Changes in Disney’s Focus

Nora Toscano, Entertainment Editor

In the midst of COVID-19, companies that depend on in-person consumers were forced to find new ways to bring in revenue. Restaurants began using curbside delivery alternatives, as did small stores. With the close of movie theaters, Disney struggled especially.  The family favorite company has decided to restructure its media and entertainment divisions to focus on streaming services instead of theatrical business.  They made this announcement Monday, October 12th, and following it, the company’s shares increased by more than 5% during after-hours trading. 

Disney is centralizing its media businesses into a sole organization, which will manage content distribution, ad sales, and Disney+.  “I would not characterize it as a response to COVID,” Disney CEO Bob Chapek told CNBC’s Julia Boorstin. “I would say COVID accelerated the rate at which we made this transition, but this transition was going to happen anyway.”  Chapek added that the corporation is examining all investments, dividends included, as it looks to increase its spend on new content, tipping the scale considerably towards streaming. He also stated that the board of directors will have the final say on Disney’s dividend payouts.

With theaters closed, Disney’s main source of income is Disney+.  Theatrical releases were pushed back, many of which have already or are scheduled to now be released on Disney+, including Marvel’s “Black Widow.” “Mulan” was also released on Disney+, and watchers had to pay an additional $30 to watch it.  The Pixar movie “Soul” is also set to arrive on Disney+ in December.

As for the reorganization of Disney’s media business, Alan Horn and Alan Bergman will continue to be in charge of the company’s studios, Peter Rice will continue to lead Disney’s general entertainment group, and James Pitaro will remain head of the company’s sports content. Chapek will oversee all of them, as well as Josh D’Amaro, who is in charge of the company’s parks, experiences, and products segment and Rebecca Campbell, the chairman of direct-to-consumer and international operations. In a statement announcing the reorganization, Chapek said, “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. 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.” 

The new structuring will be put into place immediately. As of now, Disney expects to transition its financial reports to reflect the changes starting in the first quarter of 2021.