Kyle’s Rating: 7/10
This episode picks up where Part I left off and covers forty years: two CEOs, two turnarounds, the ESPN cash machine, and the Pixar, Marvel and Lucasfilm deals. The hosts drew on conversations with Bob Iger, Josh D’Amaro and Jeffrey Katzenberg, and the insider detail shows, especially in the ESPN and Eisner-era sections. The closing analysis of whether Disney+ was the right call doesn’t land on an easy answer, which makes it more useful.
Key Takeaways
The Eisner-Wells-Katzenberg turnaround worked on every front. They raised park prices, made cheap live-action hits, and turned animated films into Broadway-style musicals. Operating profit rose roughly 8x in a decade.
ESPN was an accidental goldmine. It came along in the 1995 ABC deal. Its cable affiliate fees paid for park expansion and later for Pixar, Marvel and Lucasfilm.
The ABC deal cost Disney its simplicity. From then on, Disney ran two very different businesses: the character flywheel and the cable bundle.
Pixar was the spiritual successor to Walt’s studio. Bob Iger’s first big move was to buy it and hand Disney Animation to its leaders. Steve Jobs later said the deal “saved two companies.”
Streaming pulls against the flywheel. Disney+ needs a constant stream of new content, while the flywheel depends on rare, special releases. Parks now produce about 60% of Disney’s operating income.
Company Overview
Company: The Walt Disney Company
Founded: October 1923, Los Angeles, by Walt and Roy Disney
Headquarters: Burbank, California
Leadership today: CEO Josh D’Amaro (named February 2026, took over in March); Dana Walden, president and chief creative officer
What it does: Disney makes films and TV, runs Disney+, Hulu and ESPN, and operates theme parks and cruise ships. It brings in about $94B in revenue across three segments: Entertainment, Experiences (parks and cruises) and Sports. It owns Disney Animation, Pixar, Marvel, Lucasfilm, 20th Century and ABC.
Narrative
A company in chaos (1984)
By 1984, Disney Animation had stalled, EPCOT had opened far over budget, and corporate raiders were circling. Some deals on the table would have sold the film library to MGM and the parks to hotel operators. To fend off the raiders, management sold a large stake to Fort Worth’s Bass family, who ended up owning about 25% of the company. Parks and consumer products earned about a quarter billion dollars that year, while film and TV earned about $2M.
A half hour north, Walt’s own school, CalArts, was training the next generation in Classroom A113: John Lasseter, Brad Bird, Tim Burton, John Musker, Brenda Chapman, Andrew Stanton and Pete Docter. Disney hired several of them and then let them go.
Eisner, Wells and Katzenberg arrive (1984–1988)
On September 7, 1984, Walt’s nephew Roy E. Disney, his business partner Stanley Gold and the Bass family forced out CEO Ron Miller. Fourteen days later, Paramount’s Michael Eisner became CEO and former Warner Bros. president Frank Wells became president. Wells agreed to be number two as long as both men reported directly to the board. Eisner brought Jeffrey Katzenberg over from Paramount to run the studios.
They moved animation off the main lot to Glendale, raised park prices that had barely changed since Walt’s death (parking was still $1), and brought Eisner’s “singles and doubles” approach from Paramount: low budgets and strong concepts instead of expensive stars. Twenty-seven of their first 33 films made money, and the era’s hits included Three Men and a Baby, Good Morning, Vietnam and Pretty Woman. Roy E. made them promise not to shut down animation and became its chairman.
The animation Renaissance (1989–1994)
Lyricist Howard Ashman and composer Alan Menken treated animated films as Broadway musicals. The Little Mermaid (1989) made less at the box office than When Harry Met Sally, but became huge on home video. Then came Beauty and the Beast ($330M on a $25M budget), Aladdin (about $500M on $28M) and The Lion King ($750M on $45M), the most successful hand-drawn film ever. Animation moved back onto the Burbank lot, on the same plot once planned for Disneyland.
CAPS, a $10M computer system built with a small Bay Area vendor called Pixar, replaced hand inking and painting and made complex camera shots cheap. The Little Mermaid had three multiplane shots, and The Lion King had hundreds.
Extending the flywheel (1985–1994)
Home video: Disney released Pinocchio on VHS in 1985 despite family objections, and all 1.7M copies sold. Aladdin sold 30M tapes, and The Lion King sold 32M, the best-selling VHS of all time. Home video became Disney’s second-largest profit center after the parks.
Stores and Broadway: Disney opened more than 750 mall stores. On Broadway, Beauty and the Beast came first, and then The Lion King musical became the highest-grossing Broadway show ever.
Parks as resorts: Disney World added hotels, a timeshare program, Hollywood Studios and Animal Kingdom, turning a day trip into a week-long vacation. Euro Disney was the exception: it cost $4B, lost money for years, and eventually recovered as Disneyland Paris.
The result: by 1994, Disney’s market cap reached $22B, up 10x, making it the most valuable traditional media company.
1994: tragedy, and the ABC deal (1994–1996)
On Easter Sunday 1994, Frank Wells died in a helicopter crash. Three months later, Eisner had emergency quadruple bypass surgery. Katzenberg left when he didn’t get the number-two job, sued Disney (a reported $280M settlement), and co-founded DreamWorks with Steven Spielberg and David Geffen, taking Disney animators with him. Howard Ashman had died of AIDS a few years earlier. Eisner named himself president on top of CEO.
After the FCC dropped its rules against networks owning their programming, Eisner met Warren Buffett and Capital Cities CEO Tom Murphy at the 1995 Sun Valley conference. Disney bought Capital Cities/ABC for $19B, at the time the second-largest acquisition ever.
ESPN, the accidental goldmine
ESPN had created the cable “affiliate fee,” where cable companies pay a channel for every subscriber, whether or not they watch. Because live sports is something viewers won’t give up, ESPN could keep raising prices. Its fee was under $1 a month in 1995 and is $9.42 today, about four times any other channel. Roy E. admitted that nobody expected ESPN to become “the weightlifter of the group.”
From 2008 to 2011, cable networks, mostly ESPN, produced 60% of Disney’s operating income. Eisner’s late tenure also brought expensive dot-com bets and the hiring of agent Michael Ovitz as president. Ovitz lasted about a year and left with a $140M severance.
Eisner’s fall (2001–2005)
Disney Animation declined into Treasure Planet, Home on the Range and Chicken Little. After 9/11, park visits collapsed, the stock fell nearly 25%, and most Disney Stores closed. A margin call forced the Bass family to sell about $2B of Disney stock, so Eisner lost his biggest shareholder allies.
In late 2003, Roy E. resigned with a scathing letter and launched SaveDisney.com. In February 2004, Comcast made a $54B hostile bid. At the March 2004 shareholder meeting, 43% of shares withheld support from Eisner. He lost the chairman title, Comcast withdrew, and Bob Iger won the CEO job by pitching three priorities: great branded content, embracing technology, and global growth. Under Eisner’s 21 years, revenue grew from $1.7B to $31B and net income from $97M to $2.5B.
Pixar comes home (1995–2006)
Pixar, the Bay Area studio owned by Steve Jobs that started out as a Disney software vendor, made Toy Story (1995) for Disney and followed it with a run of hits. The partnership fell apart under Eisner, and in January 2004 Pixar walked away.
Iger called Jobs the day he got the CEO job. In January 2006, Disney bought Pixar for $7.4B in stock, making Jobs its largest shareholder, and put Pixar’s John Lasseter and Ed Catmull in charge of Disney Animation. That led to Tangled, Frozen, Zootopia and Moana.
Marvel, Lucasfilm and the peak (2009–2015)
Disney bought Marvel in 2009 and Lucasfilm in 2012, for about $4B each. The Marvel Cinematic Universe grew into the highest-grossing film franchise ever, at nearly $32B. Frozen‘s soundtrack was the best-selling album of 2014, ahead of Taylor Swift’s 1989.
In Iger’s first decade, market cap rose 4x to $200B and operating income tripled. Ben points out that the three acquisitions together cost about four years of cable profits.
Cord cutting and the streaming pivot (2015–2019)
On August 4, 2015, Iger mentioned “modest subscriber losses” at ESPN. The stock fell 10%, and Disney’s share price is about the same today, eleven years later. The rest of the industry scrambled into mergers. Disney came close to buying Twitter, then bought streaming technology company BAMTech and pulled its films off Netflix.
In 2017, Disney agreed to buy most of FOX for $52B. Comcast’s rival bid pushed the price to $71.3B. After selling off pieces, the net cost was about $44B. Disney+ launched in November 2019 at $6.99 a month and signed up 10M subscribers in its first 24 hours.
COVID, Chapek, and Iger’s return (2019–2026)
Iger handed the CEO role to parks chief Bob Chapek in February 2020, just before COVID closed the parks. With everyone at home, Disney+ passed 100M subscribers in 16 months, and Disney’s market cap peaked at $360B. Streaming losses kept growing, and after a rough November 2022 earnings call, the board fired Chapek and brought Iger back.
Iger’s second stint brought a proxy fight with Nelson Peltz, ESPN reported as its own business segment, a deal giving the NFL 10% of ESPN, and ESPN’s full direct-to-consumer service. Parks became the profit engine. In February 2026, parks chief Josh D’Amaro was named CEO.
Deep Dive: Three Business Models Under One Roof
The main thread of the episode is that Disney now runs three businesses that work in very different ways:
1. The flywheel (Walt’s model). Make a small number of great films, release them as big events, then earn money from them for decades through home video, merchandise, Broadway and parks. Scarcity is the key, so the core IP never feels overused.
2. The cable bundle (ESPN’s model). Get paid monthly by nearly every household, whether they watch or not, and use must-see sports to force price increases. Ben reads Ben Thompson’s analysis on the show: this model scaled in a way Walt’s never could. Its content, though, loses value right away. Nobody rewatches last season’s Manningcast.
3. Streaming (Disney+’s model). Win subscribers directly, then keep them with a constant flow of new content, while paying for your own technology, marketing and cancellations. The need for constant output pulls against the flywheel’s scarcity.
For twenty years, Iger used the cash from model two to feed model one. Cord cutting is shrinking model two, and model three has taken much of its place as a source of revenue, without its margins. Sports leagues are also taking a bigger share of the money now that tech companies bid against ESPN for rights.
By the Numbers
$2M: Film and TV profit in 1984, against about $250M from parks and consumer products
8x: Growth in operating profit in Eisner’s first decade (from under $300M to nearly $2B)
$750M: The Lion King‘s box office, on a $45M budget
32M: The Lion King VHS tapes sold, the most for any VHS ever
$11B+: Lifetime revenue of The Lion King musical over about 30 years
$19B: Price of Capital Cities/ABC in 1995, at the time the second-largest acquisition ever
$9.42: ESPN’s average monthly fee per cable subscriber
60%: Share of Disney’s operating income from cable networks, 2008–2011
43%: Share of votes withheld from Eisner at the 2004 shareholder meeting
$7.4B: Pixar’s purchase price, compared with about $4B each for Marvel and Lucasfilm
$71.3B: Final price for FOX’s assets, up from $52B after Comcast’s bid (about $44B net of sales)
$13B: Approximate total losses on Disney’s streaming business before it turned profitable. It now makes about $1B a year.
$19B: Disney’s streaming subscription revenue in 2024 (last reported), about a quarter of the company’s total
325M vs. ~130M: Netflix subscribers compared with Disney+
145M: Annual park visitors, below the 157M pre-pandemic peak, with spending per visitor up about 5% a year
$60B: Planned investment in parks and cruises over ten years
3%: Share of Disney’s revenue that now comes from theatrical film releases
One Big Question: Was Disney+ the right strategy?
Doing nothing wasn’t an option. Every media company that held back ended up merged, sold or much smaller. Both hosts wanted Disney+ to be a small, curated service built only around the great franchises, and both concluded it wouldn’t work as a business.
Why Disney+ probably had to exist: People now go to the movies only for a few big events. Films like Encanto, Turning Red and Elemental no longer reach every kid through theaters. The parks earn $10B a year from that IP, so Disney needs its own way to get those films in front of families.
The alternative: Ben argues for a small Disney+ plus licensing the biggest films to Netflix, which has nearly three times the subscribers. A great Disney film would rise to the top there. David pushes back that Netflix works like a supermarket run by an algorithm, not a movie theater, so a new Disney film would be competing with reruns of Seinfeld.
The kitchen-sink problem: A streaming service needs scale because its fixed costs are so high, and scale requires a broad range of content. That’s how Hulu and the FOX library ended up in the mix, and it’s why Disney+’s need for constant output pulls against the scarcity the brand depends on.
Where they land: Neither host could name a better strategy. The media world since 2015 is worse for content companies, even though it’s the best ever for viewers.
Bull & Bear
Bear: Both the flywheel and the ESPN model are weakened, possibly for good. Ben can’t name a big new original franchise since Moana and Zootopia in 2016, since the hits since then have all been sequels or existing IP. Marvel and Lucasfilm may have provided about twenty years of fuel rather than fifty, and Ben finds himself unexcited for Avengers: Doomsday.
Bull: David argues these franchises work like luxury brands: they have ups and downs, but you can’t kill them, because they are the shared myths families pass down. Ben adds that total profits are back near record levels despite Disney deliberately shrinking its old businesses. David also thinks Disney is still the best home for great IP that needs one, and pitches two acquisitions: Bluey, and Nintendo, which is worth about $50B after a 50% drop.
Seven Powers
The hosts applied the framework to Disney+ versus other streaming services.
Cornered Resource: Disney’s franchises are stronger and more lasting than anything Peacock or Paramount+ owns, which is its edge over those services.
Scale Economies: This is the power that matters most in streaming, and Netflix has it. Netflix earns $13.5B in operating income on $45B in revenue, while Disney’s streaming business earns about $1B. David thinks Disney should aim to be a clear number two, cut back on content, and let the flywheel recover. Ben goes further and wants Hulu and the FOX assets spun off, keeping only Avatar. Earlier in the episode, David also points to scale economies as the reason ESPN could outbid everyone for sports rights until tech companies arrived.
Quintessence
Ben: The environment changed. The cable bundle, frequent moviegoing and home video made traditional media unusually easy, and the prosperity of the late 1990s and of 2005–2019 was an anomaly. Disney will be fine if managed carefully, but it will always be compared to those peaks. As he puts it, “You could make money in media then.”
David: Disney is the home of shared, multi-generational myths, and that can’t be killed. It moves in roughly twenty-year cycles, and he wouldn’t be surprised to see it back on top within ten years.
Best Lines
“We have no obligation to make art.” Michael Eisner’s Paramount memo, which goes on to say that making money often requires making art anyway
“Celebrity can open a film, but celebrity can’t carry a film.” Jeffrey Katzenberg, in a widely circulated memo
“You can’t fall off the first floor.” Peter Schneider, on taking over animation after The Black Cauldron
ESPN was “the weightlifter of the group.” Roy E. Disney, on the part of the ABC deal nobody saw coming
“It is you who should be leaving and not me.” Roy E. Disney, in his 2003 resignation letter to Michael Eisner
Water Cooler Material
Disney’s odd holdings. At various points Disney owned the NHL’s Mighty Ducks, baseball’s Anaheim Angels and the 1936 ocean liner the Queen Mary.
Eisner had never seen Snow White. He wasn’t raised on Disney films, though once he took the job he was rarely without his Mickey Mouse tie.
“What do they do down there?” On Katzenberg’s first day, Eisner pointed at the ink and paint department door. Neither of them knew. Eisner told Katzenberg that it was where animated movies were made, and that it was his problem.
A deal in a parking lot. At Sun Valley in 1995, Eisner ran into Warren Buffett, who called over Capital Cities CEO Tom Murphy. The $19B ABC deal came together within about a week.
Hearst’s 20% of ESPN. When ABC bought ESPN, Nabisco took a 20% stake. After KKR bought Nabisco, the stake went to Hearst, which has collected cash from it for four decades.
Save Disney had a sequel. Roy E.’s SaveDisney.com playbook was reused exactly once, for SavePapaJohns.com.
A showdown in Comcast’s hometown. The 2004 shareholder meeting where Eisner lost the chairman title was held in Philadelphia, where Comcast is based.
Disney+ started with Ichiro. BAMTech, the technology behind Disney+, began in 2002 by streaming Seattle Mariners games to Japan.
Disney almost owned Twitter. The deal was nearly finished before Iger backed out at the last minute.
Ben called it in 2019. On Acquired’s Disney+ episode, Ben warned that Disney was underestimating how much new content subscribers would need.
Carveouts
Warby Parker Transitions Extra Active: Ben’s pick. The brown tint is what finally made light-adjusting lenses look good to him, and they even darken in the car.
Michael Arndt’s Toy Story 3 story presentation: David’s pick, an 80-minute lecture from the screenwriter on how story works at Pixar, including early story reels.
First-party Princess Peach costumes: David’s request to Nintendo, after his daughter found none at the flagship store in New York. He sees it as evidence that Disney should buy Nintendo.
Golden State Valkyries: David’s pick. In only its second season, San Francisco’s WNBA team has sold out every game and is worth over $1B. He calls his first game one of the best sporting events he’s ever attended.
Additional Notes
Episode Metadata
Season / Episode: Fall 2026, Episode 1
Release Date: August 9, 2026
Length: 4:32:56
Links