If this were a fairy tale, Disney (ticker: DIS) could be compared with the kingdom in Sleeping Beauty: dormant, overrun with vines, and waiting for a hero to restore it to life. Perhaps Florida Gov. Ron DeSantis, who has chosen to make an example of Disney for its opposition to a state law passed under his administration, would be cast as the wicked witch, and a recent box-office slump could be blamed on a nefarious spell that had fallen over the land.
But this is the real world, and in the real world, Disney has been plagued by its own missteps. It is spending big on streaming, where profits remain elusive, while cable revenue continues to deteriorate. Its recent films, like Elemental and Indiana Jones and the Dial of Destiny, fell short of the mark set by Barbie, Oppenheimer, and even The Super Mario Bros. Movie. To repair the damage, Iger, who had stepped down in 2020, returned as CEO, taking over from Robert Chapek.
Iger is no Prince Charming, but he has made clear that this is a whole new world for the media titan. With his contract extended for two years, until 2026, Iger has time to implement his vision for the company, one that centers on two pillars: streaming and theme parks. Everything else, including Disney’s cable channels, could be on the table for a possible sale. Disney is also taking steps to ensure that its earnings return to a more sustainable path. Costs have been cut, shows canceled, and a course forward—one that focuses on what Disney does well and profitably—charted. Even the dividend, paused in 2020, could return by the end of this year. With its shares appearing cheap relative to its earnings and the sum of its parts, now looks like the right time to bet on the magic returning—at least to Disney’s stock.
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