Bob Iger on DeSantis, Prices & Low Crowds at Disney World, Challenges & Optimism
Following his 2-year contract extension, Disney CEO Bob Iger spoke with CNBC’s David Faber about the future of Walt Disney World and Disneyland, streaming services, legacy media, as well as potential sales or acquisitions. This post will recap some of the highlights will interjecting our ‘between the lines’ commentary.
The backdrop of Iger’s interview was the chilly mountainside in Idaho, where Iger is making a return for the investment bank Allen & Co.’s annual conference in Sun Valley. The summit is a veritable who’s who from Hollywood, Silicon Valley and Wall Street, sometimes referred to derisively (or lovingly, I guess, depending upon the audience) as “billionaire’s summer camp.” It’s frequently a hotbed for mergers and acquisitions, with handshake deals struck among media and tech titans.
In fact, former CEO Michael Eisner famously made the deal for Disney to acquire Capital Cities/ABC for $19 billion back in 1995 at Sun Valley Resort. That’s often viewed as the first megadeal made at the conference, cementing its reputation as the place for media moguls to talk M&A. This is all relevant because it’s widely expected that CEO Bob Iger will spin off declining businesses to pay down debt and create a leaner, more focused Disney. M&A experience also likely plays a major role in Iger sticking around through 2026.
That’s as good of a jumping off point as any, and Faber was quick to ask about Iger extending his contract even after telling the interviewer back in February that he would not. Iger said that Disney has “gotten a lot done very quickly” and pointed to significant cost reductions, significant restructuring, major personnel changes, and dealing head-on with the biggest challenges and looking for opportunities.
Iger indicated that he is “quite pleased” how much Disney has accomplished in a short period of time, but noted that there are a lot of challenges, that the market has to cooperate, and post-COVID recovery remains ongoing. He went on to say that he’s “extremely optimistic” about the company and its assets, but that the challenges are greater than he had anticipated, including some “self-inflicted” damage.
When pressed about what he meant, Iger said that the disruption of the traditional television business is the most notable. This was something Disney saw coming years ago, but the decline has been sharper and faster than anticipated. To that point, Iger stated that there’s necessary “transformative work” to be done to ensure cost structure reflects the economic realities of the business that includes disruption.
He also said that Disney needed to assess “no growth businesses” like linear and see what opportunities exist. When asked specifically, Iger went on to suggest that Disney could sell ABC, FX, NatGeo, and other cable networks because they “may not be core to Disney.” He said it wasn’t a matter of creativity, but the business and distribution model for linear is “definitely broken.”
Iger also distinguished ESPN from the other cable networks, and said Disney was thinking differently about it. He said Disney’s position in that ESPN is very unique and a great brand. “We’ve had a great business, and we want to stay in that business. That said we’re going to be open minded there too. Not necessarily about spinning ESPN off, but about looking for strategic partners that could either help us with distribution or content, but we want to stay in the sports business,” Iger explained.
Based on both his comments during the interview and the way Disney has restructured to silo off ESPN from the other divisions, it’s pretty clear that Iger has something up his sleeve with ESPN. There has been a ton of speculation about Apple acquiring Disney, but I think that’s off-base. My bet is that there’s a Disney-Apple deal for ESPN on the horizon. Not necessarily a sale, but a big deal that makes ESPN, for all intents and purposes, part of Apple TV Plus.
Apple TV+ has already started to test the waters with live sports, and clearly has an appetite for more. They lost out on the bidding war for NFL Sunday Ticket to Google (YouTube), which was a big blow. Sports would be hugely beneficial to Apple and they have the money to burn on a major acquisition or strategic partnership.
One of Apple’s many problems–beyond just a lack of sports content–is brand recognition and coverage quality (Friday Night Baseball on Apple is awful). ESPN would instantly address that. Plus, I think Iger is more inclined to make a deal with Apple than anyone else–the marriage between Disney and Apple makes sense. I have zero insight beyond intuition and gut instinct, but I think an Apple-ESPN deal happens. (I do not think Apple–or anyone–will acquire Disney outright.)
Iger also addressed Hulu, and offered the strongest ‘confirmation’ to date that Disney’s plan is to acquire Comcast’s stake in the streaming service (there’s already a long-standing agreement for this transaction in 2024, but Iger previously said he’d reevaluate that). According to Iger, Disney is better off with Hulu than without it, and the tentative plan is for Hulu to be available starting the end of 2023 as part of the Disney+ streaming service.
Given that this is a theme parks blog, many of you may not really care about cable networks, streaming services, and so forth. However, Iger addressing those disruptions and reducing Disney’s debt load is absolutely a necessary prerequisite to future growth of Walt Disney World and Disneyland. To that point, let’s switch gears…
When asked earlier in the interview–during the portion about disruption and challenges–where Disney was doing well, Iger was empathic about the future of Walt Disney World and Disneyland. “There are other elements of the business that I have huge optimism about, for instance, Parks & Resorts which is just a tremendous business for us,” Iger said.
He continued: “We’re invested significantly and the investments we’ve made over the years are really paying off today. Shanghai Disneyland is a great example of that, [as is] the Star Wars Land…I’ve really believed in the future of that business. We actually have opportunities there to turbocharge that growth.”
With only a few minutes left on the clock, Faber returned to the topic of theme parks, bringing up reports that there have been slowdowns at Walt Disney World. Faber asked whether the DeSantis vs. Disney feud in Florida is now having an impact on attendance. “No, no, we see no sign of that at all,” Iger responded.
Iger then laid out all of the reasons why attendance around Independence Day was lower, saying that the temperature was about 100 degrees and 99% humidity on that day. He added that “Florida opened up early during COVID and created huge demand and didn’t have competition because there were a number of other places, states that were not open yet.”
Iger continued: “If you look at the numbers in Florida in 2023, or just recently versus 2022…the state of Florida has been down. We actually track hotel tax revenue across the state, which is a matter of public record, and there are counties in Florida that had been down 6, 7% recently. We also know that our competitors are discounting in that state. So there are some near-term issues in Florida that I don’t think had anything to do with politics.”
On some of these points, Iger is 100% correct. Hot weather likely was a contributing factor to late June and early July crowds. Florida seeing “revenge travel” earlier and thus it being exhausted sooner is absolutely a fair point, and one that has been brought up here previously. It’s also true that hotel occupancy tax collections are down in many major tourist hubs around Florida. Universal and other competitors are discounting.
And as we’ve said before, there is very little reason to believe politics is having any material impact on attendance or revenue. When you look at the data for Walt Disney World, Universal, and the state as a whole, there just isn’t much to support that narrative. A lot of readers contested that when it was our assessment, but perhaps you’ll believe it when coming from Iger? (Again, this is not to say it’s not causing people to change vacation plans on an individual level; but to whatever extent that’s happening, it more or less nets out to nothing material.)
However, this is also not the whole story. It wasn’t just the hot Independence Day weekend that was slower, it’s been all dates since Easter (year-over-year). Not only that, but hot and humid summers are not exactly a new-for-2023 phenomenon in Central Florida. Competitors are discounting more, but Walt Disney World is discounting more aggressively, too. Not only that, but Disney has brought back Annual Passes and ticket deals to boost bookings. Despite hotel occupancy tax collections being down, TSA data still shows strong numbers of inbound travelers to Florida.
Obviously, Iger is doing a wide-ranging interview and doesn’t have the time to get into granular detail on all of this–I’m just happy he hit the points he did! Had he dug into the details more, I suspect Iger would’ve said that the discounts have been necessary to maintain those strong inbound numbers–thus explaining lower occupancy tax collections–and that data also suggests more people are heading to outdoor and non-urban destinations like the beaches, state parks, etc.
As for the particularly slow Independence Day weekend, the sharper drop there could’ve been explained by a mix of particularly brutal weather and, more importantly, ticket blockouts from July 1 to 4 that were unnecessarily aggressive. (Crowd levels have already rebounded from the lows for those dates.)
Faber asked whether Iger was concerned about the attendance decline at Walt Disney World, and Iger indicated that he was not–that it was due to a tough comparison last year with pent-up demand, and that long-term, the business is healthy. Iger was then questioned about whether higher prices were one of the issues. He was pretty clear on that: “Pricing is not an issue. We addressed some of those issues.”
“I don’t know when the last time you visited Walt Disney World, but I’d say it’s where the Disney brand lives in his most sublime form. I believe that it’s an incredible experience. It’s a very, very popular business and product and it’s very successful and we’re not wringing our hands over it,” Iger continued.
Obviously, Iger is going to spin and minimize where possible. I think the situation is a bit worse than he lets on, but still ultimately a healthy and natural correction so long as Walt Disney World makes the necessary adjustments to address guest satisfaction and lure back disenchanted fans.
With that said, Iger’s assessment of pent-up demand is definitely correct and his points about pricing are at least somewhat correct. (Due to all of the discounting, prices have effectively already decreased as compared to last year. This alone suggests that pricing was/is an issue, at least to some extent. But even that could be a story about pent-up demand and free-spending consumers in 2021-2022, and people taking a “break” from theme parks after spending big on them the previous 2 years.)
The topic then turned back to DeSantis, with Faber offering some “bait” with quotes from DeSantis.
Iger stuck to the familiar script: “So far what we’ve said publicly is that we are concerned that he has decided to retaliate against the company for a position the company took on pending legislation in that state. And frankly, the company was within its right, even though I’m not sure it was handled very well, it was within its right to speak up on an issue constitutionally protected right of free speech, and to retaliate against the company in a way that would be harmful to the business was not something that we could sit back and tolerate.”
“And so, we have filed a lawsuit to protect our First Amendment rights there and to protect our business frankly. The other issues that you referenced, the last thing that I want for the company is for the company to be drawn into any culture wars. You know, we’ve operated for almost 100 years as a company making product that we actually are proud of in terms of its impact on the world. I joke every once in a while we’re there to manufacture fun.”
Iger was then asked about neo-Nazis demonstrating outside the Walt Disney World gateway last month. “That was horrifying quite frankly and it’s concerning to me that anyone would encourage a level of intolerance or even hate that…could be turned into some dangerous act of some sort.”
He went on to say that he didn’t want to engage beyond that, “except to say that it’s it’s not our goal to be involved in a culture war. Our goal is to continue to tell wonderful stories and have a positive, positive impact on the world. You know, we are a preeminent entertainer in the world. And we’re proud of our track record there. The notion that Disney is in any way sexualizing children quite frankly is preposterous and inaccurate.”
The substance of the interview more or less wrapped up there, with Iger’s concluding remarks conceding that Disney has “a lot of work to do” but that his team is confident that it’s doing “the right work at the right timetable.” He’s also confident that Disney’s board is doing well, and stated that the succession planning process “is not going to stop–it’s going to continue and it should.”
Iger ended with reassuring words: “There’s so many things that we have to do and so much that we know we will do and can do and we’re optimists like, you know, I talk about optimism is a major quality of a great leader. No one wants to follow a pessimist. We’re optimists about the future of this company. We’ve gotten at the work already. We know what we have to do. There’s light at the end of the tunnel in in the most challenged businesses, and there’s an unbelievably bright future for the businesses that are less challenged.”
Ultimately, it was a mostly good interview. Although not a ton of time was spent on Walt Disney World and Disneyland, that was to be expected. As we’ve pointed out repeatedly, the immediate pressing concerns are all on the other side of the company. Addressing those is a necessary prerequisite to significant investment and expansion in the parks. Stated differently, Disney needs to pay down debt–ideally by shedding some media baggage–before it can turn its attention to Walt Disney World and Disneyland. The two things are absolutely and undeniably intertwined.
So from that perspective, this interview hit all the right notes for me. Iger was sober and realistic about the struggles and challenges faced by linear and streaming, teasing sales of cable networks and also some sort of strategic partnership for ESPN. Iger also talked up the theme parks and his optimism for the future of Walt Disney World and Disneyland, suggesting (yet again) that he is sincere about betting big on their futures. That’s more or less everything that I wanted to hear.
One final note that’s beyond the scope of what we typically cover, Iger did have arguably one unforced error in discussing the writer’s strike when he said their union has unrealistic expectations. That is already the ‘big’ clip from this interview making the rounds on social media, with many juxtaposing Iger’s comments with his huge salary. This is like the 5th time this has happened with media executives, and while I can understand their desire to address and put pressure on the issue, the optics are awful.
Beyond that, I was frankly shocked that Iger spent 2 full minutes essentially repeating the same, substance-less sentiment. He could’ve instead broken down the financial performance of linear, streaming, and other segments to illustrate the rapid decline in entertainment profits (not to be confused with revenue) over the last decade.
I’m not going to weigh in on this contentious fight beyond that, and also to say that social media is not real life. The concerns of certain outsized online voices are not the same as those of average American consumers, and definitely not of investors. Regardless, Iger could’ve chosen his words more carefully, presented his case in a more compelling manner, or, ideally, said nothing at all.
Planning a Walt Disney World trip? Learn about hotels on our Walt Disney World Hotels Reviews page. For where to eat, read our Walt Disney World Restaurant Reviews. To save money on tickets or determine which type to buy, read our Tips for Saving Money on Walt Disney World Tickets post. Our What to Pack for Disney Trips post takes a unique look at clever items to take. For what to do and when to do it, our Walt Disney World Ride Guides will help. For comprehensive advice, the best place to start is our Walt Disney World Trip Planning Guide for everything you need to know!
OUR THOUGHTS
What’s your reaction to any of Iger’s statements about selling off networks, entering a strategic partnership on ESPN, acquiring Hulu outright? What about the explanations he offered for lower crowds at Walt Disney World? Still think that it does have to do with politics or prices? Thoughts on Disney extending CEO Bob Iger’s contract through 2026? Think he can turn things around by then? Do you believe Iger is sincere in his optimism about future expansion at Walt Disney World and Disneyland? Thoughts on anything else discussed here? Are you optimistic or pessimistic about the Walt Disney Company’s future? Think things will get better in 2024-2025? Do you agree or disagree with our assessment? Any questions we can help you answer? Hearing your feedback–even when you disagree with us–is both interesting to us and helpful to other readers, so please share your thoughts below in the comments!
To say pricing is not an issue is, at best, misleading. Disney has always been more expensive, so “pricing” may not be seen as problematic, but the value absolutely is. We just got back, and much of what set Disney miles above other theme parks was not there. The parks were dirty, areas looked shabby, and most importantly CMs were not at all what we have previously experienced at any Disney park it’s many seeming disinterested or even annoyed to be working. I’m not really going to Disney for the rides. I’m going for the entire experience which includes rides, food, park ambiance, caliber of employee, etc. I know Disney is going to be a much more expensive vacation, but I expect that to be offset by lovely parks and friendly, jovial CMs. It absolutely was neither of those things save for our time on the Galactic Starcruiser. That was worth every penny for the quality of the spaces, our personal experiences, the food, and the dedication and enthusiasm of literally every single CM there, from security at check in to the immersive actors. It was literally the exact opposite of our overall experience in the rest of WDW. So, the best part of our trip is the part they are closing. Add to that a couple of awful experiences that were not even acknowledged let alone made right, and we have already decided a Disney trip is not in our near or midterm future. It saddens me because I have always enjoyed trips to Disney parks, but this was so bad in comparison to the cost, that we simply will not do it. I will have to hear many, many, many confirmations that Disney’s (formerly) superior customer service has returned before I consider going back.
Disney needs to treat it’s passholders better! The prices consistently go up, yet the offerings go down. Give us back memory maker, some sort of free fast pass, the ability to park hop/roam freely as we want to, among other taken away perks. If things don’t improve, this will sadly be my last year as a passholder.
I enjoy this blog but if im being honest with my situation I come here to read as an escape but I cannot actually afford a Disney trip once my rent went up $400 my power bill doubled and food for my family of 4 went up as well it left me with discretionary income to pay for park tickets that are for one day — my entire monthly free cash flow.
When Iger refers to “linear”, is he referring to ABC, FX, and NatGeo? If so, could you please elaborate on why he uses that term? Thanks
It’s called linear programming because there is only one option to watch that is set up by the timetable. Like back in the day the shows were lined up in print in our TV Guide. Streaming is not linear because we can all watch whatever we want when we want and aren’t set into what is being broadcast.
“Linear” means programming that is presented to the consumer on a set schedule via broadcast or cable TV provider. If you turn on your TV and set it to a particular channel, you are consuming linear programming. Because fewer and fewer people are watching and/or paying for network & cable TV these days, and because even fewer of those people actually watch programs live (as opposed to watching on their DVR and fast-forwarding thru ads), those linear revenues are down.
The inverse of “linear” is “streaming” or “DTC” (direct-to-consumer), which refers to programming that you watch on-demand on your own schedule, and/or programming that is delivered directly to you via the internet (without the involvement of a TV “channel”).
Maggie and GS, I’ll just say the Disney has never excluded anyone. Announcements that reference the two genders do not exclude anyone. They are inclusive. Your comparison of a gender confused person to a person in a wheelchair is way off too. Do you really feel like you are not welcomed at the Magic Kingdom if they say Ladies and Gentlemen in an announcement. Do you really think that they are leaving poor you out. If you are, I think you need some psychological help. You may not think you are a man or a woman, but I don’t have to suspend what I know as a fact to make you feel good. And no, I’m not stomping on your rights. I just could care less about your preferences.
Just a side note here. When we went to Disney & Universal in 2022, our Universal tickets were far more expensive for one day than our Disney tickets. It cost our family of 5 over $1000 to visit for one day. We did opt for express pass for 2 members only for over $300 per pass on top of that too. So for the people saying that Universal is cheaper- they must have stayed on site.
Our trip this June, we did stay on site at Universal and booked a package with them. Universal express was included in our resort stay.
However, for the same time period, equivalent tickets at Disney were $700 – $1000 more expensive vs Universal. Plus G+/LL on top of that! It wasn’t even close.
Now, Disney has more to offer than Universal, I get that. But for our experience, the premium on Disney was not worth it.
I’ve seen this as well. Even booking a package to stay on site through a travel agent and looking at doing a split stay between Disney and universal the last time we went universal was about $60 more expensive for tickets per day. The hotel was comparable to what we were paying at all stars music but paying an extra $180 for the 3 days we’d be doing universal we didn’t feel was worth it. In doing research for our trip next October with our travel agent it’s the same situation tickets are more expensive. The hotel would be less expensive if we stayed at universal endless summer resort but only because we decided to do pop century this time for the skyliner. I’m not sure why people keep saying universal is cheaper when I very rarely do the math between the two and find it cheaper. I understand prices are going up at Disney but they’re also going up at universal so they’re staying pretty on par with each other
@Gail V
Thank you for your post. This is spot on. Disney ain’t what it used to be and the trajectory right now is sobering. Disney execs can either keep hiding their head in the sand and continue down this road toward self destruction, or they can read the handwriting on the wall and do an about-face.
These comments on Tom’s blog are the only place I see anything even remotely related to “culture war” issues. I like to be engaged and interactive in the community but it may not be worth it?
Yeah, he’s turned me off writing about this stuff.
So do you not read comments on literally any Instagram or Facebook post relating to Disney?
I do not read comments on any social media for the same reason (what’s the value other than people seeking out like minded ideas or doom scrolling?). I also do fully understand no one is making me read them here but sometimes it’s nice to see other folks thoughts, just not on these particular posts I guess.
Its necessary if you care about Disney bringing light to issues exacts change
He basically confirmed local APs makes Disney profitable and he finally had an epiphany. No one from out of state, or country who prepaid for their annual or once in a lifetime Disney trip isn’t going to stay couped up in their Motel6 room and not use their overpriced tickets they paid for. Hence, why hotel tax revenue was down along with attendance. The weather only matters to the locals. Local APs were restricted from going so they didn’t, they went to water parks instead. Iger is an idiot and shouldn’t have been brought back. He got himself into the culture war. Chapek wanted to stay out of it but Iger pressured the Board to pressure him to get into it. To now say he doesn’t want to be involved….that ship has sailed.
I think that Bob should look at some of the feedback from the guests and even your blog. I remember a couple months ago your blog looked back some 10 or so years ago and compared then and now. I always felt that getting rid of the disney magical express was a big mistake, charging for Genie instead of “fast pass” and so on. It was better some 10 years ago than now. I wish they would bring back the “magic” that was Disney…
This is for Maggie, with whom I absolutely agree. The point many seem to miss about using terms that don’t specify a gender isn’t because someone, however small a minority, is offended by its use. It’s because there are folks who are explicitly excluded. It’s not about being politically correct or inoffensive. It’s about including everyone. If a person is offended or outraged because a company is inclusive, that says much more about the individual, not the company.
I don’t think the prices are too high right now. We are actually able to stay at the Grand Floridian for the first time. Granted, on-site construction probably dropped prices now, but who cares. It’s the GF!!!!All of the agents we’ve talked to, for the most part have been very helpful in planning our trip. If I do get a less-knowledgeable agent, I work to a cutoff point and try back. We’re attending the D23 event and can’t be more excited!!!! Last trip was April 2022. By the wide-ranging dining options, I think this will be a more pleasant trip. Things are evolving quickly at WDW now, so I hope people keep checking back frequently for their perfect fit for a vacation. Thanks, as always, Tom for your knowledgeable insight!
Hi Tom. Congratulations to you, your wife and soon to be little one! I agree with comments made by David and Cathie, and others stating why they are not making reservations at WDW anytime soon. I must say that my husband and I made reservations for this coming September. We are both on the other side of 75 with health issues starting and we want to make one big memory with our teenage granddaughter who hasn’t been to WDW since she was 4 years old. So, we said if we go we need to go soon. Since we live in the northeast and flying it should be interesting to see how we will like having to handle our luggage since there is no longer the Disney Magical Express. I have alot of suggestions for Bob Iger., first one being he needs to talk one on one with you! Thanks again for all of your help in choosing what resort would suit us best and for your suggestion to use Be Our Guest Travel as they have been wonderful to deal with.
I’m not trying to shoehorn politics into your narrative, but…..
Anecdotal evidence suggests that leisure travel is increasingly being impacted by people choosing their journey based on their personal ideologies.
And Disney is being portrayed as having an ideology opposite to that of the State of Florida.
Said differently, some folks are choosing to stay away from Florida because it conflicts with their ideology. Conversely, some people who are attracted to Florida, are avoiding Disney because of it’s perceived ideology.
The headlines have all been looking at declines in crowds at Disney, but Universal is experiencing similar observations….and Mario Bros. was not very ‘politically correct’.
So, there is a Disney/ESPN deal that may help to bridge that gap. In part, as the article above points out, an aggressive bid for more UFC exposure and/or NFL football could be in the making for ESPN. Marketing through this viewership channel could be all the marginal difference Disney needs to again attract some folks who are presently avoiding Disney due to it’s ideology.
IMHO, Apple ‘needs’ Disney more than Disney needs Apple. Apple needs content, Disney has content. Apple, despite it’s seeming ubiquity, is still only a fraction of PC market and neither does it dominate phones, therefore, it does not bring much value-added distribution to advance Disney’s financial interests. If you own stock in Disney, Apple would likely have to pay a premium, and therefore, that’s the type of ‘adding shareholder value’ that mergers afford the acquired company – in this instance, that would be Disney.
The truth is, Disneyworld is too expensive. we went about 5 years ago, and wanted to return this summer, but prices had nearly doubled. The hotel discounts simply aren’t enough of an incentive – saving a couple hundred dollars on a $10,000 trip isn’t worth it. The best incentive, and what brought us there last time, was the free dining. For a family of four, it saved us about $2,000.
Another issue is the expense and difficulty of travel. We live in Northern California, but there are no longer any direct flights out of Sacramento, so we either have to drive 2 extra hours or take a layover, which just greatly lengthens our travel time. Granted, that’s not Disney’s fault, but with long travel times, the only way to make a trip worthwhile is to stay for at least 8 days. (Two full days of travel isn’t worth it for a three day stay at the resort).
Now add transportation to the resort and the additional Genie + costs (which for a family of four over six days is quite expensive), and Disneyworld just isn’t financially viable. Ever.