4.4% at 4.432% oil prices, which had come down a little bit, but you're still talking about $77.78 we will all be back here tomorrow with you. but right now, we're going to hand things over to "squawk on the street." we'll see you later. bye-bye. ♪ good thursday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer at the new york stock exchange david faber is at disney studios in burbank his exclusive with bob iger is coming up in a couple minutes. meantime, futures pretty resilient here as yields back off a little bit, and some decent corporate results, especially in consumer, pepsi, hilton, sonos tapestry, all higher, premarket. let's begin with disney. up sharply in the premarket after announcing this

restructuring, including plans to cut about 7,000 employees and $5.5 billion in costs. company also posting a quarterly beat, although disney+, jim, did move to some sub losses, a lot par for david to cover >> a lot of things that say that nelson peltz is wanting, we got. we got accountability of divisions, cost structure coming down, which is good because the revenues were up but not making enough money we got very, very good clarity, by the way, on what it would take to have even -- get back a modest dividend, which was terrific this was a tour de force conference call and a series of amazing moves. management really, really matters. i thought it was terrific, and my hat is off to bob iger. >> a lot of price target increases on the street today. >> deserving >> somewhere in the $145 range >> this is an iconic company i think they're going to make a lot -- they got off the treadmill, carl. they don't have to do the darn,

hey, how many subs, how many subs that may be incredible when it comes to trying to figure out what the company's worth great quarter. >> obviously, we'll talk about ramifications for media at large, jim, on a day where yesterday, i'm the com group, all-time high. i mean, calls for an ad recession seem a little exaggerated at the moment. >> i agree with that i think if you have whoo wha pe people want, you're going to get them some places don't have a lot of good ads >> david, big day. big day for the stock, the company, and obviously, you with him in burbank >> yeah. certainly so much to get to, of course, and we're very thankful for the opportunity to do that with mr. iger, who will be sitting down very shortly with us you know, it's not just, obviously, direct to consumer. you can talk about "avatar" if you want too, right? we can talk about the film business we can talk about the linear cable business, something we have so many times, parks, and on and on from there

we're going to try to hit all of it, guys, but obviously, the stock price is certainly a positive it has been since the beginning of the year, as you see, a very strong move higher as so many others in the sector, to be fair, as well, certainly the likes of warner bros. discovery and paramount have both moved up sharply, but this move has been a significant one and certainly a very positive response, jim. i haven't heard you be this positive on disney in quite some time >> what i have been looking for is better gross margin we're going to get that. i've wanted, over and over again, david, to get off the treadmill. i'm so tired that it's being valued by this many subs versus that many subs it was too much like espn. we got rid of that i have to tell you, though, there's just something, for lack of a better term, magical about bob and on the conference call, you heard the analyst say, wow, he's really giving us what we want, which is that each division is going to be accountable. the theme park business was always great but they're going to monetize fox much better. david, it's hard to believe, but

if you look at the checklist, for instance, of what activist nelson peltz wanted, it exceeds what he wanted if i were nelson, i would declare victory, say, thank you, bob, and move on or at least just enjoy the ride, because it's terrific. >> no, listen, you're right. peltz has already enjoyed the ride to the extent that he bought stock some time ago lower. he's a winner right now in terms of how it matters, generating for his fund holders and they are sort of checking -- they are checking the list, so to speak, so it is interesting >> exactly >> we haven't really heard from him in particular other than that one statement that said he's glad they're listening. >> well, david, i think you have so much to talk about, and there are things that, frankly, no one really understood, like that one kind of major omo guy between chapek, that seemed to make it so that you never knew who was doing well the lack of accountability, i

think, was part leave responsible for the $1.5 billion miss $1.5 billion miss. i don't know that's a miss. it defines miss. >> yeah. it does. listen, direct-to-consumer is still losing money, but obviously, going to be a key question i feel like i don't want to talk anymore, guys, because i want to get started here i'm going to send it back to you for now, let you wrap this up, and we'll get started with bob momentarily. >> fantastic >> very good meantime, the backdrop for futures looks pretty good here as we said on a series of pretty decent results and guides higher from the likes of atapestry, sonos. >> ralph lauren was incredible it shows you how happy everybody is salesforce, there's now five activists. how many sactivists -- it's like a riddle how many activists does it take

to have a stock go up? five wynn was amazing it was just an incredible, incredible coincidence love it. >> iger on the other side of the break. don't go away.

welcome back to "squawk on the street," i'm david faber here at the disney lot and joined by the aforementioned bob iger, the ceo of disney. it is nice to see you. >> nice to see you too

welcome to disney. >> thank you i think it's fair to say that neither one of us could have imagined being here even a couple of months ago it's only, what, 14 months since we did your exit interview, bob. so, you know, i'd love to just start off, when you got a call, maybe it was from susan arnold or from the board, and they said, we'd like you to come back, why did you say, yes >> it was from susan arnold. she called me on the friday before the sunday that it was announced. much to my surprise, i was not looking for a job, and i was not anticipating that i would be asked back, but this is a company that i worked for for almost 50 years. i have a huge passion for the company, tremendous respect for the people, and she made it very, very clear that it was a time of need they had decided to make a change at the ceo level, and i felt that -- i guess i had a sense of obligation, and i also wanted to help them not only transform the company during, i think, a pretty critical time, but i wanted to help them

succeed at succession, which was quite important to me too. >> you mentioned both of those things, transforming and obviously we're going to get to a lot of the news that came out yesterday after the close. but i've talked to any number of executives in the business i think two years isn't enough time for you to do that. you know what, you're back, you're going to be here for five you're going to be here for more than two years the things you began just yesterday with the announcements that we're obviously going to get to, can't see fruition in two years. how do you respond to that >> my plan is to stay here for two years. that's what my contract says that was the agreement with the board. that would be my preference as well >> why your preference >> well, look, i'm going to be 72 years old tomorrow. i've put in almost 50 years. there are other things in liefe that i would like to do. i'm also confident the board will be able to identify an able successor, and i would love to

have an opportunity to help that person be successful right now, it would be premature to even speculate. there are no plans right now for me to stay any longer. as it relates to two years and the sense that maybe that's too short a period of time, you can get things done very quickly obviously, you have to know what you want to do, and show incredible resolve in terms of accomplishing those things, and, you know, get buy-in from key keep, and i think we've already demonstrated in what has just been over two months since i came back that you can make a lot of changes very quickly. >> so, your belief is two years is enough time for you to see through some of the things you announced yesterday, the cost cuts, obviously, the reorganization that has taken place, and any number of other efforts that are under way >> well, i don't think you should look at it in terms of accomplishing everything this a period of time it's setting the company up for

long-term success and what happens thereafter, so my goal is, in talking about a transformation, is to set it on the right course for what could be many years, years beyond my tenure that's the goal. >> i'm curious, when you got that call, and then you went to work not long after -- >> i got the call on friday. i was working on monday. >> on monday yeah and not that you had -- obviously, that was a change for you, a significant one you were kind of retired you were busy, i know. you seemed to be enjoying your life, by the way >> i had a great life. i figured out a way to have plenty of stimulation and zero stress >> so then you decided to take this job >> again, it was a sense of obligation it was a -- you know, the love that i have of this company, and the appreciation that it was a time that, you know, the board really needed me to come back and help them deal with certain issues that were very important, not just to them but to shareholders >> the company that you found when you did return, was it as

expected was it worse than you expected >> look, i was aware of some of the issues that the company was dealing with it's a challenging time for many companies, particularly given the global pandemic and macroeconomic issues and, of course, as it relates to these businesses, all the disruption i would say it was as expected >> it was? >> yeah. there were, you know, i watched -- i was close enough in terms of my observer status being out to have a sense of what was going on. i knew there were no surprises. >> there were no surprises >> no. >> well, you've moved pretty quickly to change things fairly significantly, haven't you >> yes, because i felt it was essential to do that >> why >> well, the structure of the company that had been changed, and by my , i guess, my successor, my predecessor, bob, and he had a reason why he did

that and he articulated that, but it created a huge divide between the creative side of the company, the content engines, and the monetization, distribution side of the company. and while, i think, again, he had certain, maybe, valid reasons why he wanted to do that at that time, it was very, very apparent to me, both while i was out and when i came back that that was a mistake that there had to be a direct linkage, that the people making the content had to be fully accountable for how it performed in the marketplace and have some say in how it was brought to market timing to market, pricing, marketing, very, very important. how much to make, how much to spend, and that distance that was created by that structure, i don't think, was healthy for this company at this time. and so, my first step was to say that i was going to change that, and it took me a couple of months to actually design with

the senior team, you know, what we would change it to, and that's what we announced yesterday. >> right that announcement, that reorganization and the, what is it, four people, right >> yes, who are -- four people, three key divisions. >> three key divisions is any one a priority for you over the other >> i said yesterday on our call, streaming is a priority. as you look at the businesses that we have been in, both movies and television, put parks aside for a minute, it's very clear that the disruptive forces created by technology have had a real impact on those businesses, particularly the legacy part of those businesses, and streaming is the future. it's not the only future, but it looms large in terms of the future eventually, it will grow to the point where it is not only profitable but turns into a growth business for the company. so, we must make that transition

look, we've already transitioned to it. now we have to transition it into a growth business >> yeah. you know, you and i, obviously, sat down together in april of 2019 when you announced the streaming business, disney+, and i wonder -- we had this conversation then, bob, which is, can you ever fully replace the profitability of the linear cable business with direct-to-consumer three years in, almost four, it would seem perhaps the answer is no >> well, i don't agree with that obviously, that has not happened to date, but if you think about it, in the last -- since we sat down, 2019, we have seen consumption of television and movies actually increase globally, so if consumption is increasing, we're in the business, basically, of serving those consumers that want to obviously watch what we make, and streaming is, for them, i think, a very pro-consumer

method or means of doing that. so, you've got a consumer base that's growing and avid in terms of its interest in what we make. you have a technology that is serving them well, and actually serving us well too. it's a great technology to distribute content on as we proved going back for a minute, it's just interesting, when we sat down in april of 2019, to talk about the launch of disney+, our goal was not publicized, but our goal at the time was to sign up four million subs in a year. we signed up ten million subs in 24 hours, in one day >> i remember. >> that's an incredibly successful launch, but it speaks volumes about what we're just talking about. people, one, they want our content. two, they want it that way so, if you have that much demand, and we have the ability to essentially serve the consumer well, using that technology, then profitability, in my opinion, is inevitable you have to manage it well

you have to spend appropriately. you have to price appropriately. you have to time it to market appropriately. but it will work it is working. look, there's tremendous consumption. >> you have 104 million subscribers. there's no doubt about that. i wonder, though, going back to that time, you know, $6.99, i remember the gasp in the room at the time because the price was so ow. some would say streaming's not a business that's structured to make money with that low a price. given churn, do you think that you priced it too low to begin with and that has been part of the problem, even though you grew subscribers so substantially, that ultimately you didn't really give it a chance to become profitable in my near-term time horizon? >> i was very focused at the time on achieving three things, basically, by pricing it that low. one was, i was convinced that the investment community, the street, would measure us first on how many subs we achieved i was right about that, by the way. i also felt, because disney is

what it is, that accessibility was, i think, an important brand attribute. i wanted -- the first time we're putting almost everything that disney's ever made in one place, let's make it as accessible as possible to as many people as possible and then i thought about the competitive landscape. i knew that paramount was cooking something up we knew that your company, nbc universal, was -- and comcast was cooking something up netflix has been in the marketplace. mindful of what they were doing, i thought if we priced low, it would actually, one, make it a little more difficult for them, pricing-wise, and second, give us a bit of a competitive advantage in terms of signing subs i also was well aware that we were launching with very little original content the "mandalorian" and high school musical were two of them. i think we had five pieces of original content it took more time because of the pandemic to fill that pipeline with enough original content to justify more pricing

as i said yesterday on the earnings call, the price was taken up by $3 from $7.99 to $10.99 just recently, and we had a de minimus churn in subs, which says that now that we've fueled that pipeline with more original content, and the consumer is also, i believe, getting more used to using streaming as a primary source of material, that there is pricing leverage, that we have pricing leverage, particularly as we continue to invest >> but you have moved away -- i mean, when it started, as you said, you were very focused on obtaining subs as quickly as possible you did that you seem to be moving away from that now not seem to. you are. i mean, you're not talking about sub growth in the same way that you were, certainly, two years ago or three years ago you're talking about profitability and about cutting costs to get to that profitability. >> well, i think one of the things that happened was we got a little bit, maybe, intoxicated by our own sub growth.

we said, 60 to 90 million subs in five years. >> so did investors, bob that took the stock up enormously when you kept exceeding those until suddenly, everybody starts saying, is this business ever going to generate cash >> we blew through that in a year, and suddenly, everybody was on board with this meteoric sub rise, and that it would continue >> this followed you into the market as well, too. >> and we leaned into that because it seemed like that was the primary metric that we would be measured by now, we also said at the time we'd be profitable in five years, which, coincidentally, is the end of 2024. we reiterated that yesterday on the call so, now, as we've looked to basically becoming profitable and figured out, how do we do that, it's clear to us that we do have to continue to grow subs, but it's not just about that we have to have the right pricing. i talked yesterday about promotion. we have to have the right marketing. we have to have the right conten content. if you go back to the structure that we put in place, which is a direct linkage between the

creative side and the distribution side, there is more -- a greater likelihood that we will have the right content. they'll make choices because they're accountable for delivering that profitability. >> right all understood i want to actually ask a couple of questions specific to that that you discussed yesterday you said on the call you're going to lean into franchises, you had been too aggressive in promotion. what does that mean? >> well, sitting in front of this, you know, lovely poster, this company possesses and has made some of the all-time great franchises the five highest-grossing movies of all time came from this company. two of them, by the way, from jim cameron, "avatar," and obviously, marvel has contributed to that as well. these are stories, i guess you'd call them, that are very valuable globally, that are leverageable across multiple businesses of ours, that have a

long life. you know, "avatar" was just on disney+, did extremely well. you look at the movies we made years ago that are still performing well on new platforms because they're evergreen in some form, but because the audiences that we make them for, and that audience is constantly being regenerated, literally, new generations. >> totally but do you pull away from new entertainment, then, under this new guise? >> i like general entertainment in the sense that there's a lot of quality there we make a lot. "the bear" is a great example of that, what fx makes for us, search light just look at the academy awards. we want to curate that more aggressively when i say that, that's primarily because in order for us to be more profitable as a company in this business, we have to reduce our expenses. we talked about that yesterday in order to do that, you have to make some choices. i happen to believe, because general entertainment is not as differentiated, and look, there are seven or eight platforms in the streaming business alone

that are in general entertainment. that's a tough business to be in, competitively. and it's not our strongest suit. >> but do you worry about churn going up as a result of not providing, perhaps, as broad an array of programming >> well, i think there's a way to balance that. we're going to lean even more into disney and marvel and pixar and "star wars" and "avatar," of course, and we have had higher returns on those businesses over the years anyway, so that makes a lot of sense adding to that, augmenting that with some form of a more curated general entertainment is what we would likely do. >> yesterday, you talked about -- sorry for all my different notes here -- $3 billion in nonsports content. >> you get to take notes >> you just have to give me the answers. that's all you have to do. $3 billion in nonsports content cuts that's a lot what is that where do those cuts come from, and how do you maintain quality when you're cutting $3 billion in nonsports content >> we can achieve that

i'm confident of that. first of all, we talked about volume some in general entertainment. we have to look really hard at how much we've made and what's really worked, and now that we are even more focused on delivering profitability, we have to be, i think, more discerning in terms of basically what we say yes to in addition, technology is interesting as a tool in, i'll call it, the creator's hands, or the artists' hands extremely powerful look at what jim cameron's been able to do with technology in "avatar," what pixar has been able to do, special effects by marvel, when you see "ant-man," you'll be blown away, for instance that's great because we're adding more quality to the screen it's also added a lot of expense, and i think we have an opportunity to really look at what it costs us to produce everything and reduce, particularly in not only a more challenging time, but in a time where we owe our shareholders better returns on that business. >> when you said, for example,

that linear channels and movie theaters can provide monetization capability, coto ti point, are you going back to the older model where you're going to produce things for other distribution molds, other distribution schemes is that something that perhaps should never have not -- should not have been pushed aside >> i think we've all, including me, spent a lot of time the last four years essentially writing the obituary of linear television i plead guilty to that and movies now, movies had significant displacement because of the pandemic but, you know, recent data will show you or recent experience will show you that it's not -- those platforms are not gone they actually still are somewhat relevant "avatar," over $2.1 billion in global sales that's from a legacy platform. so, it says to us that, you know, maybe we were leaning a little bit away from that too much now, again, a lot of it was done

because of the pandemic. now that people are going back to movie theaters, we have to look carefully at how we're bringing movies to market with an eye toward still using what is a valuable platform for this company. same thing in linear tv. we can put programming on abc and fx and on the disney channel and on our streaming service and have a completely different -- attract a completely unduplicated audience. so, we're going to use those platforms. i'm not suggesting that linear television is not imperilled i think it is. the numbers speak -- >> the numbers speak for themselves, down 5% in revenues in the linear cable business i assume there's fewer espn subs this quarter than there were last year. >> i don't know about this quarter. >> year over year, though, we know where it's going. >> the recent sub experience at espn has been fairly decent, but it's gone down since you started interviewing me.

>> we have had this conversation for a very long time >> it's still profitable, still important. >> and you're not going to get -- espn, you're not going to spin it off. you made that very clear yesterday. >> i did >> you see it as a part of this company. >> i do. as long as it continues to be profitable, and it, too, needs to find a path that basically enables it to continue to deliver the kind of results that we would like it to. >> you said you're going to be more selective in terms of sports rights. what does that mean? >> well, again, it means saying no to things that don't deliver the value and saying yes to things that do we're very grateful and pleased that we have a new long-term nfl deal, extremely important, with more -- basically more product than we had before more games, postseason, the super bowl, for instance we've got great, great rights, license agreements in college sports we have an nba negotiation coming up. >> how's that going to go? you're at $1.4 billion, i think, a year people say that could double >> it's a very, very valuable property for this company. it's a great sport

not only is there a lot of volume, there's a lot of quality, and it would be a priority of ours to extend our deal with them >> but with sports rights going up, bob, as they seem to and with the number of people paying you each month for the linear product, i mean, at what point does it get out of balance, and you say, you know what, we've got to take this over the top. >> the model will ultimately change it will become an over the top model. i don't know when that will be i think as a so-called over-the-top model, a streaming model, it would be a phenomenal product for the sports fan because it will give them more flexibility. >> pay a lot for it. >> i think pricing is obviously something we have to look at very carefully you know, a combination of or a balance or pricing and how many cubs do you need to have it make sense in terms of the bottom line >> so, one day, espn will be sort of largely a streaming service? >> one day >> but that day is not here. do you know when that day comes?

does whoever succeeds you going to know? do you just see it coming? that's it, we can't afford this anymore? >> i think if you do the math, you've obviously done the math >> yes >> i should turn the question back you if you do the math, you have to -- there's an inevitability to it, i believe, but i can't say when it will bsh an-- and we're not g to do something that's precipitous or reckless in any way. >> i want to get to some numbers. the company has not been generating a lot of free cash flow you're negative free cash flow a significant amount recently. that a concern at all? >> most of it has to do with covid. look at what happened in march of 2020. other than streaming, every one of our businesses basically shut down no live sports, no movie going, our parks shut down, our cash flow basically stopped >> this year, you're not going to generate a lot of free cash flow either. >> we're still recovering from that and still obviously losing money on streaming and obviously that's one of the reasons why we

have to turn that around, but as we said on the call yesterday, we're going to get to a point where we're going to recommend to the board a dividend at the end of the year. that suggests some confidence in our cash flow directory and not only how we generate capital but how we allocate capital. >> how do you have confidence? when you put out a number of $5.5 billion in cost cutting, a billion of which is already under way, what gives you the confidence you'll get there to the extent you can say, hey, we are going to reinstate a div dividend >> not all the cost cutting will hit us right away, but we're starting today to achieve that number and to achieve the number that we set on what we call sg&a, general expenses a combination of continued recovery from the pandemic we talked about our parks results as a for instance. potential business for us, higher margins, i think real growth potential in the future including our cruise ship

business, where we launched a new ship, and that business has been fantastic when you look at recovery, by the way, it's an amazing story >> i know. we have so many things we haven't yet gotten to, including the parks, but on the -- >> look, we obviously have confidence in our ability to grow free cash flow over the, we'll call it, next five years or so. some of that will come with obviously turning a business that has not been profitable into a business that is profitable, streaming. >> which, again, by the end of 2024, it will be >> that's what we said yesterday. i haven't changed my opinion on this today >> i'm glad, less than 24 hours, hasn't changed in 2024, something else is coming up. that's hulu. you didn't get any questions on the call yesterday, but that could be a $9 billion bill to you if my parent company puts their interest to you as they are able to. if you were to buy that, that would take your leverage up significantly. some question whether that would be a good strategy how do you view it >> well, first of all, our leverage is not a huge concern

to us right now. not the concern that others would suggest that it is that said, we are intent on, over time, reducing our debt >> well, you have a lot of fixed costs. you get up to leverage of four times, let's say, people do get concerned. you have a high fixed cost business >> i would imagine that would be at a time when our other business is starting to generate more free cash flow, and i would rather not get more specific about that because we're not really, you know -- we're not prepared to give any forward statements in that regard, for instance but look, i've talked about general entertainment being und undifferentiated hulu, by the way, is a very successful platform and i think a good consumer proposition but everyone's on the table right now, so i'm not going to speculate about whether we're a buy or a sell of it, but obviously, i have suggested that i'm concerned about undifferentiated general entertainment and in the --

particularly in the competitive landscape that we're operating in, and we're going to look at it very objectively and expansively. >> if there is a opportunity, for example, then, to potentially sell your interest to comcast, if brian roberts were interested, that's a conversation you would have? >> i said, we're open -- we will be open-minded >> i just want to make sure because i think the assumption has been that you guys will buy what you don't already own of hulu >> and i think i'm suggesting that isn't necessarily the case. >> okay. it's not that far away from kind of starting to make a decision, right? >> why it's on my mind >> understood. something else that i don't know if it's on your mind or not is nelson peltz we obviously had him on some time ago, taking a lot of shots at the company, although you seem to have met some of his objectives even very recently with your announcements. but i wonder, bob, why engage at all? you've got so much on your plate. a proxy fight is distracting by its very nature. why not just say, he's one guy, put him on the board, and over

with >> well, i have to ask the question is really, why, not why not? a number of people suggested, why not? why not just let him on the board? i think you have to start with our board, which he's been quite critical of. in fact, he's been critical of one member of our board. we have a very diverse board, diverse in gender, ethnicity, and business background, and each one of those board members comes to the boardroom with very relevant background. you look at mary barra, running global brands, complex companies in a complex world you look at calvin mcdonald from lululemon, an upstart of sorts retail brand, amy, frances come out of the tech world. mel is a private wealth management, probably manages more money than nelson peltz, wakes upeveryone morning thinking about her investors and she brings that into the boardroom. and then there's michael

fromman, who nelson has come after. >> he's come after him specifically because that's a easiest way to do it give me more votes than him. >> let's look at michael as a disney board member. he has experience at citi bank, vice chairman of mastercard, u.s. trade representative in the obama administration, someone that i spoke with during that period of time about global trade initiatives, global regulation, a number of other issues that were extremely relevant to us and at disney and continues to be. so, we have a good board we have a board, by the way, that holds us accountable, that represents shareholder interests well, that challenges us all the time, that actually served me very well when i was ceo in my prior tenure with good ideas, with, you know, with input that had real value to the shareholders >> so, you just think -- >> you start with, there is not a need plus, he has not articulated either a vision or even ideas

that are of particular value to us now, some, he has, but we were already working on those and when i came in, we talked about cost-cutting right away. we reorganized the company we've recommitted to profitability and streaming. so, where -- where's the need, and by the way, just from a shareholder perspective, where's the need in addition, obviously, i have a big job right now to contend with, and focusing my time, my energy, and the time and energy of the entire team is extremely important. disruption from a force like that is not something that would be healthy to the shareholders of this company. >> you surprised that ike perlmutter has been so involved with trying to get peltz on the board? is there a feud between the two of you, perhaps, that's fueling this >> i think that's a curious dynamic. i think our filings indicate that both ike and nelson were working together to try to

encourage the pasboard or convi the board to put nelson on the board. they have a relationship that dates back quite some time we bought marvel in 2009 i promised ike a job that he would continue to run marvel after that, not forever, necessarily, but after that. and in 2015, he was intent on firing kevin feige, who was running marvel's studio or the movie making at the time, and i thought that was a mistake and stepped in to prevent that from happening. i think kevin is an incredibly, incredibly talented executive. the marvel track record speaks for itself, and so i moved the movie-making operation of marvel out from under ike into the movie studio >> so, that created some ill will, you think? i >> well, you'd have to ask ike about that, but let's put the this way he was not happy about that, and i think that unhappiness exists today.

>> yeah. >> and i, you know, what the link is between that and nelson and his relationship, i think that's something that you can speculate about. i won't. >> i want to end on a couple of quick questions, bob, because there's things we haven't gotten to the animation business, which has been so key to the success of this company for so long, the creative engine. i mean, the pixar deal, which sort of reignited that do you feel like that has fallen off? i can't remember the last pixar movie that really generated a lot of conversation. perhaps because some have gone district-to-consumer >> "turning red" would be the last one that did well, but it was a direct-to-streaming, direct-to-consumer film, nominated for an academy award, by the way it's interesting, one of the most streamed movies of the last year so, i think there has been success. it's just not the kind of success generated when a movie is taking out the box office by the way, "encanto," also very

successful film. actually won an academy award. >> so, you don't feel like the animation business is not up to par? >> no. i think we had a couple of -- we had a couple of creative misses, i'll say that's the nature of the business one at pixar, one at disney animation. we've all learned, for those of us who have been in the creative side of the business a long time, you have to move past that you got to process failure successfully i love the slate that we have coming up. i spent a day at pixar a week and a half ago, and reviewed a number of projects talked yesterday on the call about a "toy story 5," a "toy story" sequel. they have great original movies in development, including one called "elemental," which is coming out, which is brilliant same thing at disney animation, but they're also going to make a "frozen" sequel and a "zootopia" sequel, working on a "moana" tv

series for disney+ we have a pipeline that is really creative, and i'm confident that animation will continue to be an important business for this company for a long time. >> i have to wrap up, but i do want to come back to succession. you've obviously indicated it is your intent to stay the two years that was outlined when you joined how involved are you going to be in this succession process are the four people who are now running the key businesses here the logical potential successors >> well, first of all, it's a board-led process. mark barker, who's the incoming chairman of the board, is chairing a succession committee. we have a meeting tomorrow on that their work is already under way. i will be involved with them, but again, it's a board-led process. >> right what is your role going to be? >> well, i think obviously, having had the job for quite a long time, i think my input is valuable to them about, one, what are the qualities that are necessary and that the ceo of the walt disney company should have, for instance

we've already talked that. i'll help them assess candidates, but it will be their decision i have one vote as a board member >> right are you going to look outside you guys don't typically go outside. >> well, look, when i was in the process in 2004-2005, the board looked inside at me and outside, and we considered outside candidates when we made the decision about bob, and i'm certain they will do that again. >> back to that decision about bob, do you regret it? are there things that have informed that decision that will help you in terms of making the next decision on your successor? >> this is a big, complex company and a hard company to run, even in good times. we thought we made the right decision when we chose bob back in 2020. the board obviously decided recently in november that he was not the right person for the job, and they made a change.

i think there are some -- with anything that any big decision that you make, particularly if it doesn't work out right, you should learn from what went wrong, and that's something the board has discussed, but i'm not going to get into that >> you're not going to get into what went wrong or what you may not have seen properly the guy was working at the company for a long time. he shadowed you. you took endless trips to china, for example. >> i'm not going to get into that >> doesn't seem like a great place to end >> you can change the subject. you have the right >> i do. well, all right, one final question, because it's come up >> that might have been a mistake. >> it was probably a mistake our exit interview, you were talking about the reasons why you were leaving, and one of them, you said to me, i wasn't listening as well as i used to i was coming to the conclusion before i listened. and i have thought of that a few times because people have mentioned it to me people say, is bob working on his listening? >> we should put that in

context. i said -- and i was serious about it -- that i felt, over time, because of all the experience i gained and over those years, and the fact that it was relatively successful run, that i got overconfident in my own instincts and my own decision making, and that it -- i thought it caused me to be a little bit more dismissive of other people's ideas, and i think that's -- it was a healthy, what do you call it, self-analysis of some sort >> it was. people enjoyed hearing that. >> i had the benefit of being gone for 11 months it was a refreshing, rejuvenating 11 months so, i sound like i long for those -- that time again in my life, which maybe there's some truth to that. i come back with a lot of energy, a lot of passion i think a lot of self-awareness right now. i have a great team of people in place. you know, extended some of their responsibilities yesterday i'm obviously confident in their ability to take on more. i'm an optimist at heart i feel great about being here,

and i feel great about where the company is today and where i believe we'll be able to take it >> perfect place to end. >> better. >> much better >> better place to end >> ending but not over i hope we'll do this again soon. bob, thank you for having us, thank you for being here bob iger back to you guys >> all right, david, thank you so much. thoughts, jim? >> well, look, i think that it's a very well thought out, as if he very much knew what had to be done, as david mentioned about, in the book, that basically bob was saying he didn't listen well, but he sure did listen here he listened to all the critics i think he listened to everything that needed to be done, and he upended everything that he felt was in the way of great profitability, and i think profitability had been lost here in the heyday of numbers, as he said, when all we cared about was how great the numbers are, they lost track of the numbers that people wanted, the bottom line, not the number of subscribers. i don't know i feel very good my travel trust owns it.

i liked everything he said and i think that the stock is going to continue on this path if he continues to execute as he clearly did even just in a few, you know, just a few weeks of numbers. >> right i've seen a couple desk notes, bank of america, for example, saying, actually increased conviction in a long netflix play because this area of subs at all cost is ending. >> that's a great call i mean, obviously, what i think is that bob felt that there was way too much money being spent and not getting any sort of pick-up from it, even if they just go, well, a little bit better than this current trend line, then they're going to make a lot of money but the takeaway is that netflix's business is terrific let's understand that without really point-blank saying that chapek didn't know what he was doing, i think that bob felt it was just completely wayward and very fast, very fast period. clearly, the wrong man, and this man's the right man. >> certainly talked about parks, up 21, punching above its weight

in the worlds of bianca yestbank of america yesterday. and we got hilton saying they're not seeing the slowdown. >> if anything, they're seeing, you can't get in, basically. the cruises too. the cruises are doing great. i liked everything and i would have to believe that nelson peltz, who was mentioned, and i think somewhat critically, fr frankly, given the fact that i thought these two men were friends, let me bring him in to find out and an instant reaction to what david just got with bob. nelson, is this one of those where you just declare victory how you doing? >> okay, jim how are you? >> well, my travel trust owns disney i like what i heard. i really like what i heard, nelson >> these are exciting times. you know, jim, my dad once told me that you can only win once. this was a great win for all the shareholders management at disney now plans to do everything we wanted them

to do. we wish the very best to bob, his management team, the board we will be watching. we will be rooting, and the proxy fight is over. >> yes thank you for declaring victory in a gracious way. this was a huge win for you. i know you don't typically talk about it, but i'm going to ask you. how much money did you make? >> well, who's counting? >> all right, well, i just -- the viewers. the viewers want to count. >> everybody makes money jimmy, everybody made money. >> that's the best way to put it and i know that you got previously, before this, you were friends i think there's no reason to think you can't be again that's just my view of things. >> i agree i'll pick up lunch or breakfast the next time, i promise >> well, good. carl, what do you think? it sounds like there's some graciousness here. >> is it the shortest fight

you've ever seen >> how about it's the "w" is a "w." nelson, great job. i wish you well, and bob iger, maybe you call him tomorrow and wish him happy birthday. >> i'm definitely going to do it i didn't realize it until i watched just now that it's his birthday i might even send him a gift >> well, there you go. thanks for calling in. the proxy fight is over. and bob iger delivered for everybody, including nelson peltz. thank you, nelson, for calling in >> okay. have a great day jim >> you too gracious in victory. >> that's a great element. because to the degree we see activism elsewhere, i wonder how much we'll see other companies who already had things in the pipeline, that the activists realize, and we can get some kinds of resolutions >> am i glad you brought that up marc benioff, you know, i texted him yesterday night. he got five. five people whom you could argue maybe love the product but are not happy with the way a man who built the company -- remember,

bob iger did not build the company. the man who built the company, fabulous success, i don't know i mean, is there -- it's very hard to have, i think -- to love all five, because in the end, don't you have to, like, go to work and do a job and instead of just spending all your time trying to appease people, people i don't know salesforce is up a lot since the story. >> yeah. >> those people. >> tweeting about a.i., along with everybody else. >> einstein. >> crazy week. >> i wish that some of these people, look, i always say it's not about press, it's about money, but there's some people who many, many years they have become friends and i think there should be lost in the shuffle here is marc benioff built a great company. you would think that he inherited a company, you would think from listening he's chapek great company, and he destroyed it within paeeriod of nine monts and my god, somebody else -- no. i'm going to make a serious

statement. marc benioff, not a clown. >> how did the call with peltz ring with burbank right now? >> bob left and i tried calling him. i didn't get him i would love to bring him back i'm sure he's smiling. it makes perfect sense it makes perfect sense in many ways jim has been saying this nelson peltz got a lot of what he was looking for he's an empty chair unfortunately. maybe get bob back and see i don't know that we'll be able to catch up with him you know, you've been saying this, jim. he got a lot of what he wanted including most importantly, i said this earlier, the stock price going up so much there you are. i think just you kind of something that you almost expect but rarely happens, you know jim, rarely happens. so i'm sure relief, frankly. as much as mr. iger may say this is the board we love, and i'm not distracted, it's a

distraction. there is no doubt about it as we, of course, saw, there's plenty on his plate. >> yes but it would have been -- nelson was gracious when i listened to bob, i think he must have felt that nelson is not going to stop no matter what, but i detected a bit of, let's say, bristling and nelson didn't do that maybe this is over in a positive way? >> meaning >> i think that -- >> the issue of a board seat is done >> it's done doesn't need a board seat. there's a win. i didn't know whether -- look, obviously, bob didn't know that nelson was going to drop it. he emphasized that nelson was not needed he, obviously, didn't know that nelson was calling in saying i won. i have to wonder, carl, whether bob iger couldn't walk it back a little these two men, gentlemen, know each other, quite well. >> right. >> i think he might want to walk him back a little given the fact

that nelson did not say, you know what, i mean, give me a break, it was the market nelson was -- embraced maybe there's a chance that bob's birthday will be wished. >> david, i'll tell you, it's not exactly the show we thought we were going to get. >> no. ralph lauren is up a lot, david. >> no. >> salesforce, david. >> what's up a lot salesforce i know yeah speaking of activists, i don't know how you keep track of them all, let alone settle with all of them. loeb and benioff i think are in contact. i've certainly got the feel that's the case for some time, perhaps, but elliott is still the key issue for mr. benioff. in this one, you know, interesting show, to have pena peltz call in like that and break that on our news. >> i love opening the story. when you first broke in, your editor said you have to own the story. dave you own 110% of the story.

>> you know, in cable tv, they say you got to create moments, today was a moment. >> oh, my. it's the most important company in the world in terms of what people think about them. >> why couldn't he have done it while bob was still in the chair? couldn't you have arranged that? we could have gotten the immediate reaction. >> as you were - >> i did my best >> we were working on this while you were talking we're putting it together in real time, david, as you know. >> i know. i know come on. it's two minutes he walked away two minutes ago i said - >> we didn't - >> i was like oh. >> well. what a shot. >> still the empty chair. >> i guess in real time we break stories you broke stories and we got -- remember he did not say, can i get that guy back? i want to say, we're going full speed ahead anyway, he didn't. there could be love, not love

loss. >> absolutely amazing, jim you want to do 60 seconds on the overall market there's a ton of earnings we never got to. >> can i say, this is a market that embraces the good, and i'm going to talk about a mass name, pepsico. they did a fabulous job. they are a blue chip they raised the dividend, beat the numbers, raise boom maybe this is why i say we're in a bull market. good news rewarded with good stock. >> the other interesting point on pepsi, done with price increases for the year the increases they had in mind are basically baked in. >> yeah. >> and maybe suggesting the back half of the year, talks about some worse elasticity in consumer. >> people love the stuff no matter what price. we should have asked nelson about unilever unilever saying we have to keep raising. i look at pepsico and say they're renegotiating some contracts, but it's really going their way. good quarter. >> so david, are we getting you

back tomorrow? little red eye action? what's going to happen >> no way, man only -- i don't know how. >> i just -- come on >> travel day. >> no. i'm going to be -- obviously, we're going to share a lot of the interview that took place on our air throughout the rest of our day. so many interesting things in there. you know, including i think new comments around hulu that's not unimportant. >> yes, that's us. >> we'll share a lot of that today. you'll be seeing me. and carl, i will be back here tomorrow morning from our l.a. bureau, on with you guys for our show, but not together until monday. >> david, i wanted to ask you, one of the things that bob iger dismissed entirely was the balance sheet being maybe not as perfect. is something happening, i don't know, maybe they get the costs out the balance sheet is dramatically improved? >> you know. that's a good point. obviously, you wish you had followed up. i wanted to and i didn't because i agree, it's, you know, maybe he sees things that perhaps

others aren't in terms of -- i did say four times leverage with a high fixed cost company is not easy that's a good question you're asking and i don't know the answer but he doesn't seem, as he said, not as concerned about it, he said, as others seem to be i'm not sure why maybe -- >> well, i think - >> he's going to be able to succeed in the cost cutting. >> yeah. >> david, i mean one of the things i was concerned about, is hulu you said, the money in, money out. that was fantastic to get clarity there. >> as david said, never came up on the call last night. >> not at all. spent more time on espn being broken out. >> david got it. >> yep. >> david, a lot more from you later on in the morning. >> fantastic. >> jim, we'll see you later on. >> what a day. dow up 255. >> awesome teamwork. amazing. >> amazing, jim. that was great. >> when we come back, a lot more on disney up 4%. don't go anywhere.

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good thursday morning. welcome to another hour of "squawk on the street. i'm carl quintanilla with morgan brennan at the new york stock exchange david faber is at disney studios in burbank, california, after a whirlwind hour talking not only to bob iger exclusively, but nelson peltz, we'll get to more on that. dow up 224 on day with corporate results which we'll get to, david, but disney, of course, is the lead >> yeah. you know, listen, the stock up not quite as much as it was in the early going or even yesterday the street embracing $ $5.5 billion in cost cutting at the company and what that will mean $3 billion in content that's nonsports. so many things to talk with bob iger amazingly enough as long as we went, it feels like there are still questions that remain unanswered, including in some ways, you know, all right, you're going to cut as much as $3 billion from what you're spending on direct to consumer,

can it be as robust a service? there has been an embrace of the cost cutting going on there, the focus on generating more cash, on getting direct to consumer, to profitability in 2024 as they have vowed to do, moving away from subprofits and then that unexpected news from nelson peltz, that we just broke on our air, he broke it on our air with you and jim moments ago, saying he's out no more proxy fight from him he no longer wants to try to get a seat on disney's board of course, as i brought up with mr. iger, those kinds of proxy fights can be a distraction and a distraction for a management team right now that has lots on its plate. >> david as you said with iger, maybe the penalties issue has been set aside but there's still so much to get to regarding content spend and the hulu decision and you did a job of

nailing him on how much can be done in 24 months when he appears to be resolute in leaving. >> yeah. you know, that continues to come up obviously, he said he's committed to the two years he pointed out he turns 72 tomorrow, obviously, and so, you know, time is going by, and he has other things that he wants to do. take a listen. >> still recovering from fro that and still obviously losing money on streaming and obviously that's one of the reasons why we have to turn that around, but as we said on the call yesterday, we're going to get to a point where we're going to recommend to the board a dividend at the end of the year. that suggests some confidence in our cash flow directory and not only how we generate capital but how we allocate capital. >> of course that dividend being reinstated as something mr. peltz had asked for and received it's not going to be a large dividend, but as iger indicated

during the call, they expect over time it will rise to becoming something that is significant in terms of generating a return for shareholders he's ultimately, carl, confident that the cost cuts can come through, that direct to consumer can get back to profitability, that espn can remain a profitable business, despite what is a 5% revenue decrease overall and 16% operating income decrease in the linear cable business thus far year over year still plenty of questions. you may see that sort of being played out a bit as the stock kind of retreats from what had been up 6, 7%, sort of hovering around 118, 119 mark when the call ended last night. >> david, it was such a great interview. i just couldn't take my eyes off of the screen last hour. i thought it was fascinating what he had to say about the initial pricing for disney plus and you going back and forth with him on whether it was originally initially priced too low and what that meant in terms

of the hurdles around future profitability and the way he laid it out about future competition coming from other media companies, including our parent comcast, and this idea about the time and the name of the game was subs and bringing subs on, and it really speaks to how much the industry overall has shifted and investor focus has shifted from the growth numbers to now how you make money off of those numbers if you could lay that out a little bit more based on that conversation and also, i think just as importantly, how valuable sports programming is and how he's thinking about that at espn. >> yeah. i mean, there's so many different levers here. we didn't really get to the parks. now i realize it, we didn't talk about florida, we didn't, you know, get to the idea of over earning in the parks starting to realize some of the things we never even got to, morgan but you're right two of the keys are direct to consumer number one and then the

future of spespn with i they ma clear on the call will remain an important part of this company as a linear cable network for now. they're not going to take it over the top fully any time soon it would seem, despite the fact that sports rights are going up. what so many of these companies direct to consumer have been deal with over the last year, year and a half is a different universe investors asking, we reported many times, for when are you going to get to profitability? we've seen warner brothers discovery, for example, and david zaslav make moves as well, cutting back to a certain extent in terms of offering everything to everybody, making tougher decisions in terms of what they want to produce, how they want to distribute it and that seems to be the case now at disney where yesterday, he just talked about what was the quote, linear channels in movie theaters can provide monetization capability, lean into franchises

that was something iger made clear in our conversation, obviously, this one franchise next to me being "avatar" they're going to lean into, but not as much on general entertainment. they don't feel like they endanger losing subscribers by not producing as much content in that area as they have been. >> yeah. i thought that was fascinating, especially on this week where we've seen paramount do the same leaning into the franchises they've got in their tent. all these tweaks to the model with david's interview and peltz came on our air and declared the proxy fight over here's what he said. >> this was a great win for all the shareholders managemented at disney plans to do everything we wanted them to do we wish the very best to bob his management team, the board we will be watching. we will be rooting, and the

proxy fight is over. >> pretty big news in hollywood. hollywood reporter david, all the trades are now following our coverage today and your coverage the question is, reaction now from disney and to what degree can this kind of meeting of the minds be replicated in other situations >> yeah. you know, you don't see this too often. somebody who has followed activism since its infancy really, typically that doesn't happen in that way but it is a victory for penaltiespeltz in the way it matters the stock is up which is what you're aiming to do. their argument at disney he wasn't making any true arguments, so to speak he criticized them in terms of what they paid for fox, criticized the succession plan that resulted in bob chapek taking the reigns of the company and the decision to getry rid o dividend mr. peltz embracing the victory that is his in terms of making more money, morgan, for his fund

holders and moving on. it's a big deal for disney because these kinds of fights, as i've said many times r a distraction and clearly they have so many things they need to execute on. >> to your point, we're just showing the stock chart and that shares of disney are up 20% since peltz launched this proxy fight. david, now the work happens, right? we have this big sweeping announcement in the last 12 hours. it's kind of go big or go home by iger. laying out some of the details with you in this interview just how quickly now can we actually begin to see some of these changes take root and how meaningful is that going to be in terms of looking towards the next several quarters of growth and how much further the stock can move from here >> yeah. i mean, those are all great questions and hard to say. listen, the reorganization has taken effect immediately, so, you know, that's happening, right, in terms of the leadership of espn, the leadership of the entertainment

business and the leadership of parks and they're having control now of their budgets, of their content, directly linking, as iger said, their decisions to their profitability, which was not the case as much under chapek that could happen very quickly, morgan the other efforts in terms of cost cutting takes some time, which did lead to that question of really is two years enough for iger to spend there. clearly he's not going to be around to see the fruition of all the things they announced yesterday. >> yeah. let's bring into the conversation disney analyst michael nathanson. michael, good to have you on i want to ask you the same question that we just discussed with david and that is, okay, this big sweeping announcement all these changes afoot. things that key shareholders, including nelson peltz and trian want to hear, out of management in the last 12 hours, how quickly can these changes take

root and how are you thinking about the stock and the trajectory of the stock in light of that it >> good morning. great day for you guys great tv our view is really happy bob is back we upgraded the stock the day he showed up. the tone is obvious. and that lifts the multiple. in terms of your earnings question when the numbers start really inflecting to a better position, it's probably two years out, right you get cost cuts on sgna, but the question is spending on content and a reallocation of that spend and that won't be immediate. you know, to david's comment it's going to be a 2025 n our view, that's the real question is earnings power here, right. most people didn't change numbers in the near term, and we still want more details, right we got a great tone shift a strategy shift, in terms of numbers changing, and the real earnings, that's to come, i

think. our view is we raised our price target to 130. we still want to know more about the earnings power of this company. they're doing a billion last year that's to come and our feeling with bob there, even the next two years, we'll have more confidence about the 25, you know, and then post 25 earnings power. i don't think anyone is getting out of the stock it's starting the story to rebuild. when bob got there the first time, he drove earnings above and beyond what we all thought they could do at disney. that's what we're looking forward to how it drives long-term earnings power here. >> in terms of the past profitability for the streaming business, the comments from iger this morning on hulu, i mean, he didn't rule out the possibility that disney is going to let go of its ownership stake in that i want your thoughts >> we don't know who the buyer would be, right. it would be great if he would sell, but what does he sell?

does he sell the television company? you know, our view is that -- david was all over this with bob -- bob acknowledged, we always thought the disney plus strategy should be playing to the super fan, the core, and the further away from that is the heart of business. we've been thinking for a while who fits better some place else, but there's not a natural buyer for hulu what we see in terms of challenge for growth we wrote this piece last night saying look, there are challenges here, growth is one of them, but i don't think hulu has a natural exit path right now. right. they have to basically failures hulu to faster growth, profitability. for the time being i see it staying within disney. i do. >> yeah. okay so just to stay on the streaming portion of our programming here for -- with another question, is this a shot across the bow to the broader industry in terms

the shift of profitability from subscriber growth? >> without a doubt this has been the tone change that we've expected and we wanted, right. chasing subscriber growth for just the sake of making wall street happy was a dumb strategy the previous management didn't have the courage or the intelligence to change that strategy david zaslav has pivoted that way. we'll see what paramount says, comcast. the markets moving past just counting on subs if you're not scaling at this point, if you're not scaled how do you get to the other side we're not saying that everyone is going win here. we think that this third act separates winners from losers. everyone else will have to figure out what to do to get there. >> yeah. your note is titled welcome to the third act. i guess, would you agree with some of the response to today's

news, that or at least ofprint,i everyone is getting disciplined but looking for scale it reinforces the netflix long thesis and that's about it >> yeah. so we're neutral on netflix. our tone shift has been in the past couple months in the third act when everyone becomes more conservative, the winner, the incumbent wins and that's what's going to happen here the wildcard is apple and amazon but if all of a sudden the spending wars go down and people stop spending the way they were spending the incumbents win. what disney is doing is following netflix's lead, slow spending growth, we're at a plateau in terms of how big we can be, with drive pricing and the winners win. you get the separation in the next couple years, i really do. >> hey, michael, it's david. i wasn't listening at the top, but i want your reaction to the hulu comments iger made during the interview.

from my perspective it's the first time i've gotten a sense maybe they're going to try to figure something else out. i want you to listen to it and then tell me what your thoughts are about what you're hearing and what you think the future of hulu should be hulu, by the way, is a very successful platform and i think a good consumer proposition but everyone's on the table right now, so i'm not going to speculate about whether we're a buyer or seller of it, but, obviously, i have suggested that i'm concerned about undifferentiated general entertainment and in the -- particularly in the competitive landscape that we're operating in, and we're going to look at it very objectively and -- >> what do you think, mikechael? >> that's been our viewpoint for a while. i think you feel the same. when you talk about hulu in the past the question is, where does it

go the best outcome would be to recreate the joint venture they had with comcast, right? comcast blew out of hulu and they couldn't agree on how to run forward and they created a huge loss at peacock, right. so maybe there's complements of peacock, paramount plus, hulu, back to the original idea of its consortium of people who are linear creating second and third windows. i don't think there's a natural buy are for hulu, but i think the structure could change into a joint venture. that's why i think for all of bob's non-disney plus asset, can we joint venture in india with hulu you don't want to compete long-term in the entertainment it's too competitive and there's not differentiation. i think that's -- i was impressed that he said that to you. that was a really honest admission. we'll see who steps up to say i want to be a part of that new structure possibly. >> yeah. do you not think that comcast would have an interest in

opening the entire asset >> you get the asset, but you still need to produce content. you get the shelf hulu, but you still need to produce content. are you going to give them fox entertainment production companies? i don't know the value is only in -- hulu doesn't have much value. it's everything behind it producing for hulu i don't know how you guys buy hulu i think brian roberts would -- craig covers it, he would be unhappy if they stepped up and bought hulu here but they have a peacock problem, which is losing money. i don't think it's going to scale. and how do they get out of peacock. possibly but i think comcast and craig, craig would not be happy if they reversed it and used their capital to buy hulu at this point. >> michael, we haven't talked very much about it, but the parks business, also the cruise shift that seemed to put up some strength as well, seems to be an area of strength as well, how key, how crucial is this part of

the broader disney business to being able to support everything we're talking about on the programming and the streaming and the content side >> morgan, it's 100% critical. if you look at the cash flow this quarter, last year, the parks have to sustain growth right. and i think one of the reasons why the stock recovered, there was a worry when the year was ending last year that a recession in, you know, travel would really kill the cash flow here and that would really, you know, impact disney's ability to do what they want to do if people are confident about the economy and the park can sustain that's going to help disney they need the cash flow. david was asking bob about the direction of espn. it's not good, right the linear networks are not in good position to sustain growth. they're declining. we need cash there and the parks are so well operated, the backdrop of the economy is stabilizing, that's great for disney and helps the

stock price really. >> i don't think iger could have been more plain even as far back as last summer when he spoke about the future of linear tv. when it comes to parks, i guess you could argue back half of the year, if the consumer does weaken, that's negative, but maybe it only weakens on, i don't know, european travel, domestic travel picks up some share. are you thinking that far ahead? >> we're thinking, carl, that the key swing factor hasto be spending on content, right if the park weakens, potentially in the second half of the year into '24, the content spending slow down has to occur, right. you have to basically be able to stop spending on the content and raise pricing. you need to nurse the streaming business into better profitability, right. >> michael, finally, quick question, looking at how all of this played out between disney and nelson peltz, looking across

the industry, are there other companies that where activist investors might feel em bolden to make similar calls now? >> that's a great question we were surprised. it won't happen in the near term we were surprised, you know, warner, which you could argue if warner ever separated themselves into the linear network business and studio plus streaming hbo, there's value there. they can't do anything now because the reverse mortgage trust has tax implications a year from now, we were surprised he went after disney and we were waiting to see what happens. paramount is controlled, comcast is controlled, warner lost control as david pointed out in the past maybe that's something they can go after and take more time because of tax reasons. >> thank you for joining us. we'll take a break here. more disney coverage to come today with the markets enjoying a pretty good morning. dow up 266 little bit of the lower yields did help this morning along with

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we have to look carefully at how we're bringing movies to market with an eye towards using what is a valuable platform for this company same in linear tv. we can put programming on abc and fx and disney channel and on our streaming service, and have

a completely different different audience we're going to use those platforms. i'm not suggesting linear television is not imperilled. >> that's bob iger talking to david faber earlier this morning about the earnings that we got last night let's bring in jessica, bank of america u.s. senior media and entertainment analyst, reiterating her buy on disney today. sounds like you were impressed and we have peltz to go along with that. >> yeah. having bob iger back brings a tremendous amount of confidence that there's strong leadership, but strong and experienced bob has done this before he's really decisive and strategic, and so, you know, they've announced many things last night i heard him today as well. now they have to execute. >> and how quickly are you beginning to think about

whether or not bob is really serious about leaving in two years and will suck cession be e next story or incremental progress on the initiatives iger is going to introduce? >> i think there's a tremendous amount of debate about the timing of when bob actually leaves and nobody really knows that but bob i really can't -- we know that his plan is to be there at least two years. most of the industry expects that to be longer. we'll see. finding a successor does take time they have really strong management now at the divisional level. whether they, you know -- we'll see how the succession plan plays out. i think the near term, the focus will be on execution, really driving direct to consumer, theme parks are really, really good shape, and then you know what they do strategically they were clear that espn is not

for sale nor will it be spun off in the near future, if at all, and the question is hulu there was hemming and hawing in the last interview. >> jessica, you reiterated your buy rating on disney, price target of 135 a share. the street in general, largely, very bullish on disney since iger returned to the ceo position what are the biggest risks here to your thesis and to the stock? >> look, again, bob iger is strategic, successful, decisive manager, but there are tremendous, more challenges facing disney now than any other time that we can recall. the cyclical headwinds will pass but the secular challenges, which you have talked about all morning, the linear challenges, the competition direct to consumer, you know, there are issues with florida which we think they will get past, but a strong theme park business and it's a global business

the issue really is transitioning the linear business that they had on to the streaming platform and how do they make that a profitable business >> just how big, at least near term, are the issues where florida is concerned >> we'll see if it all gets resolved relatively soon from what -- you know, it doesn't seem like there are massive changes coming in the structure of whatever it's going to be called, we'll see, how that gets resolved it's not a tremendous financial impact on disney either way. and then, you know, i think the next concern would be getting the resolution with the labor unions which there's a lot of back and forth on that as well, but the parks in general are really strong and i think they evolve i know you talked about this earlier, but i think the parks are important not just because it's a tremendous business and there's a strong consumer

relationship, but what's the next step? how do they make that consumer relationship evolve? where do they go with commerce you know, that one on one is very different than in the past when like the linear business was a broad business here you really have detailed consumer information, and there are a lot of ways they can grow that business. that's kind of like over the next five years what do they do with that? >> jessica, it's david i know you've been, i'm sure, thinking and talking about this for years and i have with iger as well, can you ever really replace the profitability of a linear cable business with direct to consumer can it measure up? he still seems to want to say it can. do you agree >> it's a very difficult question and one they avoided ponding to last night on numerous calls we had with the company. it's not clear what the margin is some of the things they addressed was how do they -- how

do they right size the content spend with the other spend, the marketing spend, the promotional spend? what's the right price you know, it's a developing business, let's put it that way. netflix is a great model they're doing an incredible job, but it took them a while and there was a lot of money wasted on content that really didn't perform. so a lot of what i think bob iger was talking about was focusing on the areas where they are very strong, whether it's their franchise television shows or even their films. and that was a point they made, they're spending a lot of money on marketing films they don't need to there are ways to make the business profitability that may not be obvious to the rest of us the most important point that came out in your interview, not the most important, but in regards to this, was how much -- how much viewership has gone up and when -- wherever the consumers r the money will follow one thing that i don't think that you guys discussed was the ads here and there's tremendous

upside there the demand, all of the linear advertisers have to go where consumers are, and these consumers are younger, some of -- they're affluent, many of them are affluent, but there's a way to reach them and reach them with targeted advertising that's addressable that, you know, eventually can lead to commerce. there's tremendous upside from that it will take time to develop but there's tremendous upside. >> does that mean that you favor netflix over disney at the moment >> we like them both netflix is on a very strong path between the ad platform, it's a multiyear growth business, and i would say the same for disney. multiyear. and at the same time netflix is ahead of the curve on the password sharing that will be another driver. two tremendous drivers and other time pricing flexibility as well disney is just a different company with different

businesses disney from the streaming perspective is way behind netflix. but there are other, you know, really there are other drivers for disney and having bob there, i think, instills confidence like the market is confident that he is the right executive at this time. >> no question about that. 118 earlier this morning at least would take you back to august in an incredible environment as you say, very tough and complex. thank you. great to see you again. >> thank you so much. >> jessica reid. >> as we head to break, casino names wynn and mgm are rising in early trading. wynn up almost 8%, mgm 8% as well, beating earnings expectations and mgm posting a wider than expected loss, though both names benefitting from the strength in vegas and surprising surge in macao over chinese new year it speaks to what we're seeing in general this earnings season. the shift from consumers from buying things to experiences

we're going to be back in just a moment with the dow up 195

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the street." i'm kristina partsinevelos here is your cnbc news update at this hour. the death toll from monday's massive earthquake in turkey and syria has gone above 19,000. as deadly as the 2011 quake and tsunami that hit june japan and triggered the fukushima disaster officials are slowly shifting focus to helping the hoelz survivors find shelter and food. pennsylvania senator john fetterman has been hospitalized. fetterman went to the hospital after feeling lightheaded while attending a democratic retreat his staff says initial tests show no evidence of a stroke. the brooklyn nets have traded kevin durant to the phoenix suns the nets getting three players and four first round draft picks after just days after the nets traded kyrie irving to dallas and hours after the suns new owner was introduced in phoenix. carl, back over to you.

>> thank you very much. earlier on our show this morning, nelson peltz responded to our interview with bob iger a win is a win. >> i really like - >> these are exciting times. you know, jim, my dad once told me that you can only win once. this was a great win for all the shareholders management at disney now plans to do everything we wanted them to do. we wish the very best to bob, his management team, the board we will be watching. we will be rooting, and the proxy fight is over. >> yes thank you for declaring victory in a gracious way. this was a huge win for you. i know you don't typically talk about it, but i'm going to ask you. how much money did you make? >> well, who's counting? >> all right, well, i just -- the viewers. the viewers want to count.

>> everybody makes money jimmy, everybody made money. >> that's the best way to put it and i know that you got previously, before this, you were friends i think there's no reason to think you can't be again that's just my view of things. >> i agree i'll pick up lunch or breakfast the next time, i promise >> well, good. carl, what do you think? it sounds like there's some graciousness here. >> is it the shortest fight you've ever seen >> how about it's the "w" is a "w." nelson, great job. i know that -- i wish you well, and bob iger, maybe you call him tomorrow and wish him happy birthday. >> i'm definitely going to do it i didn't realize it until i watched just now that it's his birthday i might even send him a gift >> well, there you go. thanks for calling in. the proxy fight is over. and bob iger delivered for everybody, including nelson peltz. >> iger does turn 72 tomorrow.

cramer is back with us on the phone. cramer, what's on your mind an hour after that phone call >> well, i think that the stock has given up some of the gains, but i think that's a great opportunity because nelson peltz is happy for all the accountability he's got, by the way, even the successor, nelson wasn't sure there is going to be a successor. what i liked best, they both contend accountability is everything the company lost its accountability, i don't know how to put it, giant mother of all misses, so i think that this is one where they will be friends, that nelson is just happy with the win, and it's very difficult to disagree with what bob iger' view is. he traced out a position in a stock that was a great one for many years. >> how do you characterize your bullishness on disney at this point where we have him back and the train is moving to some degree, but we all understand

sort of these legacy issues and we're not sure how much can be offset by these very competitive businesses >> well, i think it's absolutely right. there was a moment where i gulped when david talked about how the nba rights drop, nba who knows whether amazon comes in or alphabet, lord knows alphabet needs it one thing i would say they have gigantic amount of revenues but gigantic amount of costs this iger came in and we heard him say, listen, the costs really matter, and that had no even factored in to the company. so all they were caring about was making some number, that we're going to be privy too. that could be enough to say even if revenues are up only 2 or 3%, the profits are going to be bigger which is why the stock is such a compelling situation. >> jim, whether it's disney or another name that you watch so closely, which is salesforce, which is actually up 3% today on

headlines that a fifth activist investor, dan loeb's third point, has jumped into that stock as well, it does seem like the environment right now, the investing environment is very conducive to activist investors. just want to get your thought on that and whether what we've seen play out with disney, even just this morning, whether that becomes a case study for other companies in this environment? >> what a great point. i would think that absolutely about disney, which is that if you have a company that has -- that's wayward, what you do is you attack what everyone knows is bloated, which is the cost structure. and i think that's what they want the activist, the five activist wants with marc benioff in salesforce. they feel it's bloated and could be making much more money. marc built the company and the company is very successful, and the company has had multiple years of growth. the idea that it's stumbled isn't as important as the stock

stumbled i don't think that marc -- he's got a 35 multiple. that's hardly for me to say it's doing poorly, but, yeah, this is one of those situations where rich people are not happy about other rich people, not making enough money for rich people and that's my buying hat if you say, this is what's really going on and let me put my trump hat on, they screwed it up and they have to pay. that's the way that the activists feel the capitalistis failed them. i think that in both cases, in disney's case yes, there was a gigantic miss. there was not a gigantic miss with benioff there's a great product. the wrap against margin is not that the product is great, but it's so great they should be making more money. i'm hoping even though there's five people coming after him, that there could be some resolution i think elliott partners, very,

very sticky, and dan loeb is not -- is a guy that wants to come in and makes some aggressive changes that maybe marc doesn't want to. >> let's expand it out a day where the major averages are higher and treasury yields coming off a little bit and the dollar under a little bit of pressure right now in terms of investing for the every man and every woman, what do you think of the markets at these levels given the fact that we've had strong earnings reports in the last, you know, it 12, 24 hours, but in general the earnings season hasn't been so great and the s&p, in particular, trading at 18 times? >> yeah. but i've been looking for is situations which actually, let's say r antithetical to that employment number, pepsi not raising prices, whether it be the incredibly compelling stories i'm getting from chipotle, from brinker, a restaurant where the people are going out, american express. people are going out, but they're not spending on goods,

which was the affirm problem, and the layoffs, they don't stop i mean, every day there's layoffs. so you have to wonder whether the fed doesn't say, you know what, that number, that 500,000 number, maybe that's the last of the really aggressive, unbelievable numbers so i think the bull market is here i think the fact that stocks go up on good news, which is not the case during 2022, is behind us, and i like what i see. i think people should be buying the market on every one of these dips the fed is going to win. it may not know that it's winning. >> wow hey, jim, it's david i wanted to come back to salesforce for a second because we've, obviously, spent a lot of time on disney and talked about succession with bob iger it was a point of contention between him and peltz. peltz was critical of succession the process there. obviously, the failure of finding bob's original successor. what about benioff

my sense is loeb is probably fairly constructive with benioff, but do you get a sense he's ready to sort of put a plan in place under which he would find someone to take that top job and step aside >> perhaps i do think that elliott definitely, though i think that elliott feels that marc should take more of an ambassadorial role, there's someone that can run the company better in day to day and you know what, i think even david, a proxy fight could happen a proxy fight could get ugly here because marc already made a change in the board, marc, some people think that he made that change knowing that elliott was in there and that he wanted to do it basically before elliott wanted it. i don't believe that's true, bu some people say that's what's happened i don't think it's a great situation for marc with elliott. i don't think so.

>> now, we've talked about it jim, and talked about it i think last week, elliott, there was a big gap there i think. it's the 12th. the nominating window opens next week we may find out soon. >> yeah. i don't know whether they have broken bread this is one of those moments where it's kind of radio silence. i am concerned that i think there may be some people, the activists, that the company could do fine if marc were in a less operating role. i think they may have misjudged how much marc -- how much value marc has created here and how there are a lot of customers, david, who may go to someone else if marc is not there. i think they have to be careful with what they wish for. look, i'm not saying marc is going to take his bat and ball and go home. m marc is integral to the company, great product, and he knows thou

bring in customers like marc's friend larry at oracle david i don't think that elliott will be happy at all with what marc has done and i don't think they're that happy with the makeup of that board, which they think is too ceremonial and not technological. >> yeah. it would be fun to get all five activists to come on the show live and say the proxy fights are over i'm not sure that's going to happen twice. >> we're going to get that i think that, david, david and carl, we'll do a move, david loeb on speed dial, i'll check in with elliott. starboard, we've had them on many times you've interviewed numerous times, david i don't know this could come together. >> it should all right. let's make it an agenda item for next week's show. >> done. i'll do it i'm -- super bowl. if the eagles win, count on it,

okay. >> count on it. >> thanks for calling in. >> thank you, guys appreciate it. >> still to come, the ceo of kellogg's speaking of earnings, joining us after a quick break we're going to talk earnings, the pulse of the consumer. snacking, is tt ila inhastl thg? we're back in two.

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shares of kellogg's up marginally better results for the quarter, saying it's on pace to spin off the north american cereal business by year end ceo joins us this morning. steve, it's great to have you back organic up 16 gets your attention and guiding above the street on organic. still, a bit of a split conversation about whether or not price increases are already baked in for the year. how about you guys >> carl, thanks for having me again. we're very pleased with the performance on the fourth quarter and it was built on the momentum of our brands from cereal through snacking through our frozen business. we see that continuing momentum into this year some is pricing led, to be sure. we've been able to basically cover our basic input cost inflation, which has been very significant, with a combination

of productivity and revenue to growth management, part of which is pricing that will continue into 2023 we see a let up, perhaps, in the second half of 2023. but the first half is going to continue to see pervasive inflation in the united states and, indeed, throughout the rest of the world. >> if there is a bit of a softening up in the back half, is that because input gets -- the headwinds get lighter or you think the consumer starts to get serious about pushing back on price? >> i think it's more the former, carl you see spot prices starting to come down. companies like ours have comprehensive hedging programs in place so you seem to lag what you see in the spot market we see receding of inflation pressure in the second half. the consumer n our space, remains incredibly resilient we're fortunate to be in categories that are very affordable they're affordable luxuries. and so even as we've been forced to take more price than we would like to take, our consumer has stuck with us.

and i think that's based on really the power of our brands like pringles and cheez-it, rice crih krispies. >> cheez-its are big in my household. does that mean you won't increase prices on your products this year? >> hi, morgan. no, you'll still see increased prices in our portfolio because of the continued rise in the inflationary environment again, particularly in the first half of the year >> got it. in terms of the plant-based part of the business, because i know you announced you're going to hang onto that and see that as an area of future growth opportunity. walk me through what that opportunity looks like, especially as we have seen -- the cost for some of those plant-based products, perhaps, become less competitive as meat

prices start to come down. >> yeah. so, we announced this morning that the morning star farms business, our plant-based business, will retain that inside kellogg and it will become part of global snacking company. we're only going to spin off the north american cereal business the reason for that is when we embarked on the strategic look at our plant-based frozen business, valuations outside of our company, so peer valuations were stratospheric it was really beholden to us to take a look at unlocking that value. the value was not captured inside the kellogg company those valuations have come crashing back down in a very dramatic fashion morningstar farms is one of the pioneering brands. it has a clean label, outstanding food and there's going to be a shakeout in this category it really is much more valuable to us today and going forward than, you know, when we looked at the valuations a year ago we're really excited about the

prospects. it's one of the best brands when it comes to household penetration, when it comes to name recognition, when it comes to the food we have. and the consumers migrating back into the frozen section where we're very strong. we're excited about morningstar farms. we think the clean label, the sustainable, the plant-based are very real macro trends that will continue when the shakeout occurs, we'll be one of the strong brands left standing. >> it makes sense, the change of view i guess the question would be whether or not you think the consumer has lost interest or maybe we were just in some sort of bubble or frenzy regarding plant-based business valuations. >> it was definitely a bubble. there was exuberance around the category when you look at the consumer, we look at it on a two and three-year basis when the pandemic hit, you know, this whole frozen space jumped into the future. so, last year we were cycling really inordinate growth if you look at it from two years

ago, the category's ahead of where it was it's been this irrational exuberance a lot of trial, frankly, competitors that came in the space with inferior offerings so people tried that and they were turned off to the category we think the category long term is healthy because it's, again, sustainable, plant-based, clean label. and so we're bullish on the category i think it's a matter of what it was cycling. >> appreciate it fascinating entry and time good to see you again. >> thanks, carl. coming up on "techcheck" today, we'll take a closer look at paypal and robinhood moving in opposite directions today we'll take a look at affirm. down 20% on the guide and the head count reduction head count reduction don't go away.

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welcome back take a look at shares of disney. not up as much as they were in the post market yesterday or early going this morning, but still having a strong session. obviously following on what has been a strong year we heard from bob iger on "squawk on the street" and nelson peltz, the activist investor who says, i'm done with

my proxy fight so many more questions the company announcing a $5 billion cost program, 5,000 job cuts associated with that as well something we have seen, perhaps, too often for some these days, morgan >> it was an extraordinary morning, extraordinary interview, david and shares of disney are helping the dow to move higher as well as the s&p the nasdaq is trading higher as well that's it for us on "squawk on the street." "techcheck" starts now good thursday morning. i'm deirdre bosa with carl quintanilla and jon fortt. disney, 5,000 employees laid off. nelson peltz declaring victory and an end to the proxy fight right on our air this morning. sonos shares higher after a big beat on revenue and earnings the ceo with us exclusively this hour. affirm gets a bump and we look ahead to paypal tonight