By Joe Flint
Walt Disney Co. announced a major reorganization meant to give
priority to its streaming-video services and ensure they get a
steady flow of the company's best content, in a shift echoing
similar moves by other entertainment giants.
Under the new structure, Disney is creating content groups for
movies, general entertainment and sports. It is also forming a
distribution arm to determine the best platform for any given
content, whether that is a streaming service, a TV network or movie
theaters.
The new alignment pushes Disney's streaming platforms, including
Disney+ and Hulu, even closer to the center of the company. The
various programming arms, including movie and television studios,
will be aiming to feed those streaming services, not just legacy
outlets.
Disney Chief Executive Bob Chapek said the moves are a
recognition of how consumers are changing their consumption habits,
favoring streaming platforms over movie theaters and traditional
broadcast and cable channels.
"There is a seismic shift happening in the marketplace, and you
can either lead or follow and we chose to lead," Mr. Chapek said of
the company's push into streaming, adding that the focus is now on
"what platform is best to meet those consumer needs."
The Covid-19 pandemic continues to slam the entertainment
industry, and Disney has been particularly hard hit. Its Disneyland
theme park in Southern California is still closed, and attendance
at parks that have been reopened hasn't returned to normal. Many
movie theaters around the nation remain closed or at limited
capacity.
Streaming services have been among the bright spots for Disney
and other media companies during the coronavirus crisis, as
consumers who are working from home and skipping vacations watch
more content. Disney+, which said in August it had over 60 million
subscribers world-wide, has been a big beneficiary of the
pandemic's streaming surge.
Disney has faced external pressure to pivot more aggressively
toward its streaming business, especially given the struggles of
its legacy businesses such as cable networks. Activist investor
Daniel Loeb, whose Third Point Capital is one of Disney's biggest
stockholders, sent a letter recently to Mr. Chapek calling for
Disney to devote more resources to its streaming operations.
Disney is the latest entertainment giant to reorient its
business by separating decisions over which shows and movies should
be produced from decisions over which platforms are best suited to
carry them. Comcast Corp.'s NBCUniversal has restructured much of
its content business with this goal in mind, looking to elevate its
Peacock streaming service, while AT&T Inc.'s WarnerMedia is
centralizing its creative operations in hopes of bolstering its HBO
Max service.
The media and entertainment distribution unit Disney has created
will be overseen by Kareem Daniel, who most recently was president
of consumer products, games and publishing. That unit will handle
the distribution of Disney content as well as advertising and
technology.
A Disney veteran, Mr. Daniel has also had stints in Disney's
strategy and business development unit and its motion-picture
distribution business. Mr. Chapek said having distribution under
Mr. Daniel will allow the company to "make our distribution
decisions in a less preconceived notion."
The content side will be headed by the same executives currently
in charge of movies, TV and sports. Disney Studios Co-Chairmen Alan
Horn and Alan Bergman will oversee the new movie arm. Peter Rice,
who oversees TV production for Disney, will become chairman of
general entertainment content, while ESPN head Jimmy Pitaro will
head the sports unit.
Disney Chairman and former CEO Robert Iger will also continue to
have an active role in content creation, the company said.
Mr. Daniel and the heads of the content units will all report to
Mr. Chapek.
The new content structure could end confusion in Hollywood about
who is calling the shots regarding television content for Disney+.
There had been some tension between Mr. Rice's unit and Disney+'s
own programming team, people familiar with the matter said.
Mr. Chapek played down any friction between the two, saying,
"The same people that have been collaborating in the past will be
collaborating in the future."
Rebecca Campbell, who was brought in to oversee Disney+ just
last May, will continue in that role but now reports to Mr. Daniel.
She will also head international operations and report to Mr.
Chapek.
The bulk of Disney's revenue still comes from its legacy
businesses, including cable programming networks such as ESPN,
Disney Channel and Freeform, which have suffered declines in
subscribers and ratings due to cable cord-cutting.
Ratings for the NBA Finals between the Los Angeles Lakers and
Miami Heat were far below past years, amid competition with other
live sports such as the National Football League. The fact the
basketball playoffs were played at all during the pandemic -- in a
Orlando "bubble" -- was viewed by many in the sports world as a
success that averted a disaster for the league and its TV partners.
The NFL, meantime, has had to postone games as it struggles to
contain a Covid-19 outbreak.
The theatrical film business was already facing challenges
before the coronavirus shut down theaters across the country. The
virus has led some movie studios to shorten the time between when a
film arrives in theaters and when it appears on other platforms
such as on-demand and streaming services -- accelerating what
industry observers saw as an inevitable shift.
Disney released its big summer movie "Mulan" via Disney+ at a
cost of $30. It is also moving its Pixar movie "Soul" to the
service but at no extra charge.
Mr. Chapek said that the company still believes in the
theatrical business but that Disney needs the "freedom to take a
strong pipeline of content and place it where it makes the most
sense."
Write to Joe Flint at joe.flint@wsj.com
(END) Dow Jones Newswires
October 12, 2020 19:20 ET (23:20 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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