Disney brings back a star of the past. But the real problem is the script

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FILM CRITICS often complain that the box office is overrun with series. Now there are studio headquarters. On November 20, Disney announced that Bob Iger, who ran the company for 15 highly successful years until he retired in 2020, would return to the spotlight for a second act as boss. Bob Chapek, who lasted less than three years in office and presided over a 40% drop in Disney’s share price this year, was sent back to his trailer.

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As any producer knows, a good supervisor can make all the difference. Mr. Chapek turned out to be a B-lister; Mr. Iger, who changed Disney’s fortunes, is a megastar. But the creators in Hollywood and the investors on Wall Street who expect a quick turnaround at Disney should think again. The main problem is not at the top, but in the fundamental changes in the film industry brought about by streaming, which have hurt every studio. It will take every ounce of Mr. Iger’s star power to turn the business back into the mainstream.

Mr. Chapek was stung by rotten tomatoes from the start. The pandemic, which closed cinemas and theme parks, is hardly to blame. But he often slurred his lines. Unlike Mr. Iger, who was a sunny weatherman who attracted actors and directors, Mr. Chapek, who rose through Disney’s theme parks division, disturbed Hollywood’s powerful creators, some of whom ‘ threatened to sue when their films went direct to streaming. He was no better at handling politicians. When Florida passed a law addressing sexuality and gender identity in classrooms, Mr. Chapek first took no position, then took a stand against it – managing to put from liberals and conservatives. Investor Relations Hurt; this month bad wages were sent to Wall Street. Disney stock soared when Mr. Iger returned.

But for the most part, Mr. Chapek was following the script left to him by Mr. Iger, who was hand-picked as his successor. The priority of both was to move high-end content to Disney +, the streaming service launched in 2019 under Mr. Iger. The approach has paid off, earning Disney more streaming subscriptions than even Netflix, which entered the business 12 years earlier. But it has been far more profitable than the theater and cable-TV businesses that historically supported Disney, along with its parks. Users can easily switch once they’ve connected to the latest series, meaning more content is needed to keep them on board. Meanwhile, new competitors like Apple and Amazon have bottomless budgets. Last quarter Disney’s streaming division lost $1.5bn, twice as much as a year earlier.

These problems can be seen all over Hollywood. Netflix has lost more than half its market value this year. In fact, Disney is in a better position than most of its competitors. For now Disney + is subsidized by parks and cable networks that are still profitable (the latter is rapidly declining). And the company expects its streaming business to break even in 2024. It is sure to be among the survivors of the streaming wars. For others things look more dire. Warner Bros. Discovery told investors earlier this month that streaming was tougher than expected. NBCUniversal, part of Comcast, and Paramount Global are unlikely to survive in their current form. (Some speculate that even Disney could be swallowed up—if Disney itself isn’t swallowed up by Apple first.)

As studios and advertisers tighten their belts, things will only get more difficult in Hollywood. Mr Chapek may not be the last major corporate figure to bite the dust as things get worse. A star boss can definitely help. But studios are in for a disappointment if they think a change at the top is going to change the brutal reality of Hollywood’s new economics.

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