Disney is going all-in on streaming media.
On Monday, the company announced a massive reorganization of its media and entertainment business that will focus on developing productions that will debut on its streaming and broadcast services. And Disney’s media businesses, ads and distribution, and Disney+, will now operate under the same business unit, the company said.
Its major reorganization comes just days after activist investor Dan Loeb, a major investor in the company through his Third Point Capital hedge fund, called on Disney to cancel its dividend and redirect more investments into streaming.
Wall Street has already given its seal of approval to Disney’s new move, sending shares up nearly 6% in after-hours trading.
Disney’s announcement follows a significant reorganization of its release schedule to address new realities, including a collapsing theatrical release business; production issues; and the runaway success of its streaming service — all caused or accelerated by the national failure to effectively address the COVID-19 pandemic.
Planned theatrical releases of would-be tentpole films like “Black Widow” have been rescheduled, while other films, including “Mulan” and the upcoming Pixar film “Soul,” are seeing their first runs on Disney’s streaming service, Disney+.
“This reorganization will accelerate our growth in the dynamic direct-to-consumer space, which is key to the future of our Company. The new organizational structure, with content creation distinct from distribution, will enable us to be more effective and nimble in creating what consumers want most, and delivering it in the way they prefer to consume it,” wrote Bob Chapek, Disney’s chief executive officer, in an internal memo announcing the reorganization, seen by TechCrunch. “Under this new structure, our Company’s world-class creative engines will be able to focus wholly on developing and producing great original content.”
Production of new material for Disney’s many provinces of intellectual property will fall under three groups — Studios, General Entertainment and Sports. Leadership of these groups won’t change, with Alan F. Horn and Alan Bergman, Peter Rice and James Pitaro maintaining their respective positions within the organization, the company said.
Overseeing operations for this singularly large new operational structure will be Kareem Daniel, who previously helmed the company’s consumer products, games and publishing operations.
All of the men will report to Chapek.
“Given the incredible success of Disney+ and our plans to accelerate our direct-to-consumer business, we are strategically positioning our Company to more effectively support our growth strategy and increase shareholder value,” Chapek said in a statement. “Managing content creation distinct from distribution will allow us to be more effective and nimble in making the content consumers want most, delivered in the way they prefer to consume it. Our creative teams will concentrate on what they do best—making world-class, franchise-based content—while our newly centralized global distribution team will focus on delivering and monetizing that content in the most optimal way across all platforms, including Disney+, Hulu, ESPN+ and the coming Star international streaming service.”
Studios will run all of the company’s development activities for live action and animated productions coming from Walt Disney Animation Studios, Pixar Animation Studios, Marvel Studios, Lucasfilm, 20th Century Studios and Searchlight Pictures.
General Entertainment will serve the same function for the company’s 20th Television and ABC Signature and Touchstone Television productions, along with its news divisions, Disney channels, Freeform, FX and National Geographic.
Sports will focus on ESPN and sports productions, including live events and original, and non-scripted sports-related material for cable channels, ESPN+ and ABC, the company said.
Overseeing the monetization, distribution, operations, sales, advertising and data and technology infrastructure for all of those groups will be Daniel. A longtime Disney executive, he formerly served as the head of the company’s Imagineering Operations, taking intellectual property and turning it into entertainment for the vast empire of Disney resorts and theme parks, before taking over the consumer products, games and publishing operations at the company.
“Kareem is an exceptionally talented, innovative and forward-looking leader, with a strong track record for developing and implementing successful global content distribution and commercialization strategies,” said Chapek. “As we now look to rapidly grow our direct-to-consumer business, a key focus will be delivering and monetizing our great content in the most optimal way possible, and I can think of no one better suited to lead this effort than Kareem. His wealth of experience will enable him to effectively bring together the Company’s distribution, advertising, marketing and sales functions, thereby creating a distribution powerhouse that will serve all of Disney’s media and entertainment businesses.”
The new structure is effective immediately, the company said, and expects to transition to financial reporting under this structure in the first quarter of fiscal 2021.
The company plans to hold an investor day on December 10th to unveil more of its direct to consumer strategies.