Iger Lays Out Vision for Disney’s Future
CEO says streaming, parks, studios and ESPN are the building blocks of the company
4 min
Nearly a year after returning to Disney as chief executive, Bob Iger laid out his vision of the company’s future, putting streaming and live entertainment at the centre, fed by a studio business that he plans to personally help reinvent.
Iger told investors in a fourth-quarter earnings call that Disney will focus on four “building blocks” that provide the foundation for future growth: streaming, theme parks and cruises, studios and the ESPN sports network.
Disney said Wednesday it would slash $2 billion more in costs than previously planned as the company sharply narrowed losses in its streaming business.
There are still major challenges to overcome. Disney’s streaming business has lost nearly $11 billion since the launch of Disney+ in late 2019. Its movie studio is in the midst of a box-office slump that has been exacerbated by delays caused by Hollywood strikes, and ESPN is looking for strategic partners as it plans to eventually transform into a streaming-only business by 2025.
“A lot of time and effort was spent on fixing in the last year,” Iger said during a conference call Wednesday. The company’s progress means Disney can “move beyond this period of fixing and begin building our businesses again,” he said.
Iger said the studio would focus more on quality than quantity and that it lost some of its focus during and after the pandemic. “We’re all rolling up our sleeves, including myself, to do just that,” he said.
Some of Disney’s core franchises, including its Marvel superhero movies and series, have struggled to attract big audiences to theaters in recent years.
Lucasfilm, the Disney-owned studio behind the lucrative and popular “Star Wars” movies, hasn’t released a feature film since 2019 and doesn’t have one in production currently, meaning it will likely be several years before the next one comes out. And Pixar, the marquee computer animation studio that has dominated the box office for the last several decades, has had a series of box-office flops.
The common thread underlying Disney’s recent challenges and potential opportunities is the transition from traditional media like film and legacy TV to streaming, which has upended Hollywood’s business model and roiled nearly every entertainment company.
In his comments Wednesday, Iger stressed the importance of getting streaming right. The company’s main streaming service, Disney+, added 6.9 million “core” subscribers—those in North America and other markets such as Europe and Asia, excluding India, where it is able to charge higher subscription prices—in the most recent quarter, about twice what Wall Street analysts polled by FactSet predicted. Disney+ added 500,000 domestic subscribers.
The company highlighted the popularity on Disney+ of recent movies including “Elemental,” the Marvel superhero film “Guardians of the Galaxy Vol. 3” and the recent live-action remake of “The Little Mermaid.”
“One thing that we have recently really come to appreciate is the performance of our big title films,” Iger said. The strength of its films on streaming means Disney can spend less on TV series, which is a differentiator for the company, Iger said.
The entertainment giant said Wednesday it is seeking $7.5 billion in cost cuts, up from the $5.5 billion it targeted at the beginning of this year.
Disney reported that its streaming business is making progress in narrowing its losses. The business, which also includes Hulu and ESPN+, lost $387 million in the most recent quarter, down from $1.47 billion a year earlier. The company reiterated that it believes streaming will break even by next September.
Disney has begun reporting more detailed results from its ESPN sports network as it seeks strategic partners to invest in the flagship sports network’s future.
ESPN’s operating income for fiscal 2023 fell 1.7% to $2.8 billion, while revenue rose 2% to $16.4 billion. Disney owns 80% of ESPN through a joint venture with Hearst, and Iger has said the company is working to transform the network into a fully direct-to-consumer platform, with live sports and other sports content streamed to consumers outside the cable bundle.
Excluding ESPN, Disney’s traditional TV networks saw revenue fall 9.1% for the quarter to $2.62 billion. Operating income from the networks was flat at $805 million.
During a CNBC interview Wednesday, Iger said the company has been considering strategic options for each of its TV networks, though “not necessarily all of them,” and has been reviewing its TV operations for opportunities to reduce costs and improve the business. This past summer, he said the legacy networks may not be core to Disney, suggesting it could sell them.
Other bright spots in Wednesday’s quarterly earnings included Disney’s experiences segment, which includes theme parks, cruise ships, a family-adventure travel-guide business and merchandise licensing. The unit’s operating income rose 31% from the year-earlier quarter to $1.76 billion. Disney has raised prices at its theme parks and announced major investments in its cruise ship business in the hopes of capitalising on rising demand for in-person entertainment experiences.
The entertainment giant, which just passed its 100th birthday, generated sales of $21.2 billion for the quarter, up 5% from a year earlier. Revenue for the period was slightly below the $21.4 billion predicted by analysts polled by FactSet.
Disney’s net income rose to $264 million in the September quarter, from $162 million a year earlier. Disney’s earnings per share, excluding certain items, were 82 cents, beating Wall Street’s projections by 11 cents.
Disney shares rose nearly 3% in after-hours trading. Before the earnings report, the stock had fallen 2.7% in 2023.
Overall, Disney+ ended the quarter with 150.2 million global subscribers, including those signed up to its Hotstar service in India. That service has shed millions of customers over the last year after Disney lost a bidding war for the rights to stream matches from a popular cricket league, and Disney is exploring a sale of its India unit, The Journal has reported.
Although the company fended off an activist campaign by Nelson Peltz earlier this year, Iger now faces the specter of another battle.
The Wall Street Journal reported in October that Peltz’s Trian Fund Management is planning a fresh push for board seats. Billionaire and former Marvel executive Isaac “Ike” Perlmutter has said he has entrusted his stake in Disney to Trian for that effort, giving the investment fund control over a stake worth upward of $2.5 billion.
Iger said in the CNBC interview that he had spoken recently with Peltz but he doesn’t “know what Nelson is really after.”
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Technology and semiconductor shares fell sharply as investors questioned the debt financing the AI infrastructure boom and confronted higher rates and Chinese competition.
Technology and semiconductor shares fell sharply as investors questioned the debt financing the AI infrastructure boom and confronted higher rates and Chinese competition.
4 minA sharp technology sell-off has exposed a new anxiety on global markets: whether the enormous borrowing behind the artificial-intelligence infrastructure boom can generate sufficient returns as interest rates rise and Chinese competition intensifies.
The artificial-intelligence investment boom has powered technology shares, semiconductor manufacturers and data-centre operators to extraordinary heights. Last week, investors were given a reminder that much of this expansion is being built with borrowed money.
The technology-heavy Nasdaq Composite fell 4.5 per cent over the week ended October 16, its weakest performance since late June. Semiconductor shares suffered an even deeper correction, with the Philadelphia Semiconductor Index losing about 11.4 per cent.
The selling spread quickly through global markets. Micron Technology fell 14.6 per cent over the week, while South Korea’s Samsung Electronics and SK Hynix dropped approximately 18 per cent and 24 per cent respectively.
This was more than a routine bout of profit-taking. Investors were reassessing three interconnected risks: higher interest rates, the rapidly expanding debt burden attached to AI infrastructure and the prospect of stronger competition from Chinese memory-chip manufacturers.
The debt behind the AI build-out
Artificial intelligence requires a physical infrastructure network of enormous scale. Data centres must be built, advanced processors purchased, power supplies secured and cooling systems installed before customers begin generating meaningful revenue from them.
Technology companies are increasingly supplementing their own cash with corporate bonds, syndicated loans, equipment leases, private credit and project-level financing.
JPMorgan describes the emerging funding model as a combination of conventional corporate borrowing and project finance tied to individual data-centre assets. In Australia, the Reserve Bank estimates that syndicated loans accounted for approximately three-quarters of data-centre financing during 2025 and 2026 to date.
The numbers are becoming large enough to affect broader credit markets. The Federal Reserve Bank of Dallas has cited Wall Street estimates suggesting AI-related investment-grade bond issuance could approach US$300 billion in 2026 alone.
That borrowing is not automatically problematic. Debt can be an efficient way to finance long-lived infrastructure when future revenue is sufficiently predictable. The concern is that AI technology, customer demand and computing economics are changing much faster than the repayment schedules attached to the assets.
A data centre financed today may carry debt for years. Investors must therefore make assumptions about future utilisation rates, electricity prices, chip performance, customer concentration and the amount businesses will ultimately pay for AI computing.
When interest rates rise, those assumptions become less forgiving.
Inflation changes the calculation
September’s US inflation data intensified the pressure. Consumer prices increased 3.7 per cent over the year, ahead of market expectations and up from 3.4 per cent in August.
The hotter reading reduced confidence that interest rates would fall quickly and pushed bond yields higher. That matters particularly for companies whose valuations depend on profits expected well into the future, as well as highly leveraged infrastructure operators that may need to refinance.
CoreWeave has emerged as a closely watched test case. The specialist cloud-computing company has accumulated substantial debt and lease obligations to build AI capacity, while relying on a concentrated group of large technology customers.
Its shares fell sharply during the sell-off, while the cost of insuring its debt against default climbed. CoreWeave has argued that its contracted backlog more than covers its obligations and that financial markets do not always understand its business model. Nevertheless, its securities have become a proxy for investor confidence in debt-funded AI infrastructure.
Oracle, another major investor in AI computing capacity, fell 8.8 per cent in Friday trading, while CoreWeave dropped 15.5 per cent.
The question is shifting from how much AI infrastructure can be built to how profitably it can be operated.
China adds another source of pressure
Interest rates were not the only catalyst. Reports of advances by Chinese memory-chip producer ChangXin Memory Technologies raised concerns that lower-cost Chinese products could increase competition across the global semiconductor industry.
Memory chips are essential to AI systems, but the industry is historically cyclical. Periods of tight supply and high pricing can encourage rapid investment, eventually producing oversupply and falling margins.
The prospect of a well-funded Chinese competitor expanding its technological capabilities unsettled investors in Samsung, SK Hynix and Micron. It also demonstrated that AI-related demand does not insulate chipmakers from conventional competitive pressures.
That combination—slower rate cuts, more expensive financing and potentially cheaper supply—challenged the assumption that every company exposed to AI would enjoy continually expanding margins.
A reset rather than the end of the boom
The sell-off does not establish that the AI boom is ending. Demand for computing power remains strong, the largest technology companies continue to generate formidable cash flows and many infrastructure projects are backed by long-term customer contracts.
What has changed is the market’s willingness to overlook the price and financing structure of that growth.
The most resilient companies are likely to be those able to fund investment from operating cash flow, secure long-duration customers and demonstrate that new capacity will earn returns comfortably above its financing costs.
More speculative operators may face greater scrutiny, particularly where debt is expensive, customers are concentrated or expected revenue depends on demand that has not yet materialised.
For Australian investors, the lesson extends beyond US technology shares. Local data-centre operators, infrastructure funds, electricity suppliers and property groups are increasingly exposed to the same investment cycle.
Artificial intelligence may remain one of the defining growth themes of the decade. But last week’s correction showed that enthusiasm for the technology does not eliminate financial discipline.
The next stage of the AI boom will be judged not only by computing power, model performance or demand for chips, but by something more traditional: whether the assets being financed can generate enough cash to repay the money borrowed to build them.
Fact box
Nasdaq Composite: Down 4.5 per cent for the week ended October 16, 2026
Philadelphia Semiconductor Index: Down approximately 11.4 per cent
Micron Technology: Down approximately 14.6 per cent
Samsung Electronics: Down approximately 18 per cent
SK Hynix: Down approximately 24 per cent
US September inflation: 3.7 per cent annually
Estimated 2026 AI-related investment-grade issuance: Approximately US$300 billion
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