Disney's CEO Bob Iger Faces Uphill Battle Amid Concerning Trends

Walt Disney Co. Chief Executive Bob Iger is staying in his top position for an extended period. However, navigating the changes he has in mind won't be a walk in the park.

According to Dave Novosel, an analyst at Gimme Credit, Disney is facing some concerning trends that are making him increasingly worried. As a result, he reaffirms his underperform recommendation on Disney's debt.

Uphill Battle Ahead

Iger recently hinted at the possibility of selling some of the company's linear TV assets due to their dwindling relevance. However, executing this sale won't be as straightforward as it may seem.

Novosel raises several valid concerns. Firstly, he questions who would be interested in purchasing these assets. There don't appear to be any obvious suitors on the horizon. Moreover, even if a buyer were to emerge, it remains unclear what price these assets could attract.

Disney faces a formidable challenge ahead. It will require careful consideration and strategic execution to overcome these obstacles successfully.

Bob Iger’s Repairs at Disney’s Crumbling Castle Need More Time

Despite the challenges, Disney's board of directors has extended CEO Bob Iger's tenure to oversee the development of a succession plan. While Iger's return to Disney was initially praised, it is worth noting that some of the current issues faced by the company can be attributed to decisions made during his leadership.

Industry expert Novosel pointed out, "Iger supported the strategy of offering lower prices while investing heavily in content expansion."

Disney's Free Cash Flow and Potential Constraints

In a recent analysis, concerns were raised regarding Disney's free-cash flow and potential limitations it may face. One of the main factors contributing to these constraints is the substantial capital expenditures associated with the parks segment. Additionally, there is a high likelihood that the dividend will soon be reinstated, adding further pressure on free-cash flow.

Moreover, Disney is anticipated to spend a significant sum, at least $9 billion, to acquire Comcast Corp.'s one-third stake in Hulu. However, the actual cost could potentially exceed this figure. This acquisition will significantly impact Disney's financial position and potentially create additional challenges for their free-cash flow.