What's next for Disney as CEO Bob Iger works to streamline the company, cut costs, and make streaming profitable

• Bob Iger is trying to reshape Disney as a leaner company in his second act as CEO.
• Iger recently extended his tenure by 2 years, but the clock is ticking for him to find a successor.
• Iger's also working to take ESPN direct-to-consumer and to build a profitable streaming business.

When Bob Iger came back to Disney in November 2022, the company and the town celebrated the return of a successful and statesmanlike CEO for the world's largest entertainment brand.

Two years under Iger's predecessor Bob Chapek left the company reorganized — in ways many company insiders didn't like — and executives, teams, and creative partners demoralized.

But Iger soon had to get tough, announcing 7,000 job cuts as part of $5.5 billion in cuts. Over the spring, those layoffs were completed, but the tough decisions are not. Iger has made it clear he is looking for buyers and partners for significant parts of Disney's business.

He's also venturing into sports betting, an area he previously said wasn't a fit for family-friendly Disney; trying to turn around the performance of the company's films; and working to make streaming profitable, all amid historic Hollywood strikes.

Meanwhile, after extending his contract another two years, Iger and the Disney board also have a big problem to solve with finding Iger's successor while battling lawsuits over streaming losses, the question of whether there's a buyer for the TV properties, and speculation that the company could eventually sell itself to a bigger entity, like Apple.

Iger still also finds himself in an ongoing political battle with Florida Gov. Ron DeSantis over the state's "Don't Say Gay" law and control of Disney's Orlando theme park, a dustup that has calmed in recent months but not ended.

Here are the key challenges ahead and how Iger's tackling them.

Cutting costs, eliminating roles, and streamlining a sprawling portfolio

After executing three rounds of layoffs, from the parks division to ESPN, Iger reorganized Disney into three core units — Entertainment, ESPN, and Parks — and is now looking for more ways to streamline the company by potentially shedding its TV and cable business to focus on streaming.

Iger told CNBC in July that Disney's TV and cable businesses, including ABC and cable networks like FX, "may not be core" to the company. He also said on the company's August earnings call that the company was in discussion with potential partners to help take ESPN direct-to-consumer.

Even as it seeks to shed or share some of its businesses, though, Disney is expected to take full control of Hulu in early 2024. That's when, by the terms of a 2019 "put/call" agreement between the two companies, Disney can buy Comcast's 33% share of the streamer.

More on Iger's efforts to cut costs and build revenue:

• CEO Bob Iger's new Disney structure raises succession questions, insiders say, as some top execs depart and others jockey for power
• Media insiders say ESPN's new sports-betting push could help it court a younger crowd and set up a spinoff from Disney
• Bob Iger says Disney's TV and cable business 'may not be core' and leaves the door open to a sale of assets like ABC or cable network FX
• How Bob Iger's big plan to shrink Disney could pay off and how it could backfire, according to industry insiders
• Hulu insiders are confused and frustrated about their future as Disney and Comcast battle it out for control of the streamer

Getting Disney and Hollywood out of the strike zone

Hollywood production has since May been largely shut down by a Writers Guild of America strike against the studios and streamers, who are represented by the Association of Motion Picture and Television Producers. SAG-AFTRA, the film and TV actors' union, called its own strike and joined writers on the picket lines in July.

Among the issues for both groups are concerns about compensation, particularly residuals for streaming content, and the encroachment of artificial intelligence on their craft.

In that same CNBC interview, Iger called striking actors and writers' demands "just not realistic." He's since taken a more conciliatory tone, saying he had "deep respect and admiration" for creators and that he was "personally committed" to finding a solution to the months-long impasse. He's been an on-off participant in union negotiations to end the strikes, which have entered their fifth month with no end in sight.

The WGA and SAG-AFTRA strikes are a threat to all of Hollywood, not to mention the California economy, and Iger was one of the studio leaders who helped bring an end to the last writers' walkout in 2008.

More on the Hollywood strikes and their impact on Disney:

• Inside the actors' strike: Why Netflix, Max, and Paramount+ series stars are bringing their 'war' over pay and AI to Hollywood companies that are 'trying to kill our industry'
• How the writers' strike is crushing Hollywood's next generation, as job-seekers face 'skyrocketing' debt, crumbling hope, and endless hours 'just doom-scrolling LinkedIn'
• Disney heiress says 'money and power have hijacked' CEO Bob Iger's sensibilities
• Hollywood's 100 days of strikes have likely dealt a $3 billion blow to California's economy, a university professor says
• 'We are casualties of this': A film influencer with 470,000 TikTok followers on scrambling to take second jobs, making up for lost income, and facing online hate as Hollywood's strikes drag on

A push for profitability in streaming

With Wall Street's patience for media companies' money-losing streaming business running out, Iger has promised to make Disney's profitable by the end of its 2024 fiscal year.

He's following the Netflix playbook, cracking down on password sharing and hiking the price of Disney streamers' ad-free tiers to push people to its cheaper, ad-supported offerings.

If Iger succeeds in acquiring all of Hulu, some analysts believe it would help Disney with streaming content, marketing, and ad revenue. And with ESPN on the decline like the rest of cable, Iger's looking to take the sports outlet direct-to-consumer, but he needs partners to scale it quickly, given the soaring cost of sports rights.

Meanwhile, he's looking to Disney's deal with Penn Entertainment to ease the financial pressure on ESPN. After years of speculation about if, when, and how ESPN would enter the sports-betting fray, the company announced in August a $2 billion deal with the regional casino operator to create ESPN Bet. Penn is set to rebrand its US sportsbook with ESPN this fall.

More on the future of streaming at Disney and ESPN:

• ESPN's layoffs underscore its challenges as cord-cutting accelerates, but analysts are split on whether Disney's plan to make it a streaming service will pay off
• Disney+ is increasing its price (again) and gearing up for a crackdown on the 'significant' number of people sharing passwords
• How ESPN's $2 billion deal with Penn Entertainment could shake up sports betting, from reinvigorating competition to evolving media's relationship with gambling
• Media insiders say ESPN's new sports-betting push could help it court a younger crowd and set up a spinoff from Disney

'I remain intensely focused on a successful transition'

Perhaps the biggest challenge facing Iger is the search for a successor who can lead Disney's disparate businesses and appeal to Wall Street. During his first tenure, a string of executives were positioned — and then eliminated — as candidates to replace Iger, who ultimately handed the reins to Bob Chapek.

Iger's recent extension will keep him in the CEO role through 2026, buying him time to transform Disney and signaling to some that he's confident in the company's future — but it could also suggest there's no clear contender for CEO.

Many believe the front-runners are the co-chairs of Disney's entertainment unit, Dana Walden and Alan Bergman. Iger could also look to the parks division, a profit center led by Josh D'Amaro.

In late July, Iger tapped former top Disney execs (and onetime CEO contenders) Kevin Mayer and Tom Staggs to consult on the TV business, Puck reported, which some saw as an audition for CEO.

In a statement accompanying Disney's announcement of his extension, Iger emphasized a search for the company's next chief remains a priority: "The importance of the succession process cannot be overstated, and as the Board continues to evaluate a highly qualified slate of internal and external candidates, I remain intensely focused on a successful transition."

More on CEO succession at Disney:

• Why Disney's theme parks division may get a big boost ahead of CEO Bob Iger's succession search
• Some Disney insiders are questioning whether the company can follow through on splashy Apple Vision Pro plans after layoffs on its innovation team
• Bob Iger's new Disney contract gives him 2 more years to protect his legacy and find the right successor this time: 'There is more work to be done'