The Little Mermaid

Source: © 2023 Disney Enterprises, Inc

‘The Little Mermaid’

Word has it that Sean Bailey had been looking to move on. However the news this week Disney’s president of motion picture studios has stepped down has much to do with CEO Bob Iger’s urgent course correction at a storied studio that just endured a relatively poor year at the box office and is facing pressure from activist shareholders to improve the stock price.

Bailey, a 15-year veteran of the company, was the executive who mined Disney’s animation vault and adapted them into live-action tentpoles that often crushed it at the box office.

For a long time the strategy reaped rewards as films like The Lion King, Beauty And The Beast, Aladdin and The Jungle Book earned $1.6bn, $1.3bn, $1.1bn, and $968m worldwide, respectively.

But Bailey’s magic dust only lasted so long. Last year’s centenary for Disney was a bad one for a number of reasons as the performance of several tentpoles releases can attest. 

The Marvels was arguably the worst of the lot on a little over $200m worldwide and while it did not fall not under Bailey’s purview, nobody in their right mind would fire Marvel Studios head Kevin Feige. Feige  arguably boasts the most impressive track record of any producer in Hollywood over the past two decades. 

Haunted Mansion however did hail from Bailey’s division, and the theme park adaptation only managed $117.4m worldwide. And while another adaptation from the stable, The Little Mermaid, did not exactly heap shame on itself with $569m in global ticket sales, these numbers were simply not good enough for a storied purveyor of family smashes like Disney at this time in its history.

Iger, who returned as CEO in November 2022 after the ill-fated tenure of Bob Chapek, reacted quickly, making it known on earnings calls and public forums that there would be a course-correction. In terms of the film studio, that has meant a renewed focus on quality rather than quantity. 

The CEO is bullish on streaming and well aware of the need to feed the beast -  aka Disney+  - with a constant flow of film and TV. He also knows Wall Street, and Disney’s activist investors Nelson Peltz and Blackwells Capital, are looking at profitability above all else these days.

For a company that has prided itself on the high bar of its filmed content over the years, Iger’s challenge is to deliver theatrical hits within a manageable scale of economy, while improving the quality of the content… which will eventually all end up on Disney+.

The activist investors want seats on the Disney board and are looking to shake up corporate governance at the media giant and bring big returns for shareholders. Iger needs to keep them off his back and restore some of the studio’s lustre, not to mention work out what to do with ESPN’s declining revenues and find a successor before he steps down in 2026.

Speaking of succession, Bailey’s name had been bandied about as a potential replacement for the outgoing Scott Stuber as head of film at Netflix. That did not turn out to be the case when the streamer confirmed Dan Lin for the job. Lin is the founder of Rideback and was a producer on Aladdin as well as tentpoles like the It, Sherlock Holmes and Lego franchises.

Bailey, who is liked by Iger and Disney’s film head Alan Bergman, has a great track record and deep industry and filmmaker ties and will fall on his feet.

Greenbaum and Greenfield 

Into his place comes David Greenbaum in the new role of president of president of live action and 20th Century Studios. Until this week Greenbaum ran Disney stablemate Searchlight Pictures alongside Matthew Greenfield and presided over an acclaimed roster of hits like PoorThings, which has just crossed $100m at the global box office, The Favourite, and Oscar winner The Shape Of Water, and Black Swan – the latter two when Searchlight was owned by 20th Century Fox. 

Greenfield becomes sole president of Searchlight. Shuffles are not uncommon within the Disney fold, where the thinking among executives here was the studio can save money by having only one executive run Searchlight.

Greenbaum is now charged with transforming the Disney live-action remake and spin-off slate into a consistent winner – and doing so in a cash-efficient manner. 

Iger is betting the shuffle buys him time heading into the showdown with the activist investors. How that plays out will become clear at Disney’s annual shareholders meeting on April 3. 

That may only offer a temporary reprieve. Peltz et al will not go away. Iger needs to turn things around at Disney and as Hollywood saw this week, he has begun the process at the studios.