Advertisement

What Disney’s streaming chief departure to TIkTok means for both companies

Wall Street analysts were quick to weigh in on the departure of Disney’s top streaming chief, Kevin Mayer, to TikTok, with Loop Capital downgrading the stock from buy to hold, who called Mayer "the architect of the Disney+ launch." Meanwhile, Bank of America kept its buy rating, which sees the move as “as an opportunistic move to become CEO of a high growth social media platform.” The Final Round panel weighs in on what the shakeup means for the future of both companies.

Video Transcript

MYLES UDLAND: It's time now for our call of the day, and today we're talking about Loop Capital's latest on shares of Disney, the firm downgrading stock to hold from buy. This following the departure of Kevin Mayer, who was in charge of its D to C business, and he is leaving to become the CEO of TikTok. So Dan Roberts, this kind of bringing together a number of themes in your life, an enthusiasm for Disney's sharing platforms, and an enthusiasm for TikTok.

I think, you know, Mayer joining ByteDance, which is-- so he's, what, the COO of ByteDance and that makes him the CEO of TikTok. There was a weird kind of PR thing where TikTok's parent company tried to pretend like they're not a Chinese company because they're incorporated in the Cayman Islands, but I think everyone looks at this and says oh, TikTok will go public with Kevin Mayer as the CEO. And there will be a way for this all to happen.

ADVERTISEMENT

I mean, what do you make of this move? Is it about him leaving Disney, which Loop doesn't seem to like, or is it about him actually being bullish on what TikTok could offer?

DAN ROBERTS: Well, I think both are possible, right? I mean, this is an extremely tough time for Disney. We've talked that to death. Everything that Disney has-- all pillars of its business-- are in trouble amid coronavirus, and this could take a long time for all the parts to bounce back, even once they're open. Now, Disney Plus has been a silver lining, but he might feel like, well, I did my job with that. I mean, hugely instrumental with Disney Plus-- which, by most accounts, hard to say it has not been a success-- and now moving on to something that obviously, right now, is on fire.

Now that said, very much not an apples-to-apples comparison. I mean, Disney over here and TikTok over there, US face app that is Chinese-owned, and there's been a lot of controversy over that. And also, Kevin Mayer, not a super-young guy. And what I found a little bit tickling was in "The New York Times" story about his departure, there's a parenthetical that says, you know, "Mr. Mayer is super-excited about TikTok, not as excited about posting TikTok videos of himself," which, of course. But I guarantee, he will have to post a couple.

You know, I'm sure if it were Bob Iger, Iger would post a couple TikToks too. But look, I think it's a little far to now be bearish just because of his departure. Disney has already announced the female executive will now take on this role-- Rebecca Campbell. And then also, while they were at it, Disney announced a new head of parks and consumer products. So, I mean, it's kind of like the rotation continues. Who's next up?

But with TikTok, it's interesting. Because ByteDance-- the parent company-- is based in Beijing and the stories say that Kevin Mayer will stay in LA but also spend time in Beijing. But I think that even though ByteDance owns a couple of other apps in China, there's basically a TikTok that's in China. There's also a news aggregator that ByteDance owns, TikTok is the thing. And I think you're right. You have to expect this TikTok, if it continues to grow like gangbusters, there's an IPO down the road.

And that app has really been building a star team of executives. There was also a high-up YouTube exec that left to work at TikTok. So for Kevin Mayer, it makes sense. But, you know, I don't see that as automatically a negative for Disney. Probably a good time to get out of Disney, though, because of this difficult-- at least year, if not two years-- the company is about to have.

MELODY HAHM: And Dan, you can't discount the saltiness that Kevin must be feeling, right? Because he was supposedly going to be the successor to Iger. Instead, it was the other Bob that got the role.

DAN ROBERTS: [INAUDIBLE].

MELODY HAHM: You know, I can't imagine that that wasn't part of the calculus, right? As much as he's framing it as this is an opportunity I couldn't pass up, he would have stayed, obviously, if he had gotten this new role, or if he had been promised it down the line. And then to the point of Kevin not wanting to actually share his own TikToks, we all know the best TikToks-- at least that I've been able to witness-- are the ones where the parents make the cameo, right?

The parents make the appearance. You're making a fool out of your really illustrious parents like Mark Cuban, and that's how parents end up getting drawn into the platform. And then now I've seen pop off on their own right, whereas they used to kind of be this fixture in their children who are, you know, 17, 18 years old to them kind of taking on their own sort of platform and becoming a fun mom or the baker dad, or everything in between.

I think this is going to be really interesting from the regulatory side of things, because we've known so many lawmakers from both sides of the aisle, really pressing TikTok for such a long time over the last two years, I would say, saying, hey, you have to testify. You have to be treated like a US company given how much momentum there is in this country, especially with the youth, especially for minors.

So-- and we've all been on the platform. We see how much scantily-clad folks there are. We see a lot of kind of secrets being revealed on this platform. So if you can imagine, there obviously will be that much more intense scrutiny on someone like Kevin Mayer during this period of time. And I am curious to see if he serves as a very successful buffer or liaison between Beijing and DC, which inevitably, will be hit, this role.

DAN ROBERTS: Now the irony of saying Kevin Mayer is probably not happy about not becoming Disney CEO is that Bob Chapek became CEO, and it doesn't matter because by all reports, Bob Iger is again the CEO. So is that is sort of funny.

JEN ROGERS: I think that's part of the whole complication of this sort of "Game of Thrones" situation that has been set up there. And that's why to the bank of America note that's out, to other people I've talked to, this is expected and it doesn't seem that it's necessarily bad. Maybe they made the wrong choice in the beginning, some people think, but now, he's got to go, especially because you have Bob Iger there. It just sets up an incredibly difficult situation.

If Iger had really stepped back and Chapek had said, like, look. I need you to stick around. We're in a global pandemic. Help me, here. That could have maybe formed some sort of partnership, but that's not what is going on. And Melody, I can't get my kids to put me in their TikToks. I've tried.

MELODY HAHM: You have to be interesting. You have to be silly. You got to make--

[INTERPOSING VOICES]

JEN ROGERS: I did [INAUDIBLE].

MELODY HAHM: Jen, [INAUDIBLE] interesting.

JEN ROGERS: I'm interesting.

DAN ROBERTS: Jen, just corn on the cob on the drill, and knock out all your front teeth like Jason Derulo, today.

MYLES UDLAND: Man.

JEN ROGERS: Apparently my renegade is really bad, my whoa, my whole thing. No one will do it with me. It's very sad.

MYLES UDLAND: Wow, we are all really dating ourselves here, getting this all very boomer--