Iger replaced Bob Chapek, his hand-picked successor, late Sunday. He made Disney the dominant entertainment company during his first spell in charge. But once the champagne corks stop popping, Iger and his investors will find themselves with the same problems that caused Chapek’s ouster.
But that balance sheet was created by Iger. It was Iger who bought Pixar, Marvel and Lucasfilm. It was Iger who bought Fox’s entertainment assets. It was Iger who led Disney into streaming, made the company a tourism monster and chose Chapek.
Chapek was able to increase operating income by $1 billion per year. He used a discounted combination of Hulu, Disney Plus and ESPN Plus to overtake Netflix (NASDAQ:NFLX) in streaming. He picked up a new ship for the Disney Cruise line at a discount.
But the streaming bundle’s growth came with a loss of $1.47 billion for Disney’s direct-to-consumer business during the quarter ending Oct. 1. The quarter was saved by Chapek’s old parks division, which earned $1.5 billion during the quarter and $7.9 billion during the last 12 months.
Chapek was unable to deal with Florida Governor Ron DeSantis, who cancelled long-standing tax breaks on Disney’s Florida land holdings after a bitter fight over Florida social policy. Chapek didn’t speak out until after a bill against LGBTQ+ rights was passed, then said he worked against it behind the scenes. This made him, and the company, appear weak.
What Happens Next for DIS Stock?
Iger faces challenges on several fronts. Most involve PR and politics, which are his strengths.
He must deal with Florida’s governor and make streaming a profit center. Iger also needs to deal with ESPN losing market share and get past the layoffs that followed the quarterly report.
If he can do all that, Iger will have room to pick a successor who might have an easier time of things.
On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.