Disney CEO Bob Iger ‘not worried’ about competitors’ streaming prices

First On CNBC: CNBC Transcript: Disney CEO Bob Iger Speaks with CNBC’s Julia Boorstin Today

Disney CEO Bob Iger

Image source: CNBC Video Screenshot

WHEN: Today, Tuesday, October 22, 2019

WHERE: CNBC’s “The Exchange” – Live from Vanity Fair’s New Establishment Summit 2019 in Beverly Hills, CA

The following is the unofficial transcript of a FIRST ON CNBC interview with Disney CEO Bob Iger and CNBC’s Julia Boorstin on CNBC’s “The Exchange” (M-F 1PM – 2PM) today, Tuesday, October 22nd, live from Vanity Fair’s New Establishment Summit 2019 in Beverly Hills, CA. The following is a link to video of the interview on CNBC.com:

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Disney CEO Bob Iger say he's 'not worried' about competitors' streaming prices

 

KELLY EVANS: Take a look now at shares of Disney, which are up about 2.5% after a series of blockbuster announcements: a new partnership with Verizon for a free year of Disney Plus, a deal with Sirius XM for exclusive Marvel podcast, and the release of a new trailer for the next "Star Wars" film, “The Rise of Skywalker.” Let’s get to Julia Boorstin. She’s in Beverly Hills with a very special guest, Disney Chair and CEO Bob Iger, in a first on CNBC interview. Julia?

JULIA BOORSTIN: Kelly, thanks so much. Yes, we’re so glad to be joined here by Bob Iger on such a busy day. Kelly just mentioned all of your big announcements. And you just came from stage here at the Vanity Fair summit. where you unveiled a clip of the Mandalorian, which will be one of the centerpieces of upcoming streaming service, Disney Plus. Can you give us a sense of early demand for Disney Plus? You’ve been offering the ability to sign up before in launches on November 12th. What kind of demand are you seeing so far?

BOB IGER: Well, we started allowing people to sign up for subscriptions back in the middle of the summer. And we also launched it somewhat quietly in the Netherlands but without original content. And we -- I can say without being very specific that the reaction to the product that people have tried in the Netherlands and the reaction in terms of the sign ups has been robust. It’s heartening. It’s heartening to see just how much interest there is in what we’re bringing out, which I think speaks volumes about the brands and the content under those brands, both the library content and the original. You mentioned, Mandalorian, the first-ever Star Wars live-action series which will be available when we launch. So, there’s a lot of excitement and a lot of anticipation. And all signs point in the right direction, as far as we’re concerned.

JULIA BOORSTIN: And everything’s ready to go for November 12th?

BOB IGER: Yes. Everything’s ready to go. We could launch today – a lot of people right now at Disney who probably just had heart palpitations. But we’re still doing some tweaking. And we have the time to do that.

JULIA BOORSTIN: So, you just announced this big deal with Verizon. You’re going to be giving a year to Verizon subscribers of Disney Plus. Is this a marketing tool? Are you going to be losing money on this, breaking even, or will this be a money-making—

DISNEY CEO BOB IGER: Verizon is making available to their customers one year free of Disney Plus. And it’s a wholesale deal to us so we will get paid for that. And they will also support us with a lot of marketing. But this is not just a marketing play. And it will, I think, have a significant effect–not just think, I know–in terms of jump-starting subscriptions.

JULIA BOORSTIN: How important is this kind of deal to minimize turn? This is the first time that you had to really worry about turn on a month-to-month basis for your subscribers. And what other types of deals could we see, like this one?

BOB IGER: Yes, well we have created a variety of incentives to get people to subscribe for more than a month. But you can – it is a month-to-month subscription. So, there’s a discount of the marketplace so you can buy a year for $69. For instance, there’s a multi-year subscription that can be brought. We’re trying to essentially give the consumers the flexibility to sign up for longer periods of time, which obviously limits turn, but also gives the consumer value in terms of, you know, price.

JULIA BOORSTIN: After you priced Disney Plus at $70, Apple came in and priced its service at $5. What do you of all think of these services launching around the same time? And, with Apple at that lower price point, are you worried about competition limiting your pricing power down the line?

BOB IGER: No. we’re not really worried about competition in terms of pricing, because we have such a unique product. When you put in on one service on one app, Disney and Star Wars and Marvel, and National Geographic, and you add to that The Simpsons, and not only the great library, but all the original content that’s being made under those brand umbrellas. We’re very, very different than the other services out there. So, while we view the others as competition, we’re not fixated on the competitive side of things here.

JULIA BOORSTIN: Three, five years down the line, how much of Disney’s business is going to be about this direct-to-consumer streaming? Does this take over and become more important than your cable bundle business?

DISNEY CEO BOB IGER: Well, I think it certainly, as our projection suggests, both in terms of the impact on the bottom line but also in terms of our engagement with consumers, it grows and it grows and it grows. And this is really the trends that we’re seeing in the world. If you look at the erosion of the multi-channel bundle, if you look at the way people are consuming media today, I see numbers a lot now on Hulu because we control Hulu. And to see the consumption of programs on Hulu, even programs that were launched on FX, programs that were launched on ABC and on Freeform, and you look at the audience, there’s a whole other audience out there. And there’s, I think, a migration that’s not going to slow down—it will speed up—in the direction of direct-to-consumer over-the-top services.

JULIA BOORSTIN: Of course, you have direct-to-consumer, ESPN Plus. Are you going to be looking to buy more rights for that? For instance, the NFL Sunday ticket rights, would you be looking to buy those when AT&T’s deal for those rights expire?

BOB IGER: I won’t answer specifically to the question about the NFL package. But we know the NFL is really valuable. But the answer is yes, we will be looking to buy more rights for ESPN Plus as they become available. And I imagine down the road, ESPN – the linear channel is still very valuable to us and distributers, but down the road, you could see a shift to some extent of some product from those services to ESPN Plus. But that’s at a time when we believe the shift from a consumer perspective is significant enough to warrant that.

JULIA BOORSTIN: I have to ask you about China, it’s been a big topic on our air and in the mainstream media, with all these NBA tweets sparking such backlash. And I’m curious, for China, it’s such a big business for you, you obviously have NBA rights here in the U.S., what does this all mean for you in your business and your approach to everything from the movies you distribute there to your relationship with your theme park there?

DISNEY CEO BOB IGER: Well, I think what we’ve learned, if anything, from the -- what you just described, which is what happened with the NBA, is that any entity expressing anything in public today about something that’s considered complex or controversial has to proceed with real caution. It’s a cautionary tale. And so, I am going to be extremely cautious here in this interview and be careful with what I say.

At the Walt Disney Company, you know, we infuse values in the stories that we tell. We design those stories, we tell those stories for -- to be universal in appeal for an audience that’s global in nature. When we do that we think very hard about being culturally relevant and culturally correct. Much less so, by the way, than being politically correct. People always talk about being politically correct. Being cultural correctness has importance.

When we designed Shanghai Disneyland, for example, we talked about being authentically Disney but distinctly Chinese, which is essentially to be culturally correct and culturally relevant to the people of China. But I’m not going to weigh in very specifically about the events of the last few weeks.

JULIA BOORSTIN: In addition to abiding by values, you also abide by the laws here in the U.S. And we were just learning about Mark Zuckerberg’s testimony on Capitol Hill and there is a lot of focus on whether the tech companies should have to abide by the same rules about the content they distribute as Disney does, and as ABC does. When you think about all of the rules you have to play by as a content company, do you think that the tech companies should have to play by the same rules when it comes to content? Right now, they’re exempt.

DISNEY CEO BOB IGER: Well, there are different rules and regulations that relates to content in the United States. I think we all are subject to libel and slander laws. Slander law is, for instance, you just can’t say anything about somebody. But it’s the broadcast regulations that I think are the most evident in the United States.

Some cable entities and some of the new entrants to the marketplace like Netflix are not – and other content creators and distributors, are not subject to the same rules. So, there’s already a bit of a double standard that exists here about content, depending on what platform. So, I do happen to -- should there be a level playing field in that regard?

Yes. I think broadcasters are constrained by regulation. As it relates very specifically to regulation for tech, most of what’s discussed about tech regulation is broader than content obviously. It’s the impact they have on people and society. You know, I do think that tech to technology companies, those that are most I think being scrutinized have done a lot of good in the world and changed our world in many respects for the better. But there’s also, a negative side to it.

There’s a lot of bad has also been done. And I think it’s up to governments of course, not companies like us, to really carefully scrutinize the negative side of it.

To the extent that that gets really negative, and meaning has a damaging effect societally, I think it, you know, should be looked at. And regulation should be considered.

JULIA BOORSTIN: And just a final question about your perspective on the health of the American consumer right now, you have so many connections to consumers, particular at the parks. You can see what kinds of vacations people are booking months out. What’s your sense of the health, right now? Are people concerned and pulling back?

BOB IGER: Well, we’ll some more probably at earnings, which I think are November 7th. But, what we’ve seen so far, meaning in the recent few months since we last had an earnings call, is it’s still relatively positive as it relates to the American consumer, both in terms of travel and visitation to our parks and advanced bookings. But also, the advertising marketplace is still very strong.

JULIA BOORSTIN: Thanks so much, Bob, for your time. We really appreciate it. We look forward to hearing more at earnings next month.

BOB IGER: Thanks, Julia.



About the Author

Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Prior to ValueWalk, Jacob was VP of Business Development at SumZero. Prior to SumZero, Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver