Disney’s Bob Iger will inherit a mess, analyst says

Disney's DIS Bob Iger will inherit a mess, as he assumes the CEO position at a company he led for 15 years.

Doug Cruetz, a media analyst at Cowen, told Yahoo Finance Live that Disney's problems are more structural than they are related to who is running the company.

Cruetz listed several concerns, including a declining linear business, which has been tethered to an increasingly costly sports business at ESPN, in addition to a streaming unit bleeding money in an ultra-competitive environment.

I don't think there's a magic wand that Bob Iger can wave to change that, the analyst stated.

In its most recent fiscal year, losses for Disney's direct-to consumer unit, which includes Disney Hulu, and ESPN, totaled $4 billion for the year.

The streaming division lost $1.5 billion in the company's quarter, missing expectations and sending shares down more than 10% after the results. After the results, Disney created a cost structure taskforce under former CEO Bob Chapek to help the streaming division reach its profitability targets.

Iger will hold a town hall with employees on Monday morning, November 28, to discuss the future of the company, along with his business strategy, according to an internal memo obtained by Yahoo Finance.

Iger gave investors a taste of what appears to be the first step of the strategy - removing Kareem Daniel and restructuring Disney's Media and Entertainment Distribution DMED division earlier this week. DMED was one of Chapek's first big swings as the chief executive, but the reorganization was categorized as a controversial move that upsets longtime veterans and confused workers.

Iger spent more than four decades at Disney, including 15 years as CEO.

The 71-year-old will serve as CEO for two years, with a mandate from the Board to set the strategic direction for renewed growth and work closely with the Board to find a successor to lead the Company at the end of his term. Cruetz said that Iger's return felt a bit odd as he's putting his once squeaky clean reputation on the line.

I thought Iger was brilliant for getting Disney launched, getting all the subs and then stepping aside and letting someone else be responsible for making it profitable, which was always going to be the harder job, he said.

He has a bit of a stake in his own legacy, so he's putting it at risk. The analyst said that for Iger to come back after just a few years and retake control, whoever is next CEO of Disney, they're going to be looking over their shoulder from day one, wondering if they're really the CEO of the company or if they're going to get pushed out like Chapek did. It's not a great position for Disney to be in if they're trying to find a person who can lead the company successfully, starting in 2024 and forward, Cruetz cautioned.

Cruetz said that Chapek's biggest problem is one that will likely plague other potential candidates, and he wasn't Bob Iger. Alexandra is a senior entertainment and media reporter at Yahoo Finance. Follow her on Twitter alliecanal 8193 and email her at alexandra.canalyahoofinance.com.