Will Iger’s Sequel Be as Good as the OG? | The Daily Peel | 11/22/22

Nov 22, 2022 | Peel #343

Market Snapshot

Barely 3 years into his tenure as top dog at Disney, CEO Bob Chapek was dumped by the board.

The old king Bob Iger now returns older and wiser as several of the beloved company’s businesses are at inflection points.


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Macro Monkey Says

Return of the Jedi

Disney’s board basically created $10 billion in market value overnight by reinstating longtime chief exec Bob Iger as CEO over the weekend.

As evidenced by the deluge of Star Wars content it’s made since acquiring the series, the company has a history of going back to the well when times are tough.

Despite spending more than half his life at the company, Iger is only 71 and will have a long to-do list on day one.

  • Priority numero uno is figuring out a game plan for Disney+. The company talked a big game about being alright with losing billions in order to gain market share, but the rope doesn’t seem quite as long after a brutal quarter
  • Its declining cable division is still a decent chunk of its overall business, but those revenues are evaporating by the day
  • Iger’s only signed up for 2 years at the helm, during which he’ll lay the foundation for the next chief to take his seat

Bolstering Disney+ presents a catch-22. It has pointed a firehose of cash at content, but that hasn’t lured enough subs to be worth the spend. Somehow he’ll have to slow the streaming division’s burn while also sparking higher growth.

Then there’s its steadily-declining cable business. Cable networks paid Disney nearly $18 billion in 2020, and it can’t afford to see those dollars vanish.

The question becomes, do you go all-in on Disney+ and lay cable to rest for good? That’d be risking billions in existing revenues but could strengthen its streaming position in the market. Either way, cable is dying, so they’ll have to think of something before the final nail in the coffin.

Not a lot of easy decisions here. The epic comeback of theme parks and travel, more generally post-C-19, saved its in-person businesses, but digital content will ultimately make or break $DIS as it enters its 2nd century.


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What's Ripe

Disney ($DIS) ↑ 6.19% ↑

  • Must be a pretty sh*tty feeling to get canned as CEO and see your company’s stock shoot up as a result
  • Chapek had plenty of missteps during his reign, including a streaming money pit and overreliance on parks revenue. But none was worse than mislabeling “The happiest place on Earth”

Natural Gas ↑ 4.75% ↑

  • While the price of oil tends to move based on demand expectations, nat gas goes the way of the weather. Mild winter = lower prices
  • It looks like both the U.S. and Europe will have a warm-ish start to December, which sent prices falling Monday. But analysts are warning that even a slightly cooler winter than expected could send prices rocketing higher.

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What's Rotten

Crocs ($CROX) ↓ 8.73% ↓

  • Investors activated sport mode and sprinted away from $CROX Monday after its CEO dumped a huge chunk of his shares
  • After a post-Q3 earnings pop based on strong back-to-school performance, the market snatched back gains on concerns about a weak 2023

Crude Oil ↓ 4.76% ↓

  • No one headline dragged Crude prices down Monday, but a cocktail of multiple headwinds did the trick
  • C-19 is spreading again in China, causing Guangzhou to lock down. Europe looks like it has a surplus of oil, and hawkish Fed comments point to slowing demand in the U.S. Add it all up, and you have sub-$80 crude for only the 2nd time all year.

Data Peel

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Thought Banana

Leaders Emerge From Egypt With a Deal

An inconvenient truth of climate change was the main focus during the recently wrapped COP27 summit in Egypt.

No, not that inconvenient truth. The one where rich countries burn the greatest chunk of fossil fuels, while the poorest will suffer the worst consequences of climate change.

It’s been a hairy issue without much of a path forward since The Paris Agreement, but COP27 may have set the foundation for a resolution.

  • Marathon negotiations resulted in a deal where rich countries would pass the hat around to give poor countries the resources needed to both avert and adapt to a warmer world
  • While specifics still need to be ironed out, the pact points to a glimmer of hope that hundreds of nations can work together to deal with a problem that affects them all, even though the effects won’t be evenly spread
  • The 1.5C goal still seems like a pipedream even after the deal, but there’s still a massive difference between 2 and 3 degrees of warming long-term

Hovering over the meetings in Egypt was the energy disaster that Europe’s found itself in. After going all-in on renewable energy investments and shunning fossil fuel production, the continent found itself bending over backward to Russia to avoid shivering all winter.

Poorer nations have it even worse, and without a hand up from the wealthiest, they will be forced to decide between development and climate change mitigation, all while the effects of the latter slam them disproportionately hard.

Business leaders like Larry Fink and Bill Gates have been ratcheting up demands for economic changes to sidestep emissions growth, but actual changes have been a slow drip.

Oil giants are well-capitalized after an incredible year for the industry, and unless the regulatory hammer comes down, they’ll have a lot of power in determining the energy future of the world.

The big question: Will COP27 turn out to be just another showy agreement without legs, or will it unlock better cooperation between advanced and emerging economies to deal with climate change?


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