Thu. Dec 3rd, 2020

Walt Disney has announced a reorganization of its business, which could more correctly be called a reorientation. Having suffered significant losses due to closed amusement parks and cinemas, the company decided to rely on streaming services.


“The market is undergoing a dramatic shift, and you can either lead or follow. We prefer to be in the lead, ”Walt Disney CEO Bob Chapek explained his announcement on Monday of a massive reorganization of the company. The COVID-19 pandemic was never mentioned in a press release on these reshuffles. Simultaneously, it was precisely because the company lost a significant part of the profits from theme parks and film distribution.

It seems that it was the pandemic that finally convinced the corporation’s management to rely on the direct selling (D2C) model. In the case of Disney, it means betting on streaming.

Disney is transforming its media and entertainment business by strictly separating those responsible for content from those responsible for promoting it.

The latter will be handled by a promotion group, whose competence will be content monetization (distribution and advertising sales) and the operational activities of streaming services and television networks.

Three creative teams will now be responsible for content :

  • The studio division will bring together film and series studios – The Walt Disney Studios, 20th Century Studios, Pixar, Marvel, Lucasfilm, and Searchlight.
  • The entertainment division will include divisions known primarily for cable TVs, such as ABC News, National Geographic, and Disney channels.
  • The sports division will be created from ESPN, which will produce sports programming for other cable channels.

The main innovation is that now all Disney creative teams will work not only and not so much in their niche as on creating content for the Disney + and Hulu streaming platforms.

The streaming service was the only Disney business to flourish this year. Therefore, the decision to shift the emphasis of strategic development in this direction looks natural.

Also, shareholders insist on this: an activist investor and one of the largest shareholders in Walt Disney, Daniel Loeb, earlier called on management to refuse to pay dividends this year and use the freed-up funds to use the creation of content for streaming platforms.

Walt Disney is not the first global entertainment corporation to focus on streaming. Earlier, Comcast-owned NBCUniversal and AT&T-owned Warner Media announced a reorganization of their businesses for the same purpose.

As noted by Mikhail Denislamov, an analyst at Freedom Finance, this decision will also positively affect the price of Walt Disney shares. “Firstly, analysts will receive more detailed disclosure of financial information about streaming direction, which will lead to a correct valuation; secondly, the company is changing its image in the eyes of a wide range of investors and is positioning itself as a streaming-first-company, which will inevitably entail further strategic steps and will ultimately lead to higher valuations in terms of valuation multiples, ”he notes.

The financial statements, taking into account the structural changes that have come into force, will be published for the first time at the end of the fourth quarter of this year (first quarter of the company’s fiscal year 2021).



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