It's been nearly eight months since Bob Iger returned to Walt Disney (DIS -0.12%) as its CEO, and the clock keeps ticking. He was brought back on a two-year contract, and it's becoming fairly clear that Iger doesn't have enough time to turn things around by the end of 2024.
I predicted back in December that Iger would negotiate a contract extension in 2023. It's starting to seem like a strong possibility, but not for the reasons that bulls would like.
Disney stock is down 3% since his arrival was announced, a sharp contrast to a general market that is up 11% in that time. An Iger extension at this point wouldn't be a sign that he's doing a great job in getting Disney on track. It would be an admission that two years was never going to be enough time to get the market excited about the company again.
It's a maul world after all
It's not fair to pin the stock's slump on Iger. Weakness in the ad market is a macro matter. The animated features that are flopping at the local multiplex were in motion long before his return to the helm. The seeds for the early summertime slump at the theme parks were planted long ago.
Iger is the right person for the job. Set aside the stock's performance (for now), and his initial report card merits a passing grade. He has made turning Disney+ profitable by the end of 2024 a priority, the cornerstone of the $5.5 billion in annual savings that he hopes to realize by the end of next year.
He has made life easier for theme park enthusiasts, restoring some perks without sacrificing the need to maximize the monetization of its gated attractions. He has also delayed some key theatrical releases, a sign that he knows it can't be business as usual on the studio end anymore.
Image source: Disney.
He also has to be humbled at this point. The initial "I'm back" rally on his return just before Thanksgiving has faltered. Iger agreeing to a mere two-year deal suggests that he misunderstood the severity of the assignment. The brand has fallen far as a result of spurts of mediocrity and mismanaged political fisticuffs.
Iger came in rolling up his sleeves. Now he realizes that he might need a new shirt instead.
There's a lot at stake, of course. Disney continues to be the world's leading operator of theme parks. It's the studio behind most of the biggest theatrical releases since Iger's return. Subscriber growth has recently stalled at Disney+, but just building out a premium streaming service to a nine-figure base of subscribers in less than four years is a stunning accomplishment.
Disney isn't the only media stock that the market is ignoring. It's just the loudest one that has gone silent. Iger will need more time to mine for pixie dust, and Disney's board knows it. He might want to cancel any post-Disney plans he had for 2025, especially if he recognizes what becomes of his legacy if he hangs up his mouse ears before the job is done.
