Axios Pro: Media Deals

November 21, 2022

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Good morning, Media Deals readers!

📚 Situational awareness: Penguin Random House's deal to buy Simon & Schuster is on the verge of collapse. Paramount will allow the purchase agreement to expire today, per Reuters.

1 big thing: Disney's dealmaker is back

Bob Iger attends the Exclusive 100-Minute Sneak Peek of Peter Jackson's The Beatles: Get Back at El Capitan Theatre on November 18, 2021 in Hollywood, California.

Bob Iger. Photo: Charley Gallay/Getty Images for Disney

Bob Iger's tenure at Disney was legendary in part because of several massive acquisitions that brought the media company to new heights. His return as CEO could spark more dealmaking, Kerry writes.

Why it matters: Iger's return is of course a move to stabilize the struggling business but it also raises the prospect that he's got a deal or two in mind, particularly something around Disney+, Hulu or ESPN. Or maybe Netflix.

Background: Deal buzz has surrounded the company for a while now. Earlier this year, activist investor Third Point pressured Disney to spin off ESPN and buy out Comcast's stake of Hulu. While they reached a truce, these same conversations could be reignited now that Iger is back.

Of note: Disney now has two activists in the stock.

  • Trian Partners has recently acquired a stake in Disney worth around $800 million, the WSJ reports. Nelson Peltz, a Trian founding partner, is seeking a seat on Disney's board "as it pushes the entertainment giant to make operational improvements and cut costs," according to the WSJ.
  • Trian has pushed dozens of companies to make major strategic moves over the years, and it's no stranger to the media business. (More below.)

Catch up quick: Disney said last night that Iger will return as CEO, effective immediately, for the next two years.

  • Earlier this month, Disney suffered its worst day on the stock market in 21 years, after it missed Wall Street expectations on revenues and profits for its final fiscal quarter of the year.

State of play: Iger led Disney through its acquisitions of Pixar, Marvel Entertainment, Lucasfilm and 21st Century Fox. Disney also acquired BAMTech to build a streaming powerhouse.

  • Each of the media brands not only powers Disney's streaming service, Disney+, and supports its box office dominance, but also works as part of the infamous flywheel with integrations in its theme parks and with retail products.
  • Since Iger's return was announced, speculation has grown about Netflix as a potential takeover target for Disney. That rumor isn't new, but as Netflix continues to regain its footing and Disney seeks to strengthen Hulu, a merger of those platforms could make sense.

What they're saying: "Why, exactly, is Iger doing this? As one longtime Disney observer texted me, he doesn't put his legacy at risk just for a job. What's up his sleeve? Perhaps there's one big deal yet to be made," Puck's Matthew Belloni writes.

  • On CNBC, MoffettNathanson's senior analyst Michael Nathanson speculated about Disney making some kind of move with ESPN. He added that Iger thinks in terms of major franchise deals, not something like streaming content.

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