It’s been an interesting few days since Sunday night’s surprise announcement of a leadership change at The Walt Disney Company. CEO Bob Chapek is gone and the man he replaced, Bob Iger, is back in the House of Mouse. While the company’s weak financial condition is the obvious reason for this change, more details are coming to light that indicate that Bob Chapek may have made some shady decisions regarding the company’s finances, particularly around Disney+ .
In a story in the Wall Street Journal (via WhatsOnDisneyPlus), it is mentioned that the second season of The mysterious Benedictus society, The Disney+ original series made its episode debut on Disney Channel a day before it appeared on the streaming service. Something similar was planned for the second season of Doogie Kamaloha, MD The reason for this, according to the report, was that by premiering the show on the Disney Channel, production and marketing costs could be shifted to the cable channel, thereby reducing Disney+’s costs.
Disney+ has lost money for Disney from the start, something that was known and fully expected, but the streaming service reported a $1.5 billion loss on its latest quarterly earnings call. While then-CEO Chapek tried to twist it by saying the losses wouldn’t go away until Disney+ becomes profitable in 2024, Wall Street didn’t react well to the news. The earnings call has been cited as one of the key factors for Disney’s board to make the move to bring back Bob Iger.
Walt Disney Company CFO Kristin McCarthy was reportedly among those concerned about this cost shift, and she is also among those apparently concerned about Chapek continuing as CEO. There was serious concern and so it seems that this approach contributed.
If this reporting is correct, and there’s no reason to believe it isn’t, then the whole thing is quite concerning. While shifting such charges may not be strictly illegal, it is questionable at best. It seems like a conscious effort to make Disney+ look better financially than it actually was. It won’t change Disney’s bottom line, but it will make the segment of the company that has been the primary focus for the past two years look better than it should, which shareholders and financial institutions won’t appreciate. ,
It also raises some interesting questions about Disney’s media and entertainment distribution, the new line of business within Disney created by Chapek to manage nearly all of the Disney media businesses, including both the Disney Channel and Disney+. These cost shifts can be simpler and less transparent due to the organization. The head of DMED, Kareem Daniel, left Disney on Iger the day before, and in an email to employees, Iger said Disney would return to a more creator-oriented organization, indicating that DMED could be phased out entirely.