Walt Disney cuts spending in programming for traditional TV pretty dramatically as part of its strategy to maximize audiences and profit in the streaming television networks era. The decision to cut investment was made by Disney Chief Executive Bob Iger on Wednesday.
Iger said he looked expansively at traditional media when he came out of retirement to return to Disney as CEO in November 2022. He added, to prioritize streaming services, Walt Disney Co has significantly reduced its investment in traditional TV networks.
Disney cuts TV spending
Bob Iger added on the TV budget that traditional channels such as ABC still serve as an important marketing tool and help reach older viewers who are not watching series such as “Abbott Elementary” on Disney’s streaming platforms.
Still, the company has reduced “pretty dramatically our investment in content specifically aimed at those traditional networks,” Iger said at the MoffettNathanson’s 2024 Media, Internet and Communications Conference in New York.
“We feel comfortable with our hand right now, because we’re using those networks efficiently and effectively,” he said.
Disney’s focus on streaming service
Shows such as “Abbott” or “Grey’s Anatomy” move quickly to Disney’s Hulu streaming service, where they attract a younger audience, Iger said.
The strategy to focus on streaming service allows Disney to amortize costs across platforms, the CEO added. One executive, Dana Walden, oversees the traditional entertainment networks and streaming.
“We’re basically aggregating greater audience, and we’re amortizing costs and we’re using the marketing of the traditional network, really, to help in some cases,” Iger said.
“We’re doing that across the board, Disney Channel, ABC, National Geographic, and it’s working,” he added.
Disney’s theme parks
Iger said he expected continued growth from Disney’s theme parks business, but perhaps not at the same rate as in recent years.
“We’ve had double-digit revenue growth in that business for quite some time, and that’s extraordinary,” he said. “But I think we’re being realistic, too, in that delivering double-digit revenue growth … well into the future is not necessarily that achievable.”
Why Disney TV spending cut matters?
Disney’s Q2 earnings showed a 1% year-on-year revenue growth to $22.08 billion, slightly missing the consensus of $22.11 billion. The company’s entertainment revenue declined by 5% year-over-year to $9.8 billion, while sports revenue grew 2% year-over-year to $4.3 billion.
During the earnings call, Iger announced a global crackdown on password-sharing, citing Netflix Inc. as the “gold standard” in streaming.
Disney stock
Disney shares fell 2.5% to close at $102.77 on the New York Stock Exchange on Wednesday.
