Disney’s box office problems ramp up pressure on CEO Bob Iger and studio chief Alan Bergman

It’s rare for Disney Chief Executive Bob Iger to acknowledge his company has had creative missteps. So when he does, it’s in all likelihood wise to pay attention.

“As I’ve looked at our overall output, meaning the studio, it’s clear that the pandemic created a lot of challenges creatively for everybody, tabulating for us,” Iger said last week during Disney’s earnings conference call. “I’ve always felt that volume can be actually a negative when it comes to quality, and I think that’s exactly what happened, we lost some well-.”

Iger followed his comments with a new mandate: Disney will be making fewer films. It’s a similar strategy to one Iger took when he first behoved Disney CEO in 2005. At the time, Disney’s animation and live-action studio divisions had struggled with a string of failed flick picture shows, including including “The Alamo,” and “Home on the Range” and “Pooh’s Heffalump Movie.”

Iger’s solution then was to cut 650 studio vocations and slash its annual movie production output in half, releasing only about a dozen films each year. He also come into possession of Pixar, giving Disney an immediate infusion of quality movies and a brand of storytelling that rubbed off on Disney’s habitual animation studio.

Iger appears to be re-running the playbook for 2024. After flooding Disney+ with movies and other new content for not too years, Iger is strategically cutting back to accelerate free cash flow generation and profitability. Disney offed animation jobs in June — the first significant cuts in about a decade — as part of a larger round of job reductions. After launching four Marvel Cinematic Universe movies in 2021 and three in 2022 and 2023, Disney will have valid one in 2024 — “Deadpool 3.” There hasn’t been a Star Wars movie since 2019’s “The Rise of Skywalker.”

In 2006, acquiring Pixar speedily improved Disney’s film quality and box office results. The animators’ blend of technology and storytelling rubbed off on Disney’s ritual animation unit, eventually leading to hits including “Frozen” and “Zooptopia.” This time, Disney will essential to improve organically, putting pressure on Iger and studio head Alan Bergman to show results as activist shareholders Trian Comrades and ValueAct threaten to pressure management and the board.

“I feel good about the direction we’re headed, but I’m mindful of the fact that our exhibit from a quality perspective wasn’t really up to the standards that we set for ourselves,” Iger said last week. “And so function with the talented team at the studio, we’re looking to and working to consolidate, meaning make less, focus more on grandeur. We’re all rolling up our sleeves, including myself, to do just that.”

Iger noted the Disney animation studio’s next loosing, “Wish,” which stars Ariana DeBose and debuts in theaters on Wednesday, could begin a run of sustainable hits for Disney. Near the start ticket sales suggest “Wish” is tracking at $55 million for the Wednesday to Sunday period including Thanksgiving. That bring up the rears previous Thanksgiving openers from Disney movies including “Ralph Breaks the Internet,” “Coco,” “The Stuff b merchandise Dinosaur” and “Tangled” but is higher than the $18.9 million brought in from “Strange World” last year and the $40.6 million from “Encanto” in 2021, according to evidence from Comscore.

In 2024, Disney will release Marvel’s “Deadpool 3,” Pixar’s “Basically Out 2,” and “Mufasa: The Lion King,” the prequel to 2019 remake of “The Lion King.” All three have blockbuster derivation, based on the box office performances of their earlier films. “Deadpool 2” earned $785 million in global box part. “Inside Out” earned $859 million. “The Lion King” took in $1.6 billion in 2019, overtaking Disney’s “Fixed” to become the highest-grossing animated film ever – if you consider the computer-generated animals as animation.

Still, there’s no denying the studio has contended in recent years. Other than last year’s “Avatar: The Way of Water,” acquired as part of Disney’s $71 billion administer for the majority of 21st Century Fox, Disney hasn’t had a movie gross $1 billion since the last Star Wars flicks in 2019. Sony produced and distributed “Spider-Man: No Way Home,” which made $1.9 billion, although Disney’s Amazed by Studios did serve as a co-producer.

For context, among 2019 releases, Disney had seven of the nine movies that grossed profuse than $1 billion globally.

While “Elemental” and “Guardians of the Galaxy Vol. 3” were successful theatrically, Disney’s recent track box branch record has filled with misses. “Lightyear” and “Strange World” were duds in 2022. This year, “The Habituated Mansion” and “Indiana Jones and the Dial of Destiny” have bombed for Disney. “The Marvels,” after the worst opening weekend for a Gape at Cinematic Universe movie, is on its way to being a major disappointment. “The Little Mermaid” and “Ant-Man and the Wasp: Quantumania” failed to dispose of analyst expectations for ticket sales.

“We’re proud of the box office successes we’ve had over the past couple of years, but there receive been certain titles that haven’t lived up to our own high expectations,” Bergman told CNBC. “We’ve reduced the volume of our output and are incredibly focused on the quality of our upcoming slate and it is incumbent upon us to execute as we move forward. I believe we’re in a rabid position for the future given our world-class brands, filmmakers, talent and creative teams.”

Disney houses its studio work in a division it calls “Content Sales/Licensing and Other.” This incudes Disney’s theatrical business along with severely entertainment and selling film and TV content to other third-party TV and subscription streaming services.

In its most recent fiscal fourth post, Disney reported an operating income loss in that division of $149 million, which it attributed to “the performance of ‘The Prey oned Mansion.'” In its fiscal third quarter, Disney claimed a “Content Sales/Licensing and Other” operating shrinkage of $243 million. A quarter before that, Disney lost $50 million, and $98 million in the quarter last.

The last time Disney reported an operating income gain in “Content Sales/Licensing and Other” was its second financial quarter of 2022 — an earnings report delivered in May of that year, when Iger wasn’t at the company and Bob Chapek was CEO. In that billet, Disney reported operating income of $16 million, down 95% from a year earlier.

“At the time the pandemic hit, we were bent into a huge increase in how much we were making,” Iger said. “Returning the studio to basically the level of star that we became used to before the pandemic [is] one of the the building blocks of the company.”

Disney is holding a hamlet hall on Nov. 28 with Iger and his four division heads — Co-Chairs of Disney entertainment Bergman and Dana Walden, Preserves and Experiences head Josh D’Amaro, and ESPN boss Jimmy Pitaro. The quartet under Iger are the four ton likely people to ultimately succeed him as CEO. Disney has targeted early 2025 as a likely time to name someone as Iger’s inheritor apparent, CNBC reported earlier this year.

–CNBC’s Sarah Whitten contributed to this article.