Disneyland and Disney World, and new streaming TV series like The Mandalorian.
The Mandalorian. Image source: Star Wars/Disney.
- Over the summer of 2016, Disney took a one-third interest in BAMTech, the digital media and technology outfit started up by Major League Baseball. A year later, Disney paid $1.42 billion for another 42% of the company, hoping to use its new controlling interest in BAMTech and its digital prowess to update its ESPN sports network for the 21st century. In the spring of 2018, the fruits of the BAMTech acquisition were realized with the launch of the ESPN+ streaming service.
- On to the big one. In December 2017, Disney announced it was purchasing Twenty-First Century Fox. The deal, which ultimately ended up costing $71.3 billion, was closed in March 2019 after Disney agreed to spin off some of Fox's regional sports networks. The list of property acquired is extensive though: a sprawling back catalog of movies and TV including the X-Men (to be reunited with the rest of Marvel), The Simpsons, Avatar, and another one-third stake in Hulu. As to the latter, Iger and company shortly thereafter cut a deal with Comcast for the final one-third piece of the pie for no less than $5.8 billion. The massive media merger is key to Disney's plans, not just in the world of TV streaming with its just-launched Disney+ service but in developing a stronger direct-to-consumer distributor of entertainment content.
What the immediate future holds
The last few years have been especially busy ones for Disney and CEO Iger. Digital subscriptions -- headed by Disney+ with Hulu and ESPN+ riding sidecar -- will be under the microscope as Disney integrates its massive Fox purchase and updates its business model for the decades ahead. As a result, the bill will continue to be a large one. Disney's direct-to-consumer and international segment, which houses its internet streaming products, had a $1.81 billion operating loss on $9.35 billion in revenue during fiscal 2019 -- all of that before Disney+ was even launched.
But the long-term potential is there. Disney+ had more than 10 million sign-ups on Day One, and the company expects it will have 50 million paying subscribers worldwide in a few years' time. Paired with the company's resorts and movie studios, Iger's deal making in the last decade and a half has Disney set up for big success in the years ahead.
