Iger said he would be "implementing organizational and operating changes" within the company over the next few weeks.
The widely expected move comes as Iger takes back the reins from Chapek, with the directive to “set the strategic direction for renewed growth” as well as help to develop and find a new successor during his two-year term. Wall Street analysts and company watchers had been expecting a reorganization of the company’s media and entertainment division, as Iger seeks to reshape Disney’s streaming strategy and return to a structure that prioritizes greater decision-making by creatives.
In a note to Disney Media and Entertainment Distribution employees Monday, Iger said he would be “implementing organizational and operating changes” within the company over the next few weeks. This most directly impacts the group organized under Daniel.
“I’ve asked Dana Walden, Alan Bergman, Jimmy Pitaro, and Christine McCarthy to work together on the design of a new structure that puts more decision-making back in the hands of our creative teams and rationalizes costs, and this will necessitate a reorganization of Disney Media & Entertainment Distribution. As a result, Kareem Daniel will be leaving the company, and I hope you will all join me in thanking him for his many years of service to Disney,” Iger wrote.
“Our goal is to have the new structure in place in the coming months. Without question, elements of DMED will remain, but I fundamentally believe that storytelling is what fuels this company, and it belongs at the center of how we organize our businesses,” he continued.
This is the first big change of many Iger is expected to make as he re-enters the organization.
After taking over the role in February 2020, one of Chapek’s first moves was to reorganize Disney to prioritize its streaming ambitions. He created the new media and entertainment distribution group, charged with the dissemination and ad sales for Disney content, including on Disney+ and in theaters. The division had a vast amount of responsibility, which included the distribution, operations, sales, advertising data and technology across all Disney content, and ultimately carried the weight of the group’s profits and losses.
Chapek tapped Daniel, a 14-year veteran of the company at the time, to head the division.
The consolidated power of the group differed from Iger’s vision of relying on creative talent and ideas throughout the company, which he emphasized in June 2021 at the company’s annual retreat.
“In a world and business that is awash with data, it is tempting to use data to answer all of our questions, including creative questions,” Iger said at the time. “I urge all of you not to do that.”
There was also concern among Wall Street that the creation of the division “has hurt the morale of the creative leadership and has created more bureaucracy, which has slowed decision-making,” wrote MoffettNathanson analyst Michael Nathanson.
And while Disney’s streaming business saw growing subscriber numbers, most recently reaching more than 235 million across Disney+, ESPN and Hulu, the division’s losses have continued to grow, hitting close to $1.5 billion in the most recent quarter. This may hamper Disney’s goal of making its streaming business profitable starting in fiscal year 2024.
It also contributed to the wider view that Chapek has been following a streaming strategy laid out in the company’s December 2020 Investor Day, which set “unrealistically high subscriber targets without a grasp for the underlying return on investment,” as Nathanson said.
Before taking on the job, Daniel had recently worked as president of consumer products, games and publishing. In his prior role as president of Walt Disney imagineering operations, product creation, publishing and games, Daniel’s work intersected with that of Chapek’s, who was then in charge of the company’s parks division.
Iger’s full memo is below:
Dear DMED Employees,
As we embark on the transformative work that I mentioned to you in my email last night, I want to begin by offering my sincere appreciation and gratitude to each and every one of you. Over the coming weeks, we will begin implementing organizational and operating changes within the company. It is my intention to restructure things in a way that honors and respects creativity as the heart and soul of who we are. As you know, this is a time of enormous change and challenges in our industry, and our work will also focus on creating a more efficient and cost-effective structure.
I’ve asked Dana Walden, Alan Bergman, Jimmy Pitaro, and Christine McCarthy to work together on the design of a new structure that puts more decision-making back in the hands of our creative teams and rationalizes costs, and this will necessitate a reorganization of Disney Media & Entertainment Distribution. As a result, Kareem Daniel will be leaving the company, and I hope you will all join me in thanking him for his many years of service to Disney.
Our goal is to have the new structure in place in the coming months. Without question, elements of DMED will remain, but I fundamentally believe that storytelling is what fuels this company, and it belongs at the center of how we organize our businesses.
This is a moment of great change and opportunity for our company as we begin our second century, and I am so proud to be leading this team again. I can’t say it enough: I’m incredibly grateful for the tremendous work you do each day, and for your commitment to maintaining the level of excellence Disney has always been known for.
I know change can be unsettling, but it is also necessary and even energizing, and so I ask for your patience as we develop a road map for this restructuring. More information will be shared over the coming weeks. Until a new structure is put in place, we will continue to operate under our existing structure. In the meantime, I hope you all have a wonderful Thanksgiving holiday, and thank you again for all you do.