Bob Chapek's Disney: Streaming exclusives, no politics, sitting tight on ESPN

Disney (DIS) CEO Bob Chapek hasn't had an easy run in the executive chair.

Soon after replacing longtime CEO Bob Iger on February 25, 2020, Chapek was hit by the unimaginable — a pandemic that upended the business world.

In the nearly three years since taking over at Disney, Chapek has needed to both steady ship and manage the industry's massive transition into the streaming world.

Speaking to multiple outlets at Disney's D23 Expo this past weekend, Chapek — who sported a new look, complete with a chin strap beard — sought to set a new course for a company that has been challenged during his tenure.

From political battles and A-list talent problems to controversial reorganizations and the looming shadow of Bob Iger — the embattled CEO has laid down a clearer vision for what Bob Chapek's Disney could look like.

'You keep ESPN'

Most recently, ESPN has been a hot button issue for investors.

Billionaire activist investor Dan Loeb encouraged Disney to explore a sale of the popular sports network earlier this year. But Chapek argued Disney has the best strategic vision for the sports behemoth, and revealed last week there are currently no plans to spin off the network, no matter how tempting.

"If you happen to have a vision for the future that the rest of the world’s not necessarily in tune with yet, then you keep ESPN. You keep ESPN, and you have a full complement of general entertainment, family news, sports that no other entertainment company can touch," Chapek told Deadline, adding the company received numerous inquiries from businesses looking to purchase.

Loeb backed off his stance after hearing Chapek's comments, writing in a tweet last weekend he now has a "better understanding" of the company's growth plans.

Growth plans that could possibly include gambling. Chapek revealed Disney is still bullish on sports betting during the comapny's Q3 earnings call, adding the leadership team is working hard to announce something on sports betting. So far, no plans have been disclosed.

Streaming: Disney+ content push

In an interview with The Hollywood Reporter, Chapek doubled down on the future of Disney+, noting he fully believes the streamer has the potential to launch lucrative franchises, citing the success of "Encanto" and its steady flow of subscribers.

Disney+ debuted in November 2019 but faced an uphill battle after the pandemic slammed production schedules. Disney decided to place theatrical content onto the streaming service, a choice he described as the company's "only option" at the time.

"We had to take titles that were never envisioned to go into streaming because the cinemas were shut down. That’s not how they were originally envisioned, but it was our only option, and plus we had a huge need," Chapek told Deadline.

Disney+ subscriber numbers exceeded expectations in Disney's latest quarter, with the company reporting 14.4 million net additions versus 10 million estimated by analysts. However, Disney lowered its 2024 subscriber guidance to 215-245 million — down from 230-260 million.

The company also revealed it will raise the price of its current Disney+ ad-free streaming plan by 38% to $10.99 a month, a $3 increase from the current $7.99 a month. Its upcoming ad-supported Disney+ tier will launch in the U.S. on December 8 for $7.99 a month.

Chapek added the company will not be pumping the brakes on the content side, either.

"I would say we dramatically underestimated the hungry beast [that is Disney+] and how much content it needed to be fed," he said.

Disney plans to spend about $30 billion on content across its various platforms, which also include ESPN+ and Hulu.

Gaining full ownership of Hulu has long been a missing piece for investors, with Loeb pushing the integration sooner than later.

The activist investor previously expressed his desire for Disney to buy out Comcast's 33% stake in Hulu prior to the early 2024 contractual deadline.

Chapek revealed during an interview with Variety that accelerating that buyout timeline is possible but will also depend on Comcast's ultimate position.

"We would be absolutely willing to do it," Chapek told the outlet, saying Hulu rounds out the company's content gaps due to its focus on adult and general entertainment.

"We’ve been in discussions for quite a long time. This is not a new idea. There have been ongoing, sporadic conversations for a long time," he added.

Political fallout: 'Everything to everybody'

Earlier this spring, Chapek found himself in the political crosshairs of Florida Governor Ron DeSantis, who revoked the company's special tax district following Disney's reaction to the Parental Rights in Education Act, or what critics have dubbed the "Don't Say Gay" bill.

"What we try to do is be everything to everybody," Chapek told The Hollywood Reporter this week when asked about the controversial fallout that ensued. He stressed that the company aims to rise above political agendas.

"We believe Disney is a place where people can come together with shared values of what an optimistic and ideal future can be. We certainly don’t want to get caught up in any political subterfuge, but at the same time we also realize that we want to represent a brighter tomorrow for families of all types, regardless of how they define themselves," he said.

Chapek, who initially decided not to speak publicly on the matter, opted to work behind the scenes in an attempt to soften the legislation. That didn't work.

The executive eventually reversed course following intense backlash and a string of employee-staged walkouts.

Chapek publicly denounced the Florida law during the company's annual shareholder meeting on March 9 and directly apologized to employees in a company memo, although the apology was seen by many as too little, too late.

Nevertheless, Chapek said he believes his employees appreciated his efforts, noting actions speak louder than words.

"We are a very cohesive, big, happy family," Chapek told The Hollywood Reporter.

Parks: 'We have a real high-class problem'

On the parks side, Chapek underscored increasing ticket prices was necessary in order to maintain value and adequately keep up with demand.

"We have a real high-class problem: We have much more demand than there is supply. What we will not bend on is giving somebody a less than stellar experience in the parks because we jammed too many people in there," Chapek told The Hollywood Reporter.

"If we’re going to have that foundational rule, you have to start balancing who you let in. ... Our ticket prices and constraints we put on how often people can come and when they come is a direct reflection of demand. When is it too much? Demand will tell us when it’s too much."

Chapek teased a desire to blend both the digital and the physical worlds, which could mean the introduction of virtual reality, metaverse components, and next-level A.I. technology.

He described the push as "Next Generation Storytelling," explaining the goal is to program individuals' Disney experience throughout all of its consumer touch points.

"We'll program your Disney+ experience, not according to what you watched last or what other people who watch this show, but to what you did, what you experienced [at the parks]...that’s what we aspire to do. That’s why we call it Next Generation Storytelling," Chapek told Deadline.

'Black Widow' fallout

The decision to place major theatrical releases on Disney+ during the height of the pandemic created a ripple effect throughout Hollywood, and challenged the status quo on how talent should be paid.

Last July, Chapek found himself in the middle of a public battle with "Black Widow" star Scarlett Johansson, who sued the company over "breach of contract" after it decided to release the Marvel film on Disney+ the same day it hit theaters.

"There were a lot of people that got a vote in how we handled that. And I was one voice," Chapek revealed to The Hollywood Reporter.

Johansson and Disney eventually settled, setting a precedent for future contract negotiations between studios and actors.

Devin McRae, LA-based entertainment & business litigator at Early Sullivan Wright Gizer & McRae, told Yahoo Finance at the time that bombshell lawsuit would likely lead to an immediate change in new deals.

"[Producers and talent] are going to want to work in protections for decisions like this and they're probably already saying that they don't want earnings to be based solely on the theatrical side because that's not the way things are working right now," McRae said.

As for Chapek's current relationship with the A-list star, the executive simply said, "Our relationship with her agency and her has never been better."

Disney has committed to releasing a slew of new Marvel movies in the coming years with "Black Panther: Wakanda Forever" next on tap. The exclusive theatrical release will serve as the appetizer to Disney's "Phase 4" Marvel plan, which kicks off with "Ant-Man and the Wasp: Quantumania" in February.

Despite the hype around the upcoming releases, not everyone is convinced theatrical films will return to pre-pandemic glory — including Disney's former CEO.

"The movie industry used to argue that you couldn’t create cultural impact without people going to the movie theater around the globe that same weekend — I don't agree anymore," Bob Iger shared during last week's Code conference.

Iger added he doesn't think "movies ever return in terms of going to the level they were at pre-pandemic."

Bob Chapek will now have to prove him wrong.

Alexandra is a Senior Entertainment and Food Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at alexandra.canal@yahoofinance.com

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