Disney to Reorganize, Prioritize Streaming In New Leadership Structure

Charley Gallay/Getty Images (2); John Sciulli/Getty Images; Matt Winkelmeyer/Getty Images; Courtesy of Disney

Disney's Alan Horn, Alan Bergman, Peter Rice, James Pitaro and Kareem Daniel.

Kareem Daniel has been upped to lead the newly created Media and Entertainment division.

New Disney CEO Bob Chapek is reorganizing the company to prioritize the creation and distribution of content for streaming.

Under the new structure, Disney is creating a Media and Entertainment Distribution group responsible for both the dissemination and ad sales for all of its content, including across streaming services including Disney+. Chapek has tapped Kareem Daniel, formerly president of consumer products, games and publishing, to run the newly formed division.

The newly created group will be responsible for the profits and losses for the entirety of Disney's media and entertainment businesses and will oversee distribution, operations, sales, advertising data and technology for all of Disney's content arms. It will also manage operations for Disney's streaming services and domestic television stations.

Disney will feed the Media and Entertainment Distribution group with programming from its film studios, general entertainment television studios and sports group. Those divisions — Studios, General Entertainment and Sports — will produce for theatrical, linear and streaming distribution with a focus on the company's direct-to-consumer outlets, which include Disney+, Hulu and ESPN+. Alan Horn and Alan Bergman will continue to oversee Studios Content output from Walt Disney Studios, Disney Animation, Pixar Animation and Marvel Studios and other arms as chairmen; Peter Rice will continue to oversee General Entertainment Content from 20th Television, ABC Signature and other groups as chairman; and James Pitaro will continue to focus on live and original sports programming as chairman of ESPN and Sports Content.

"Given the incredible success of Disney+ and our plans to accelerate our direct-to-consumer business, we are strategically positioning our Company to more effectively support our growth strategy and increase shareholder value," Chapek said in a statement. "Managing content creation distinct from distribution will allow us to be more effective and nimble in making the content consumers want most, delivered in the way they prefer to consume it. Our creative teams will concentrate on what they do best — making world-class, franchise-based content — while our newly centralized global distribution team will focus on delivering and monetizing that content in the most optimal way across all platforms, including Disney+, Hulu, ESPN+ and the coming Star international streaming service."

With the reorganization, Disney has handed significant power to Daniel, a 14-year veteran of the company who has worked in a range of departments, from games to publishing to studio distribution and Walt Disney Imagineering. Before he took over leadership of Consumer Products, Games and Publishing, Daniel was president of Walt Disney Imagineering Operations, Product Creation, Publishing and Games, a role in which he likely worked closely with Chapek — formerly chairman of Disney Parks, Experiences and Products — to create the new Star Wars: Galaxy's Edge section of Walt Disney World and Disneyland and Toy Story Land at Walt Disney World and Shanghai Disneyland.

In his statement, Chapek called Daniel "an exceptionally talented, innovative and forward-looking leader, with a strong track record for developing and implementing successful global content distribution and commercialization strategies" and noted that his experience across the company made him the right fit for the job.

"I'm honored to be able to lead this new organization during such a pivotal and exciting time for our Company, and I’m grateful to Bob for giving me the opportunity,” Daniel said in a statement. "It's a tremendous privilege to work with the talented and dedicated teams that will comprise this group, and I look forward to a close collaboration with the outstanding and incredibly successful team of creative content leaders at the Company, as together we build on the success we’ve already achieved in our DTC and legacy distribution business."

Under the new organizational structure, Disney's Direct-to-Consumer and International group will be split in two. Rebecca Campbell will continue to lead both groups, reporting to Chapek in her role oversee international and reporting to Daniel in her role leading direct-to-consumer operations.

The reorganization, one of Chapek's first big moves since succeeding Bob Iger as CEO in February, comes as Disney's legacy theatrical and experiential businesses have been roiled by the novel coronavirus, which earlier this year forced the closure of movie theaters and shuttering of its theme parks. During the second quarter of the year, Disney reported a $4.7 billion loss, and in September the company said it would lay off 28,000 people in its Parks, Experiences and Products division, many of them part-time theme park workers.

Amid those challenges, the company has continued to see a bright spot in streaming. Disney+, its nearly one-year-old streaming service, has more than 60 million subscribers and has driven buzz with the release of Star Wars-set TV series The Mandalorian and filmed version of the Hamilton Broadway show. Disney recently underscored its focus on building Disney+ amid the ongoing pandemic and the demise of the box office by announcing that it will send Pixar’s Soul straight to Disney+ in the U.S. and other markets where the streaming service is available.

Earlier this month, the activist investor Dan Loeb sent a letter to Chapek and Disney’s board of directors, suggesting that the company really embrace the "transformational opportunity" of streaming by eliminating its $3 billion annual dividend and investing it entirely in content. "[M]eaningfully accelerating DTC content spend will further broaden the divide between Disney and its traditional media peers — AT&T’s WarnerMedia, Discovery, ViacomCBS, Comcast’s NBCUniversal and Fox — none of which have the financial capabilities to execute such a bold plan," Loeb wrote in his letter. In fact, Loeb argued that "with Disney’s superior tentpole franchises and production capabilities, we believe that the company can exceed the subscriber base of the industry leader, Netflix, in just a few years."

The changes Disney announced Monday would have been in the works well before Loeb sent his letter. On CNBC Monday, Chapek said "we welcome input from all of our investors, and we appreciate [Loeb’s] thesis," but would not commit to eliminating Disney’s dividend, saying that it would be a decision for the board. "I think what we are doing is taking a look at all of our investments whether it is dividends, capital improvements or content."

Alex Weprin contributed to this report.