Ex-Disney CEO: Letting Netflix Have Disney Films Was Like Selling ‘Nuclear Weapons’ to ‘Third-World Country’

In 2015, former Disney CEO Bob Iger had a realization. His company was making Netflix rich.

That realization led to the acquisition of 20th Century Fox and the creation of Disney+. Today, Disney and its streaming options are going head-to-head with their former ally. But the old arrangement gave Netflix a massive head start.

In an interview with Kara Swisher's podcast “Sway,” Iger spoke about what he now regards as a mistake.

“Disney was licensing movies to Netflix and they were helping to build their platform on the back of our movies, and having the direct relationship with the consumer, and building this global subscription business, which they did a brilliant job of,” Iger said. “They deserve a lot of credit. While they were doing that, they were using some of the circulation that we helped them create, and the subscription growth, to fund their own television and movie production, directly competitive with us for talent and stories. And I woke up one day and thought we’re basically selling nuclear weapons technology to a third-world country, and now they’re using it against us. So we decided at the time that we would stop licensing to Netflix, and do it ourselves. And it resulted in a substantial decrease in our revenue, because we weaned ourselves of all that licensing money, but it thrust us into a business that is the most compelling growth engine in media today.”

Iger also spoke of his purposeful acquisitions. “If we owned a lot of high quality, branded content - Marvel, Pixar, Star Wars, The Simpsons, Avatar, National Geographic - that would enable us to withstand not only disruption of a business, but the incursion of new entrants into the business, even very, very deep-pocketed very competitive competitors.”

Disney’s biggest acquisition under Iger’s watch was the 20th Century Fox purchase. “When Rupert Murdoch called me in 2017, to talk about possibly buying some of the assets of his company, he asked me whether I thought they were too small - and could they basically survive all this new competition?” Iger said. “And (Murdoch) was thinking, I think smartly, of exiting a good part of the business because he worried that they didn’t have the scale. I was thinking at the time, knowing that we were going to be launching Disney+, and going into the streaming business, that if we had on top of Marvel, Pixar, Star Wars, Disney, ESPN, ABC, if we had National Geographic and ‘The Simpsons’ and ‘Avatar,’ and the whole Fox library, and the great ‘people’ talent that came with those assets, that we would have the scale, particularly to go into the streaming business.”

That collection of assets has propelled Disney+ to 118 million subscribers as of last quarter.

Iger went on to say that streaming competitors Apple TV+ and Amazon Prime Video likely aren’t creating movies and shows strictly for revenue, but as an add-on value to sell other products.