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The COVID-19 pandemic has severely damaged many Disney businesses.
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Walt Disney Co. on Monday announced a strategic reorganization of its media and entertainment businesses to focus on streaming, sending shares higher in after-hours trading.
“We are accelerating more to a [direct-to-consumer] priority company,” Disney DIS, -0.00% Chief Executive Bob Chapek told CNBC in an interview minutes after the news was announced.
Under the restructuring, content creation will be managed in distinct groups: Studios, General Entertainment and Sports will be headed by current leaders Alan F. Horn and Alan Bergman, Peter Rice, and James Pitaro, respectively. The “Media and Entertainment Distribution” group will determine the monetization of content from all those sources and be led by Kareem Daniel, formerly president of consumer products, games and publishing for Disney. All five leaders will report directly to Bob Chapek, Chief Executive Officer
Streaming service Disney+, which has attracted more than 60 million subscribes since its November 2019 launch, has adopted a more aggressive approach to taking content direct to streaming amid the COVID-19 pandemic. Movies such as “Hamilton” have debuted on the service instead of in theaters in the U.S., and last week, Disney said it Pixar’s newest animated film, “Soul,” will premiere on Disney+ on Dec. 25.
Services such as Disney+ is “where we see the world going,” Chapek said, adding that Disney will provide more details at investor day Dec. 10 on how its reorganization Monday translates into its business interests.
“I wouldn’t say COVID forced this action; it accelerated our transition,” said Chapek, who was vague when asked if the company’s actions today would lead to layoffs. Disney announced 28,000 job cuts, many of them involving part-time theme park workers, earlier this month.
Disney stock increased more than 4% in after-hours trading following the announcement. Disney shares have declined 13.6% so far this year as the pandemic has crushed many Disney businesses in the U.S., while the S%P 500 index has returned 9.2% in that time.
