by Robert Iger;
There’s no rule book for how to manage this kind of challenge, but in general, you have to try to recognize that when the stakes of a project are very high, there’s not much to be gained from putting additional pressure on the people working on it. Projecting your anxiety onto your team is counterproductive. It’s subtle, but there’s a difference between communicating that you share their stress—that you’re in it with them—and communicating that you need them to deliver in order to alleviate your stress. No one on this project needed reminding of what was at stake. My job was to not let us lose sight of our ambition when we confronted creative and practical obstacles, and to help us get to solutions in the best possible way. Sometimes that meant allocating more resources, sometimes it meant talking through new drafts of a script, or watching endless dailies and numerous cuts of the film. Often it just meant reminding J.J. and Kathy Kennedy and Alan Horn that I believed in all of them and there were no better hands for this film to be in.
That’s not to say it was a smooth ride from the start. Early on, Kathy brought J.J. and Michael Arndt up to Northern California to meet with George at his ranch and talk about their ideas for the film. George immediately got upset as they began to describe the plot and it dawned on him that we weren’t using one of the stories he submitted during the negotiations.
The truth was, Kathy, J.J., Alan, and I had discussed the direction in which the saga should go, and we all agreed that it wasn’t what George had outlined. George knew we weren’t contractually bound to anything, but he thought that our buying the story treatments was a tacit promise that we’d follow them, and he was disappointed that his story was being discarded. I’d been so careful since our first conversation not to mislead him in any way, and I didn’t think I had now, but I could have handled it better. I should have prepared him for the meeting with J.J. and Michael and told him about our conversations, that we felt it was better to go in another direction. I could have talked through this with him and possibly avoided angering him by not surprising him. Now, in the first meeting with him about the future of Star Wars, George felt betrayed, and while this whole process would never have been easy for him, we’d gotten off to an unnecessarily rocky start.
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THERE WERE OTHER struggles on top of George’s feelings about the film. Michael wrestled with the screenplay for months, and eventually J.J. and Kathy made the decision to replace him with Larry Kasdan, who’d co-written The Empire Strikes Back and Return of the Jedi with George (as well as Raiders of the Lost Ark and The Big Chill and many others). Larry and J.J. completed a draft fairly quickly, and we began shooting in the spring of 2014.
We’d originally planned to release the movie in May 2015, but because of those early script delays and some other complications later on, we didn’t release it until December. This moved it out of our 2015 fiscal year and into our 2016 fiscal year. My presentation to the board prior to the acquisition, and our disclosures to investors assuring them that we would begin to see a return on investment in 2015, turned out not to be true. Hundreds of millions of dollars moved out of one fiscal year and into the next. This was not a huge deal, but it had to be dealt with.
One of the biggest mistakes that I’ve seen film studios make is getting locked into a release date and then letting that influence creative decisions, often rushing movies into production before they’re ready. I’ve tried hard not to give in to calendar pressures. It’s better to give up a release date and keep working to make a better movie, and we’ve always tried to put quality before everything else, even if it means taking a short-term hit to our bottom line. In this case, the last thing we wanted to do was put out a movie that didn’t live up to the expectations of Star Wars fans. The Star Wars fan base is so passionate, and it was vital that we give them something they loved and felt worthy of their devotion. If we didn’t get that right on our first Star Wars film, we’d suffer a breach of trust with our audience that would be very hard to recover from.
Just prior to the global release, Kathy screened The Force Awakens for George. He didn’t hide his disappointment. “There’s nothing new,” he said. In each of the films in the original trilogy, it was important to him to present new worlds, new stories, new characters, and new technologies. In this one, he said, “There weren’t enough visual or technical leaps forward.” He wasn’t wrong, but he also wasn’t appreciating the pressure we were under to give ardent fans a film that felt quintessentially Star Wars. We’d intentionally created a world that was visually and tonally connected to the earlier films, to not stray too far from what people loved and expected, and George was criticizing us for the very thing we were trying to do. Looking back with the perspective of several years and a few more Star Wars films, I believe J.J. achieved the near-impossible, creating a perfect bridge between what had been and what was to come.
On top of George’s reaction, there was a lot of speculation in the press and from die-hard fans about how we were going to “Disney-fy” Star Wars. As with Marvel, I made the decision not to put “Disney” anywhere in the film credits or the marketing campaigns, and to not in any way change the Star Wars logo. “Disney-Pixar” made sense from an animation-branding perspective, but Lucas fans needed to be reassured that we, too, were fans first, respectful of the creator and looking to expand on his legacy, not usurp it.
Even though he had issues with the film, I thought it was important for George to be at the Force Awakens premiere. He didn’t want to come at first, but Kathy, with the help of George’s now-wife, Mellody Hobson, convinced him it was the right thing to do. Among the last things we negotiated before the deal closed was a non-disparagement clause. I asked George to agree that he wouldn’t publicly criticize any of the Star Wars films we made. When I brought it up with him, he said, “I’m going to be a big shareholder of the Walt Disney Company. Why would I disparage you or anything you do? You have to trust me.” I took him at his word.
The question now was how to handle the premiere. I wanted the world to know that this was J.J.’s movie, and Kathy’s movie, and it was our first Star Wars movie. It certainly was by far the biggest film we’d released since I became CEO. We held a gigantic premiere in the Dolby Theatre, where the Academy Awards take place. I went onstage first, and before I brought J.J. and Kathy out with me, I said, “We’re all here because of one person, who created the greatest mythology of our time and then entrusted it to the Walt Disney Company.” George was in his seat. He got a long, rapturous standing ovation. Willow was sitting in the row behind him and took a wonderful picture of him, surrounded by a few thousand people, all on their feet. I was happy to look at it later and see how pleased and grateful George was at the outpouring of admiration for him.
The movie opened and set a slew of box-office records, and we all breathed a sigh of relief. Our first Star Wars film was behind us and the Star Wars faithful appeared to have loved it. Shortly after the release, though, an interview George had done a few weeks earlier with Charlie Rose aired. George talked about his frustration that we hadn’t followed his outlines and said that selling to Disney was like selling his children to “white slavers.” It was an unfortunate and awkward way for him to describe the feeling of having sold something that he considered his children. I decided to stay quiet and let it pass. There was nothing to be gained from engaging in any public discourse or waging a defense. Mellody sent me an apologetic email, explaining how difficult this had all been for him. Then George called me. “I was out of line,” he said. “I shouldn’t have said it like that. I was trying to explain how hard it is to let this thing go.”
I told him I understood. Four and a half years earlier, I’d sat with George at breakfast and tried to convey that I knew how difficult this would be for him, but that when he was ready, he could trust me. All of the negotiations—over the money, and then over the question of his ongoing involvement with Star Wars—were exercises in balancing my respect for wh
at George had done, and how deeply personal I knew this was for him, with my responsibility to the company. I could empathize with George, but I couldn’t give him what he wanted. At every step of the way it was necessary to be clear about where I stood, while being sensitive toward how emotional the entire process was for him.
Looking back on the acquisitions of Pixar, Marvel, and Lucasfilm, the thread that runs through all of them (other than that, taken together, they transformed Disney) is that each deal depended on building trust with a single controlling entity. There were complicated issues to negotiate in all of the deals, and our respective teams spent long days and weeks reaching agreement on them. But the personal component of each of these deals was going to make or break them, and authenticity was crucial. Steve had to believe my promise that we would respect the essence of Pixar. Ike needed to know that the Marvel team would be valued and given the chance to thrive in their new company. And George had to trust that his legacy, his “baby,” would be in good hands at Disney.
CHAPTER 12
IF YOU DON’T INNOVATE, YOU DIE
AFTER THE DUST settled on the last of our “big three” acquisitions, we began to focus even more on the dramatic changes we were experiencing in our media businesses and the profound disruption we were feeling. The future of those businesses had begun to seriously worry us, and we concluded it was time for us to start delivering our content in new and modern ways, and to do so without intermediaries, on our own technology platform.
The questions for us were: Could we find the technology we needed to accomplish that and be at the forefront of change rather than simply being undone by it? Did we have the stomach to start cannibalizing our own still-profitable businesses in order to begin building a new model? Could we disrupt ourselves, and would Wall Street tolerate the losses that we would inevitably incur as we tried to truly modernize and transform the company?
We had to do it, I was sure of that. It was the old lesson all over again about the need to constantly innovate. So the next question was: Do we build a tech platform or do we buy one? Kevin Mayer warned me that building one would take five years and would be a massive investment. Buying one would give us the ability to pivot immediately, and the speed at which everything was changing made clear that patience was not an option. When we looked at acquisitions, Google, Apple, Amazon, and Facebook were obviously off the table, given their size, and as far as we knew, none of them was looking to buy us. (Although I did believe that if Steve were still alive, we would have combined our companies, or at least discussed the possibility very seriously.)
What was left was Snapchat, Spotify, and Twitter. They were all digestible in terms of size, but who was potentially for sale, and who delivered the qualities we needed to reach our consumers most effectively and rapidly? We landed on Twitter. We were less interested in them as a social media company than as a new distribution platform with global reach, which we could use to deliver movies, television, sports, and news.
In the summer of 2016, we expressed interest to Twitter. They were intrigued, but felt they had an obligation to test the market, and so we reluctantly entered into an auction to buy them. By early fall, we’d virtually closed a deal. Twitter’s board supported the sale, and on a Friday afternoon in October, our board gave their approval to finalize a deal. Then, that weekend, I decided not to go through with it. If earlier acquisitions, especially Pixar, were about trusting my instinct that it was the right thing for the company, the acquisition of Twitter was the opposite of that. Something inside me didn’t feel right. Echoing in my head was something Tom Murphy had said to me years earlier: “If something doesn’t feel right to you, then it’s probably not right for you.” I could see clearly how the platform could work to serve our new purposes, but there were brand-related issues that gnawed at me.
Twitter was a potentially powerful platform for us, but I couldn’t get past the challenges that would come with it. The challenges and controversies were almost too much to list, but they included how to manage hate speech, and making fraught decisions regarding freedom of speech, what to do about fake accounts algorithmically spewing out political “messaging” to influence elections, and the general rage and lack of civility that was sometimes evident on the platform. Those would become our problems. They were so unlike any we’d encountered, and I felt they would be corrosive to the Disney brand. On the Sunday after the board had just given me the go-ahead to pursue the acquisition of Twitter, I sent a note to all of the members telling them I had “cold feet,” and explaining my reasoning for withdrawing. Then I called Jack Dorsey, Twitter’s CEO, who was also a member of the Disney board. Jack was stunned, but very polite. I wished Jack luck, and I hung up feeling relieved.
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AROUND THE SAME TIME that we entered into the Twitter negotiations, we also invested in a company called BAMTech, which was primarily owned by Major League Baseball and had perfected a streaming technology that allowed fans to subscribe to an online service and watch all of their favorite teams’ games live. (They’d also been hired, after HBO failed to build its own streaming service, to come in and, under intense time pressure, build HBO Now in time for the release of season five of Game of Thrones.)
In August 2016, we agreed to pay about $1 billion for a 33 percent stake in the company, with an option to buy a controlling interest in 2020. The initial plan was to address the threats to ESPN’s business by creating a subscription service that would exist alongside the programming on ESPN’s networks, but as tech companies invested more deeply in their entertainment subscription services, the urgency for us to create direct-to-consumer bundles not just for sports but for television and movies intensified.
Ten months later, in June 2017, we held our annual board retreat at Walt Disney World in Orlando. The yearly retreat is an extended board meeting, in which we present our five-year plan, including financial projections, and discuss specific strategic issues and challenges. We decided to spend the entire 2017 session talking about disruption, and I instructed each of our business leaders to present to the board the level of disruption they were seeing and what impact they predicted it would have on the health of their business.
I knew the board would demand solutions, and, as a general rule, I don’t like to lay out problems without offering a plan for addressing them. (This is something I exhort my team to do, too—it’s okay to come to me with problems, but also offer possible solutions.) So after detailing the changes we were both experiencing and projecting, we then presented to the board a bold, aggressive, comprehensive solution: We would accelerate our option to buy a controlling stake in BAMTech, and then use that platform to launch Disney and an ESPN direct-to-consumer, “over the top” video streaming services.
The board not only supported the plan, but urged me to move as quickly as possible, saying “speed was of the essence.” (This is also an endorsement for populating boards with people who are not only wise and confident in their opinions, but also have direct and relevant experience of current market dynamics. In our case, Mark Parker from Nike and Mary Barra from General Motors are two perfect examples. Both have witnessed profound disruption to their businesses, and both are keenly aware of the perils of not adapting quickly to change.) I met with my team immediately after the board retreat and gave them the feedback I received, instructing Kevin to move quickly to purchase control of BAMTech and telling everyone else to prepare for a significant strategic shift into the streaming business.
On our August 2017 earnings call—exactly two years after a fateful call in which we’d watched our stock get clobbered as I spoke frankly about disruption—we announced that we were accelerating our agreement to buy full control of BAMTech, and we shared our plans to launch two streaming services: one for ESPN in 2018, and one for Disney in 2019. This time, our stock soared. Investors understood our strategy and recognized both the need for change and the opportunity that existed.
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THAT ANNOUNCEMENT MARKED the beginning of the reinvention of the Walt Disney Company. We would continue supporting our television channels in the traditional space, for as long as they continued to generate decent returns, and we would continue to present our films on big screens in movie theaters all over the world, but we were now fully committed to also becoming a distributor of our own content, straight to consumers, without intermediaries. In essence, we were now hastening the disruption of our own businesses, and the short-term losses were going to be significant. (As one example, pulling all of our TV shows and movies—including Pixar and Marvel and Star Wars—from Netflix’s platform and consolidating them all under our own subscription service would mean sacrificing hundreds of millions of dollars in licensing fees.)
At some point over the years, I referred to a concept I called “management by press release”—meaning that if I say something with great conviction to the outside world, it tends to resonate powerfully inside our company. The investment community’s reaction in 2015 was overwhelmingly negative, but speaking candidly about the reality punctured our denial and motivated people within Disney to conclude, He’s serious about this, so we better be, too. The 2017 call had a similarly bracing effect. The team knew how serious I was about doing this, but hearing it communicated broadly, particularly to investors, and witnessing the reaction to it, fueled everyone with the energy and the commitment to move forward.