How Disney Makes Its Billions 0 10

Bob Iger, the legendary CEO (president and chairman of the board) of the Walt Disney Company, announced plans to retire on December 31, 2026, concluding nearly two decades of presidency. Starting March 18, 2026, his position will be partially taken over by Josh D'Amaro, the current chairman of the Disney Experiences segment, which is responsible for parks, cruises, and all merchandise.

Iger will remain a senior advisor and board member until the end of the year to ensure a smooth transition. Although Disney's revenue grew by 3.3% in 2025, operating profit in key segments, such as entertainment, fell by 35% in the first quarter of the 2026 fiscal year. We analyze what exactly Iger is leaving to his successor and why his departure is more a cause for concern than nostalgia for investors.

Investors expect the successor to accelerate growth, as Disney shares are trading at around $107 as of February 2026, which is only 13-21% higher than prices a decade ago (the average price in 2016 was $95-100). Over the past ten years, the total return on shares has been 21.7-28.6%, but over five years, it has been minus 39.2%, peaking at $203 in March 2021 and hitting a low of $78.73 in October 2023. The company's market capitalization is $190.8 billion, with an annual stock growth of 0.87% over the past 12 months, which is lower than the S&P 500 (15.76%).

Iger took over Disney in 2005, succeeding Michael Eisner, and executed key deals such as the acquisition of Pixar for $7.4 billion in 2006, Marvel for $4 billion in 2009, Lucasfilm for $4 billion in 2012, and 21st Century Fox for $71 billion in 2019. These deals, while increasing revenue from $31 billion in 2005 to $88.5 billion in 2023 and making Disney a leader in content, were overshadowed by the COVID-19 pandemic in 2020, which led to the closure of parks and theaters, resulting in a loss of $2.8 billion.

This is not the first time Iger has left his position: in February 2020, he stepped down, handing over power to Bob Chapek, but returned in November 2022 after Chapek's dismissal due to internal conflicts and a 44% drop in shares in 2022. During his second term, Iger managed to create his own streaming service and even make it profitable (approximately $500 million is expected in the second quarter of 2026).

In the first quarter of the 2026 fiscal year, ending December 27, 2025, the Walt Disney Company recorded a 5% revenue increase compared to the previous year, reaching $26 billion. However, operating profit in segments fell by 9% to $4.6 billion, and adjusted earnings per share decreased by 7% to $1.63. These results are related to the company's transition from traditional media to streaming and its focus on developing its theme parks. At the same time, they indicate problems with rising costs and competition.

In the entertainment segment, revenue increased by 7% to $11.6 billion, but profit plummeted by 35% to $1.1 billion due to a sharp rise in production costs. Dependence on sequels (about 80% of releases in 2026 are continuations of already released films) raises risks, as seen with the $237 million loss from The Marvels in 2023. Streaming added 7 million subscribers to reach 230 million, but competition from Netflix and Amazon, along with annual investments of $8 billion in content, limit profit margins and exacerbate the overall decline in profitability.

The Disney Experiences segment, unofficially known as Disney Parks, reported record revenue of $10 billion, with a growth of 6%, but international tourism fell by 5%, and the profit forecast for the second quarter is modest due to inflation and global risks.

In the sports segment, revenue grew by only 1% to $4.9 billion, while profit collapsed by 23% to $191 million due to the YouTube TV blackout and rising rights costs. As a result, the decline of linear TV by 7-10% annually, competition, and the arrival of a new CEO cast significant doubt on the company's plans to increase revenue to $101 billion in 2026, with a margin of 14%.

It seems that Disney's strongest area is streaming. However, even here, things are not straightforward. Intense competition from Netflix with 270 million subscribers and Amazon Prime Video with 200 million creates significant challenges for Disney+. Although the operating profit from streaming rose by 72% to $450 million in the December quarter of 2025, high capital intensity and user churn in such a saturated market create risks. The company attempted to mitigate some of these by partnering with OpenAI for $1 billion, but this does not resolve the fundamental issues of audience migration to competitors.

Moreover, in recent years, the company has faced regular criticism for its film projects. In 2025, several major releases flopped at the box office: films like Tron: Ares lost $132.7 million, Snow White around $100 million, and Pixar's Elio barely recouped its $150 million budget, earning only $154 million.

As noted by analysts from The Hollywood Reporter and Variety, such projects do everything expected but offer nothing new, leading to audience fatigue. In 2025, this resulted in overall studio losses in the hundreds of millions, largely due to the failures of films like Thunderbolts and Fantastic Four, which barely broke even, reinforcing the narrative about the "collapse of Disney" favored by social media users.

In response, Disney has indeed scheduled several new releases for 2026, such as Jumpers and Enchanted, and even secured a partnership with Taylor Swift. However, critics doubt that this will restore audience trust. After all, 7 out of 9 planned releases for 2026 are still sequels to old, proven stories from which the last money is being squeezed. The same analysts from Hollywood Reporter predict that without a balance between commerce and creativity, the hate will continue, especially in 2026. The problem with sequels is that the audience already has an established pattern of expectations from each specific story, which they have experienced before, and justifying those expectations with each new installment will become increasingly difficult.