Disney’s Multi-Billion Dollar Poison Pill

Disney vs Saudi

Bob Iger is betting on a strategy that diverges significantly from the family-friendly image of Disney by diving head first into the murky waters of online sports betting. His tenure, and legacy, as CEO may depend on it.

In 2020, Saudi Arabia’s largest sovereign wealth pool, the Public Investment Fund (a.k.a., the “PIF”) began investing directly into the Walt Disney Company in significant amounts. The PIF purchased more than five million shares valued at just under US$500 million that May. This represented less than half of one percent of the company, but marked a starting point for a much larger move across an industry in which Disney held a unique position.

As the Media C-Suite reported in a previous article, “Additional indirect investments into Media & Entertainment globally are thought to be held by PIF capital involvement in large private equity funds such as BlackStone.”

That year, 2020, was important. The Saudi Government’s long-term economic strategy was shifting. One new focus was on the global Media & Entertainment industry as a means of simultaneously building a local industry that would provide meaningful employment opportunities to its citizens and offer the means for persuasive messaging about Saudi Arabia on the global stage.

“Saudi will likely look to acquire at least one of the legacy studios.
… Disney has always been at the top of the list.”

The family-friendly ethos of the Walt Disney Company was a cultural match for the vast majority of Muslims around the world and investment posed little risk of controversy from Saudi society.

Similar alignments of interest have been fiercely defended by a core group of long-term investors in the Walt Disney Company.  Its theme parks and feature film distribution businesses had been built on the family-friendly experience. It was an image important to the founders of the company, Roy and Walt Disney, as they carefully cultivated a corporate culture intended to perpetuate it. To many of its shareholders, that image is central to the very existence of the company.

By 2020, affiliations with scandals such as Harvey Weinstein’s notorious downfall as head of Disney-owned Miramax, and content pushing the limits of family friendly definitions, increasing shareholder attention was on the divergence from Walt Disney’s vision.

2020 was also the year that Bob Iger, long-time CEO of Disney, was due to retire.

Iger’s Legacy

At the time, Bob Iger had spent nearly two decades acquiring high-profile production companies to diversify Disney’s library of entertainment content during a period when traditional romance and fairytale animations were perceived as in decline financially and culturally.

In 2006, Iger acquired Pixar, a long-time strategic partner of Disney, for US$7.4 billion. The Marvel cinematic universe was acquired for US$4 billion at the end of 2009. LucasFilm and the Star Wars universe was acquired in 2012 for US$4.05 billion. In 2019, Iger completed the acquisition of 21st Century Fox, which included the 20th Century Fox film and television studios, U.S. cable channels FX, Fox Networks Group and a majority stake in National Geographic Partners. By the end of Iger’s planned reign at Disney, the company had become the most lucrative source of entertainment IP on the planet.

While Bog Iger manoeuvres from within the palaces of the Magic Kingdom, an actual crown prince has made it his mission to adapt the global appeal and influence of the Media & Entertainment industry to the economic development of the Kingdom of Saudi Arabia.

Iger has particularly emphasised the value of content franchises such as Marvell’s Avengers and StarWars, which were easier on both marketing and accounting executives than stand-alone content. Strategically, it was a win for both Iger and Disney. The globalisation of broadband internet infrastructure was allowing segmented regional audiences around the world to converge, greatly increasing demand for more entertainment content. The world was craving greater quantities of the high-quality output that Hollywood was particularly good at.

His collaboration with NBC/Universal to build Hulu, with now acquired Fox, was meant to be a serious rival to Netflix’s subscription streaming business model, but wasn’t really. So, as Disney and NBC/Universal developed familiarity with the model and the technology, collaboration on Hulu began to unravel into universal ambition for walled garden-style streamers.

Iger’s Disney was being built into a fairytale powerhouse, possessing both commercial muscle and an ethical image. Forbes named the Walt Disney Company as the No. 1 best-regarded company in 2018. By the end of 2019, Disney+ was in the works, which propelled Disney share price up more than 10% when it was announced on April 12 of that year.


Iger waiving to WGA picketers a Disneyland

Who Iger Answers To

One of the highest paid executives on Earth is credited by many in Hollywood with holding unionised creatives to the fire as if it were his personal inclination. But it is strategy, not animus, that drives experienced CEOs with legacies to protect.

After fifteen years on the throne at the Magic Kingdom, Bob Iger enjoyed near-royal adulation as a CEO. Bob Chapek was named Iger’s selected successor and appointed CEO of the Walt Disney Company in February 2020.

Bob Iger stepped down from the royal palace at Disney on a high, and just in time.


Bob Chapek’s mandate as CEO was to stabilise a quintessential American media conglomerate after decades of acquisitions and corporate complexity. A structure of stand-alone and redundant subsidiaries often fought against each other’s efforts. Corporate integration, cohesion and a return to Disney’s core values as an all-American family-friendly media empire were all on the agenda.

The ability to maintain a large, diverse and highly complicated organisation may have been described as more juggling act than commercial strategy. In most other companies, this would have been expected. There would be a period of transition. The more complex the organisation, the longer it might take for a new chief executive to find his groove. For Bob Chapek, dealing with the establishment of his own administration while manoeuvring against legacy structure and executives loyal to the previous regime would have been difficult in ordinary circumstances.

A devastating global pandemic, competition from Netflix’ global strategy and the effects of globalisation itself on audience appetites fell upon Bob Chapek’s Disney almost as soon as he placed his feet under his desk. And changes to the Media & Entertainment industry were coming hard and fast. Most notably, in hindsight, were three particular trends.

The first was a distinct change in industry revenue streams. Consumer spending on access to content was shifting from passive acceptance of what content was available to active search for what was wanted; more short-form, more creator-led diversity and more gaming.

The second trend was advertising spend. Advertisers were following the audiences. This meant less ad-spend on broadcast and cable television and more money focused on digital. Programmatic advertising that benefited groups like Alphabet, Amazon and Meta was being scaled back to more focused, direct and targeted ads that spoke to distinct audiences.

The commercial market and capital strategies of the industry’s biggest publicly-listed conglomerates, including Disney, were caught completely wrong-footed. Wall Street punished them severely.


Wall Street Punishes U.S. Media as Cord Cutting Accelerates

One person’s crisis may be another’s opportunity. As the board rooms and C-suites of US media conglomerates convulse to the rhythms of finger pointing and job preservation, publicly-listed media companies haemorrhage cash from self-inflicted wounds.

It was corporate politics, however, that put the foundation of Walt Disney’s inherent identity to the test.  Memory of Iger was still fresh. Chapek’s struggles were openly aired. A reactionary palace coup became inevitable.

See, Bob Iger Returns from Private Equity to Publicly Fix Disney (mediacsuite.com).

Fast forward three years and Iger is back in the throne room and tasked with putting Disney back at the centre of the trend lines. The result is a 100 year old company that is recognised as much for the ideals of Walt Disney as it is for the machinations of Bob Iger.

Any yet, even the return of the nearly-king could not stem the rising tide of the third major trend. The hundreds of billions of dollars in capital injection from Saudi Arabia, and other Gulf States, into global Media & Entertainment as strategic economic development has accelerated market disruption far faster than the major publicly-listed U.S. media conglomerates are designed to manage.

Another Kingdom

While Bob Iger manoeuvres from within the palaces of the Magic Kingdom, an actual crown prince has made it his mission to adapt the global appeal and influence of the Media & Entertainment industry to the economic development of the Kingdom of Saudi Arabia.

In some respects, the two leaders may find much in common. But the differences create considerable difficulties between their two respective constituents. On the one hand, the Walt Disney Company is a long-established Major Studio with cultural and economic roots growing deep into the heart of American territory, including Wall Street, Hollywood, Disney World and Disney Land. On the other, a distinct intent to outright purchase key Media & Entertainment assets and transplant them directly into the Saudi economy are clear and present.

For a comprehensive discussion, see,

The media strategy of Saudi's MBS

Saudi’s New Investment Strategy in Media & Entertainment

Said Arabia’s investment activities point to a determined strategy to make use of the Media & Entertainment industry’s massive soft power.

Saudi Arabia has made no secret of its aspirations with regard to global media assets. Those assets cross a wide spectrum, including gaming and sports. Its advantage is money. On the gaming side, the PIF has acquired significant stakes across the sector and now boasts a dedicated investment company. PIF-owned Savvy Games Group was originally an eSports venture that has been adapted to bring video game development and publishing players into Saudi’s economy. The company has already invested more than US$38 billion into the US$185 billion global gaming market and still has an estimated US$30 billion acquisition war chest to work through.

Saudi’s investment into sport has been far less in terms of money, but has garnered far greater attention globally.

As the Media C-Suite reported in April last year, “fans of live, televised sporting events such as football, tennis and golf outnumber any single nation on Earth (yes, including China). They are, taken en masse, the largest single entertainment audience ever conceived of.”

Saudi has this audience clearly in its sights. According to an analysis by the Guardian newspaper in July of last year, Saudi Arabia has invested at least US$6.3 billion in sports deals since early 2021. This is a 4X increase over the figures for the six years prior.

“The $6.3bn total figure is probably an underestimate of the true value, as the PIF is notoriously opaque about its finances, and details of some deals are not made public.” Writes journalist Ruth Michaelson for the Guardian.

While investment in sport may receive the most attention, and gaming the biggest budgets, the PIF and its network of capital intermediaries continue their pursuit of traditional media assets that could viably develop the infrastructure necessary for the production of high-quality entertainment content from inside Saudi Arabia.

Buried in the Money

Entertainment Targeted by Sovereign Wealth

The Media & Entertainment industry topped the unofficial agenda for an invitation-only gathering of the world’s most powerful money managers hosted within the British House of Commons and organised by the Sovereign Wealth Fund Institute.

One adviser working closely with the PIF spoke to the Media C-Suite on condition of anonymity.

“Saudi will likely look to acquire at least one of the legacy studios.” He told the Media C-Suite. “Disney has always been at the top of the list.”

This opinion is often repeated by those with direct knowledge but who risk much in speaking openly.

Given the investment capital available to the Kingdom of Saudi Arabia, and the tendency for money to be persuasive, it is likely that the Media & Entertainment industry will feel a near irresistible urge toward the Middle East.

The only real defence specific to Saudi Arabia’s acquisition strategy across the M&E spectrum is a form of ‘Krytonite’ that might be as toxic to Disney as it is to Saudi’s primary audience.

The Poison Pill

While share price remains a key measure of CEO success, the discomfort felt by some shareholders in Disney to the idea of the company becoming a Saudi-owned asset has offered Bob Iger a key strategic opportunity to serve them, and his legacy, in another way.

An orphaned asset and market opportunity has provided him the means.

When he was first appointed CEO, Bob Iger inherited a legacy asset. With the Capital Cities/ABC Inc acquisition in 1996, Disney acquired both IP and one of the big three national broadcasters, ABC. That deal also brought with it a sports network called ESPN.

That network sat unloved as a non-core corporate orphan for decades until sport rose to the forefront of corporate strategy following Saudi Arabia’s overt moves to take ownership of both sports and entertainment.

Then, in 2018, the Supreme Court of the United States overturned a federal ban on sports betting. In the five years since, sports betting has become one of the nation’s fastest growing businesses. Sportsbooks, or bookies as they were once known, are now plying their trade through on-line portals and sophisticated apps available on every smart phone in the nation. They are thus available to anyone, everywhere all the time. Sports betting is currently forecast to generate an estimated US$15 billion in revenues to sportsbook operators in the United States this year alone.

ESPN's Promotion of ESPN Bet via Taylor Swift
ESPN is already marketing ESPN Bet aggressively, including content promoting the sportsbook via images of Taylor Swift see, an example here. Pictured are Travis Kelce and Taylor Swift on Jan 28th at the AFC Championship NFL game used in ESPN’s coverage of ESPN Bet (image: AP/Julio Cortez)

With this, the unlikely circumstances for repelling the PIF arose.

According to the Quran, Muslims are strictly forbidden to gamble. For the rulers and citizens of Saudi Arabia, this prohibition is as existential as the family friendly ethos is to Disney. Walt Disney would almost certainly have considered the encouragement of gambling by his intended audiences to be anathema to his company’s corporate image. The wholesome nature of sports, and its attractiveness to hundreds of millions of fans around the world, would seem to be well outside that risk to both Saudi Arabia and Disney alike.

But, on August 8, 2023, Disney’s ESPN issued a surprise press release announcing a 10-year, US$2 billion dollar licensing deal to launch a new product called ESPN Bet by rebranding PENN Entertainment’s Barstool Sportsbook in 16 states across its mobile app, websites. Disney’s ESPN would effectively market ESPN Bet across its linear and digital platforms, particularly during live games and its popular SportsCenter programme. According to a report by Forbes, “PENN will benefit from ESPN’s leading sports position and portfolio of assets including over 370 million social media followers, 100+ million monthly digital uniques and 11 million fantasy app uniques.”

Forbes’ analysis also states that, “the initial terms in the press release do not suggest ESPN will share in any of the revenue from ESPN Bet.” While receiving roughly US$150 million in license fee revenues directly to Disney’s bottom line for 10 years, the deal is effectively a boon to PENN Entertainment.

On the surface, one might question the commercial appeal for Disney but for the strict prohibition on gambling that Saudi Arabia is so sensitive to.

And yet, the potential protection against a Saudi take-over of Disney comes with a serious risk to the company itself.

The Nature of Poison

Once one of the core commercial activities of organised crime, gambling is now both legal and booming across the United States. In 2013, the American Psychiatric Association added gambling to its diagnostic manual as an official medical disorder on par with heroine, nicotine and alcohol addiction. Sports betting in particular has been seen as a form of gambling that is prone to particular abuse.

For a review of those abuses, see the Financial Time’s exposé entitled, The dark side of the US sports betting boom (possible paywall).

The destructive nature of addiction, such as to gambling, can be so devastating to society that one of two outcomes tend to emerge in the United States. Either politicians enact regulations to protect their constituents, or lawyers assemble victims of businesses that profit from it and prosecute multi-billion dollar law suits. These class-action court cases brought Big Tobacco to its knees and effectively ended the legalised corporate abuses that gave rise to the opioid epidemic as depicted in HBO’s Crime of the Century.

Richard Daynard is a professor of law at Northeastern University and was a principal plaintiff’s litigator in a 1998 settlement in which Big Tobacco conglomerates paid out US$206 billion for suppressing tobacco’s links to addiction and cancer. Daynard now has sports betting companies in his sights.

The FT’s Oliver Barns writes, “Daynard is now working on litigation against a major sports betting operator over misleading adverts and promotional bonuses which he believes are designed to make gamblers chase their losses. He intends to organise a class-action lawsuit by the year-end.”

Barns reports that Daynard is convinced, “the disclosure process in litigation, whereby companies are forced to offer up tens of thousands of internal documents, will help unravel the shoddy consumer protections of the betting companies.” And that, “litigation against betting operators could precipitate the same shift in sentiment experienced by the tobacco industry”.

But the money being made is just as addictive for the bookies as the thrill of betting is for the gamblers. Like gamblers, the sportsbooks are left generally to regulate themselves, often with the result of marketing and operations that go beyond fair play. The risks of involvement with the business of gambling, whether legal or not, are huge. For Disney, and its family-friendly heritage, those risks are being taken by Bob Iger as a strategic move.

Iger’s risk is that Disney’s ownership of the ESPN brand as a wholesale marketing device for ESPN Bet will entangle Disney within a class action lawsuit of the same nature that solidified the villainy of Big Tobacco and the Sackler family’s Purdue Pharmaceuticals.

Iger’s bet is that he can hold onto ownership of the ESPN brand, including the association with ESPN Bet long enough to steer Saudi Arabia away from Disney and toward another legacy studio.

That strategy is Bob Iger’s biggest gamble.


  1. A long read to be sure.

    But if this is right, that Bob Iger is tying Disney to gambling to sour Saudi Arabia on acquiring a controlling stake in Disney, it explains a lot.

    No doubt, a lot of investors are concerned about the aggressive marketing of sportsbooks. It will become a talking point once the euphoria of all those revenues starts to balance against the cumulative effects of the inevitable rise in gambling addicts.

    But that might take a long time (relatively).

    Disney seems to be hedging that bet with what’s clearly a license deal that keeps Disney itself out of the operations. But for all the consumers out there, ESPN Bet is ESPN and ESPN is Disney. For all intents and purposes, it sure looks like Disney is in the gambling business.

    PENN’s sportsbook, now ESPN Bet, is less than 2% of the sports betting market. Iger couldn’t have chosen a better “straw man” for his “poison pill”.

    Luckily, if it wants to, Disney can cut ESPN loose, including the deal with PENN.

    But I think Saudi Arabia is not a typical investor. It has less wiggle room in terms of supporting a business that’s effectively a mortal sin for Muslims. The association of Disney with gambling may just be enough for the Saudi government to turn away.

    Does this explain the increased chatter on who is financially supporting the multiple bids now being made for Paramount?

    Is this really a conscious strategy by Bob Iger?

  2. interesting. It would be relatively easy for the Saudis to dispose of ESPN Bet if they wanted to take a run at Disney, though Sportsbet.io has become a sponsor of Newcastle United under Saudi ownership, so they seem more flexible than one might think.

    • Thank you Gavin. I think the two are quite distinct. The licensing deal allows PENN to fully co-opt the ESPN brand as a sportsbook. This is not Barstool sponsoring content on ESPN, it’s ESPN becoming a betting shop. Punters will identify ESPN Bet as ESPN, not PENN Entertainment.

      But you are right, ESPN can be carved out of Disney by selling it on. That has been in the cards for a while. But in this year’s earnings call, we heard Disney say ESPN is now a core silo within its group accounts. That makes it seem more integrated than it once was.

      The question really is, is Disney now in the sports betting business?

      This is corporate strategy played at the highest level.

      • Sportsbooks and other forms of Gambling are still very much seen as being the home of Gangsters and Maffia. Online betting has helped to change this image somewhat, but still there are so many legal restrictions that we are not talking throughly main stream. That Disney is willing to emerge itself in this market does nor seem obvious at all. Them setting up defences against an unwanted takeover makes sense.

Leave a Reply

Previous Story

Media C-Suite Week No. 5/2024, Issue No. 42

Next Story

Is this the Beginning of the End in the Global Streaming Wars?