With the stock price hovering around $30, up from $24 when his appointment was announced, Bob Iger must be doing something right, at least in the minds of investors. None the less, Iger decided to shake things up at the studio division of the Mouse House. If the realignment continues as expected it will signify a more than two-thirds reduction in production since the height of Eisner’s studio mayhem.
I don’t think this is a long term position for Disney and expect the numbers to slowly trickle back up as the studio finds projects it likes and thinks will make them a profit. But in the short term, Disney appears to be content to have just a few dogs in the race while the entertainment industry deals with the twin earthquake of internet distribution and the fracturing of the mass audience.
I’m hoping the studio pull back means Disney will be concentrating on their ABC and cable programming. LOST and Grey’s Anatomy won’t carry the network. Heck, even ESPN is starting to see an increase in complaints about the lack of decent programming. This is your expertise Bob. Time to get crackin’ on it.
I’m not recommending the strategy of production reduction for other studios as Disney is in the unique position of having many properties to create value with. Almost all of the Disney Studio’s past animated features can be tapped to create new themepark attraction, television shows, etc. Except for the Mary Poppins years Disney has never depended on new film releases for the majority of their income. The themeparks and video sales have been huge cash cows and I don’t see that changing in the near future. Sadly DVD sales won’t be at the same volume as during Eisner’s big profit years. Therefore, plussing the themeparks and increasing their hotel and attraction capacity, domestic and international, would appear to be a good strategy for the Mouse House now.
Can Bob Iger pull it off. For a man I once wrote off as a ‘suit’ he appears to be doing a good job. Here’s to hoping the trend continues.