Disney CEO Bob Chapek Cites “100% Membership” of Management Team During Reorganization – Deadline

In his first in-depth public comments on the major restructuring implemented in October, Disney CEO Bob Chapek said it had garnered “100% buy-in” from company executives. With the new structure in place, he added during a call Thursday to discuss Disney’s fourth quarter and full year results, it will be “full speed ahead” in terms of delivering more ambitious projects. at Disney + as theaters remain in limbo due to COVID -19.

The radical reorganization created a centralized distribution organization headed by Kareem Daniel. In the new scheme, Daniel’s distribution group maintains a single profit and loss account for all titles and creates budgets and exit plans. The idea is to distract film and television groups from mainstream thinking on how to create profitable slates and instead focus on consistent returns from the creative ideas flowing through the business.

There is obvious logic to the new setup, as drastically different as it may be, and WarnerMedia and NBCUniversal are making similar changes to their workforce as well. Still, Disney executives and talent have privately raised questions about the deviation from long-standing industry standards – especially at an already difficult time for the company.

“I would say, given everything that’s going on in the world, now is the perfect time to do such a reorganization,” Chapek said. “I am 100% convinced that it will go exactly as we planned. It’s going extremely well and despite the disruption of everyone’s roles, I think we have 100% buy-in. I think we have 100% membership because we have clarity on the accountability, which everyone really enjoys, and we’ve separated the roles based on what people tend to do best.

In the New World Order, the CEO added, “Distribution, which manages the P&L, will set the parameters for the annual and long-term budget framework which will then be agreed with the content creators. And then the content creators give the green light to individual projects and lead the development and production. Thus, distribution is now able to optimize marketing without perhaps too much unnecessary consideration for legacy distribution platforms. But at the same time, our creatives, who as you know are the best in the world, are really free to do what they do, which makes for the best content and the best storytelling possible. “

While there is “a lot of collaboration between the two groups,” Chapek said, there will also be “a certain level of independence in terms of each being what they can be and doing their jobs best.

Citibank analyst Jason Bazinet asked Chapek if there were any “guardrails” on the overhaul in terms of financial impact, so that a distribution decision on a particular stock doesn’t come as a surprise to the company. Wall Street. A movie like the one from Pixar Soul, for example, has a very different impact on the bottom line when it skips theaters and goes straight to Disney + (as it is scheduled to do on Christmas Day). This could increase subscriptions to the streaming service, which could in turn drive up the company’s stock price and have other benefits. In the pandemic environment, however, this will not generate the hundreds of millions of dollars in theatrical box offices and other initial windows that can be easily predicted in conventional forecasting models.

In other words, the Disney bus is rolling down a winding mountain road – how can analysts be sure it doesn’t come off a cliff?

“I think guardrails are a bit of common sense in terms of cash management,” Chapek replied. Due to the coronavirus, the activity of the parks has an “anchor”, he added, so the management team must be “a little more careful” in its operations.

As he and CFO Christine McCarthy have done more than a dozen times throughout the call, Chapek said more details will be offered at a big investor day scheduled for next month.

“When we talk to everyone on December 10, I think you’ll see that we’re going to put a lot of wind in the sales of our Disney + business and invest heavily in it,” he said. “Thus, guardrails are only the only ones that would be the constraints we are facing today in terms of liquidity. Other than that, everything is really high speed. “