Candle Media co-CEO Kevin Mayer on Disney topics like succession, the future of ESPN, streaming economics and more: “Bob has his hands full”

According to Candle Media co-CEO Kevin Mayer, streaming’s difficult economic climate will make industry consolidation “inevitable,” but Big Tech and Hollywood will likely remain in separate camps.

Mayer shared his views during an appearance at the Yahoo Finance Invest conference in New York. Most of the 15-minute session focused on the Walt Disney Co., where Mayer was a longtime executive and now serves as an adviser to CEO Bob Iger. “Bob has his hands full,” Mayer said of the many issues facing Disney, from activist investors to restive shareholders to various strategic moves. The 72-year-old CEO is “very capable and versatile. He has a long reach so he can handle it. … You have to be disciplined, and Bob has always been very strategic.”

As for Disney’s falling stock price, Mayer said the market is “reacting to uncertainty” about the future of Hulu, ESPN, the company’s leadership and other aspects of the media giant.

During his time as manager of the strategic planning group at Disney, Mayer completed a historic series of mergers and acquisitions, including the acquisitions of Marvel, Pixar and most of 21st Century Fox. Before his departure in 2020, he led the launch of Disney+ and then focused on streaming and digital content at Candle, as well as chairman of sports streamer DAZN and CEO of TikTok.

An experiment DAZN conducted with streaming-only European soccer rights led Mayer to believe that ESPN has a significant advantage in pricing its upcoming standalone streaming service. ESPN has long been funded by distribution fees from pay-TV providers and is actively planning for a future as a direct-to-consumer service. One of the problems with the launch is the price. On paper, ESPN has the potential to be the most expensive offering in modern streaming history, and given its wealth of sports rights, it’s well above the $23-a-month sick price in the general entertainment market.

After initially gaining traction with Disney+ with a monthly price of $6.99, Mayer recalled that he decided to take a similar approach in Italy, about 10 euros below Sky’s previous price to enter the market. DAZN then decided to raise the price from 20 euros to 35 euros and found that few, if any, subscribers abandoned the service. The bottom line: “Sports fans who really want their sport will pay a lot for it,” Mayer said.

Mayer declined to discuss the status of Disney’s efforts to find a strategic partner for ESPN as the company ramps up its direct-to-consumer approach. More broadly, he said, the enormous cost of achieving scale in the streaming space, whose profit margins will likely never reach the historic highs of linear television, will drive mergers and acquisitions. Mayer said it’s “not clear” to him that more mixes of Big Tech and Amazon-MGM-style entertainment are on the horizon. “I think there’s a little bit of nervousness about how the two will intersect once they’re under the same roof,” he said of technology and Hollywood. “I’m not sure it goes without saying that a fast-growing, technology-driven company that’s really about the technology and the product at its core would be a great home for creativity and the kind of storytelling that Hollywood is synonymous with. “

Such “cultural mismatches make buyers nervous,” he continued. “If you use Apple TV+ or Google, you also have access to programming from independent content producers” such as Candle Media. “If you want content for your streaming services, you can always buy it remotely.”

Succession at Disney has historically been a difficult process, Mayer acknowledged. Iger returned as CEO in November 2022 after her hand-picked successor, Bob Chapek, made a series of missteps and was ousted by the board. Iger agreed to a short-term contract and said a special committee is weighing candidates for Disney’s future CEO, but there is still much uncertainty about the process. “It’s just hard,” he said, “especially when you’re a successful CEO like Bob. I think it hurts him when the company doesn’t live up to the standards he set for it. “When he went back, he thought he just had to do it.”

Iger and the board “will choose a great successor,” Mayer predicted, noting that there are a number of viable internal candidates. Asked if he would consider taking the job that instead went to Chapek the last time Iger passed the baton, Mayer declined.

As for the future of Candle, which is backed by private equity giant Blackstone, the CEO said there were three possible outcomes: an acquisition by a strategic buyer; an initial public offering; or a sale to another PE firm. “We are prepared for anything,” he said.