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One-year-old streamer Disney+ has been a public success story for Disney, surpassing its five-year goal of attracting more than 60 million subscribers in just nine months. But the service has been a structural challenge for the legacy studio and the center of a power struggle over who has final say in the streamer’s programming lineup, multiple sources tell The Hollywood Reporter.
Disney could put an end to that tussling with its Oct. 12 restructuring, which hands its studio leaders greater control over the content they create for outlets like Disney+ while consolidating all budget and distribution decisions under the new Disney Media and Entertainment Distribution group led by former consumer products executive Kareem Daniel. But it’s unclear how this new arrangement will play out in practice.
“There was so much missing in that announcement that it raised more questions than it answered,” a former Disney executive says. Among those questions: How will the greenlight process work? Are film chiefs Alan Horn and Alan Bergman still developing projects for theaters first? And, with the theatrical business largely on hold stateside, will top creative talent lose out on big backend paychecks as Disney looks to monetize its “world-class, franchise-based content” via streaming?
Disney’s streaming structure has raised eyebrows since former CEO and current executive chairman Bob Iger unveiled plans in 2017 to launch an over-the-top service for all of Disney’s family-friendly brands. Though Iger put longtime marketing executive Ricky Strauss and former ABC and Imagineering executive Agnes Chu in charge of programming decisions and gave them greenlight power, he also directed the company’s studio engines to supply original shows and movies to the service, creating confusion over who exactly was in charge of the final product. The reorganization makes it clear that Iger and new CEO Bob Chapek are tipping the creative decision-making power in favor of the content chiefs but that the financial power will reside with the distribution arm. It’s a move that should come as little surprise to those paying close attention to Disney, which in recent months lost two of Disney+’s top bosses — Chu and direct-to-consumer and international chairman Kevin Mayer.
Under the new structure, says a source with knowledge of the situation, Daniel’s Media and Entertainment Distribution group will work with the studios to determine their overall budgets and to dictate the content needs of distributors like Disney+ and ABC. That group will also make the call about whether a project is destined for theatrical, linear TV or streaming distribution. But once those decisions have been made, Studios chairmen Horn and Bergman, General Entertainment chairman Peter Rice and Sports chairman Jimmy Pitaro will have the ultimate say over the finished product. That means Disney+ executives won’t get in the weeds on casting decisions or offer creative notes, and Strauss’ team will pivot to focus more on programming and curation than content development.
Daniel, in a note to his division staff on Oct. 20 obtained by THR, sought to further clarify the restructure, saying that the Media and Entertainment Distribution team will “manage operations of the Company’s streaming services and domestic broadcast and cable television networks, while working in close collaboration with the creative leaders on content budgeting.” Those reporting to him include international operations and direct to consumer chairman Rebecca Campbell, platform distribution president Justin Connolly, who adds theatrical film distribution to his purview, president of advertising sales Rita Ferro, and a yet-to-be-named head of networks that will manage the bottom line for Disney’s linear TV channels.
Disney+ sister streamer Hulu went through its own shake-up when, in 2019, its content team began reporting to Disney TV Studios chairman Dana Walden. But that process was complicated by the introduction of the FX on Hulu hub, the programming for which FX chairman John Landgraf oversaw, per a source. (Details of the new structure are being sorted out, but it’s likely that going forward, the Media and Entertainment Distribution group would determine where an FX project lives.)
Though the changes are meant to encourage collaboration across divisions and create a clearer path to project completion, some who do business with Disney are skeptical. WarnerMedia and NBCUniversal, which both have centralized creative decision making as they prioritize new streaming services, have faced similar criticism. “The way these companies are all being structured is crazy,” says a top TV literary agent. “I don’t know if it’s successful to have a content czar and a Supreme Court of buyers” at Disney.
Disney’s reorganization changes the way film distribution has been handled at Hollywood studios. Typically, distribution execs deal with theater owners, set release dates and calculate how much a project could make at the box office, both overseas and domestically. Now it will be up to Daniel’s group to figure out which customer is best served on what platform. Cathleen Taff, who has served as chief of global film distribution since mid-2018, will not join Daniel’s new team, instead remaining with the content group as president of production services, franchise management and multicultural engagement.
Theater owners are nervous since the consolidation of distribution power under another group means Disney’s film executives won’t have the same relationship with cinema chiefs. “They will make more content. They just won’t be worried about selling it,” says a veteran Disney observer. “This was a system that was going to be eventually disrupted, even before the pandemic.”
Anxiety is high among top creatives who are concerned that, as media companies try to boost their streaming services, they will lose out on lucrative profit participation that comes from a theatrical release. “I’ll be asking what am I getting when they sell something to streaming,” says one longtime producer.
Wall Street expects more details to be shared during Disney’s Nov. 12 third-quarter earnings call and when it reveals its plans for a Star-branded international streamer during a Dec. 10 investor day. “If you want the teams to all pull the oars in the same direction, you must align them,” notes Moody’s senior vp Neil Begley. “Fiefdoms and misaligned incentives can be a big problem for big media companies.”
Kim Masters, Lesley Goldberg, Pamela McClintock and Alex Weprin contributed to this report.
A version of this story appears in the Oct. 21 issue of The Hollywood Reporter magazine. Click here to subscribe.
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