(FiveNation.com)- Disney announced over the weekend that former CEO Bob Iger was returning to replace Bob Chapek, signing a 2-year contract to help restore the company.
Iger, who had transformed Disney into the world’s most powerful entertainment company will now need to show how quickly he can reduce costs and restore Disney’s profitability.
The most likely target of Iger’s cost-cutting will likely be Disney+, the streaming service Iger helped launch just three years ago.
Losses at Disney+ have doubled in the last reported quarter to $1.5 billion despite its subscriber gains, becoming a drag on earnings as Disney is spending heavily on content to attract subscribers.
ESPN is also likely to find itself on the chopping block for deep cost cuts. The company will review all of the upcoming sports rights as ESPN loses cable subscribers.
Bob Iger, who served as Disney’s chief executive for 15 before retiring last year, agreed to return for two more years after Disney’s Board fired Chapek.
Chapek took over as CEO in February 2020.
Disney’s stock has plummeted over 40 percent so far this year and lost almost a third of its value since Chapek took over at the helm.
Susan Arnold, chairwoman of the Disney Board said in a statement on Sunday that the Board concluded that Bob Iger was “uniquely situated to lead the Company through this pivotal period.”
This month, Disney released an earnings report showing mounting losses in its streaming media unit that includes Disney+. Shares hit a 20-year low the day after the fourth quarter earnings were released.
Since its 2019 launch, Disney’s streaming unit has failed to make a profit. The company has said it doesn’t expect Disney+ to become profitable until 2024.
In a memo to Disney employees this weekend, Iger expressed his optimism that things will turn around.