WHEN: Today, Tuesday, May 5th
WHERE: CNBC's "Squawk on the Street"
Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Disney Chairman & CEO Bob Iger on CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET) today. Following is a link to the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000376724
All references must be sourced to CNBC.
JIM CRAMER: THIS IS VERY BIG DAY. WE ARE GOING TO START WITH DISNEY. DISNEY SHARES ARE RISING PRETTY PRECIPITOUSLY IN PREMARKET. DOW COMPONENT POSTING MUCH BETTER THAN EXPECTED QUARTERLY RESULTS. HIGHER REVENUES IN ITS THEME PARKS, CONSUMER PRODUCTS, MEDIA NETWORKS DIVISIONS – SOME SURPRISES THERE. JOINING US FOR AN EXCLUSIVE INTERVIEW IS THE CHAIRMAN AND CEO OF WALT DISNEY COMPANY BOB IGER. BOB, GREAT TO SEE YOU.
BOB IGER: THANKS, JIM. GOOD MORNING.
CRAMER: I FEEL LIKE I HAVE TO DO A CONGRATULATIONS. I THINK YOU ARE GOING TO HEAR A LOT ON YOUR CONFERENCE CALL. LET'S GO RIGHT TO IT. MARVEL FRANCHISE OR PARKS AND RESORTS, WHICH WOULD YOU SAY WERE THE ONES THAT REALLY DROVE THE EARNINGS?
IGER: WELL, PARKS AND RESORTS AND CONSUMER PRODUCTS HAD GREAT QUARTERS. BUT ACTUALLY, ALL OF OUR BUSINESSES DID. THERE WERE SOME NUMBERS THAT WEREN'T NECESSARILY COMPARABLE. FOR INSTANCE, THE STUDIO HAD A GREAT QUARTER. BUT LAST YEAR THIS QUARTER WE HAD "FROZEN," PARTICULARLY THE VIDEO. SO THAT IS NOT A GREAT COMPARISON. AND THEN ON THE MEDIA NETWORK SIDE WE HAD EXTRA SOME COSTS AT ESPN BECAUSE OF THE COLLEGE FOOTBALL PLAYOFFS AND THE NFL WILDCARD. SO GENERALLY SPEAKING, ALL OF OUR BUSINESSES HAD A VERY STRONG QUARTER. BUT FROM A PERCENTAGE INCREASE PERSPECTIVE, PARKS AND RESORTS AND CONSUMER PRODUCTS LED THE WAY.
CRAMER: WELL, LET'S TALK ABOUT PARKS AND RESORTS BECAUSE HOW MUCH OF THAT IS JUST THE TECH THAT YOU ADDED, HOW MUCH OF IT IS NEW THINGS YOU PUT IN DURING THE DOWN TURN, HOW MUCH OF IT IS GASOLINE?
IGER: I THINK WE HAVE A GREAT BUSINESS IN THAT WE OFFER THE CONSUMER A GREAT PRODUCT AND A GREAT EXPERIENCE. SO I THINK IT STARTS THERE. IT'S GREAT SERVICE, GREAT USE OF INTELLECTUAL PROPERTY AND GREAT PRICE-TO-VALUE RELATIONSHIPS. I DON'T THINK YOU CAN LOOK AT GAS PRICES OR WHAT'S GOING ON WITH THE DOLLAR, CURRENCY EXCHANGE ISSUES. I THINK YOU JUST HAVE TO LOOK AT WHAT IS THE PRODUCT THAT WE ARE OFFERING, WHAT IS THE EXPERIENCE THAT WE ARE OFFERING, AND HOW MUCH IN DEMAND IS IT. AND I THINK CLEARLY OVER THESE YEARS, DEMAND FOR OUR PARKS AND RESORTS EXPERIENCE, NOT JUST IN THE UNITED STATES, BUT GLOBALLY, IS INCREASING.
CRAMER: ALRIGHT, BOB. CONSUMER PRODUCTS, I DON'T EVEN THINK IT STARTED HERE BECAUSE YOU'VE GOT "STAR WARS" COMING UP IN Q4. WHAT ARE THE MERCHANDISE PLANS THERE? AND CAN MERCHANDISE ACTUALLY ECLIPSE THE ACTUAL MOVIE?
IGER: WELL, WE'RE NOT GOING TO MAKE ANY PREDICTIONS ABOUT MERCHANDISE. BUT WE CERTAINLY HAVE GRAND PLANS FOR "STAR WARS" MERCHANDISE. YOU ARE TALKING ABOUT THE NUMBER ONE FRANCHISE IN THE WORLD IN TERMS OF MERCHANDISE. AND THERE HASN'T BEEN A FILM RELEASE SINCE 2005. SO WE'VE ALREADY SEEN INTEREST IN THIS FILM STARTING TO GENERATE INCREASED INTEREST IN THE MERCHANDISE FOR THIS FILM. AND THE FILM IS SEVEN MONTHS AWAY. SO I THINK YOU CAN EXPECT THAT THE NUMBER ONE FRANCHISE IN THE WORLD IS ONLY GOING TO STRENGTHEN IN TERMS OF VALUE, PARTICULARLY ON THE CONSUMER PRODUCTS FRONT. BUT RIGHT NOW, WHAT WE ARE MOSTLY FOCUSED ON IS MAKING A GREAT FILM. AND I CAN'T WAIT TO SHOW IT TO THE WORLD.
CARL QUINTANILLA: BOB, IT'S CARL. YOU'VE SPENT $15 BILLION ON MARVEL, PIXAR, LUCAS FILM. OBVIOUSLY PEOPLE SNICKERED A LONG TIME AGO. YOU'VE SAID ON OUR AIR RECENTLY YOU ARE FAIRLY CONFIDENT THOSE WERE GOOD DEALS FOR THE COMPANY. IS YOUR APPETITE SATED FOR ANY ADDITIONAL M&A AT LEAST ON THE STUDIO FRONT?
IGER: WELL, WE HAVE A GREAT HAND ON THE STUDIO FRONT. AND AS A COMPANY IN TERMS OF OUR INTELLECTUAL PROPERTY. DISNEY WAS STRONG TO BEGIN WITH AND ADDING PIXAR CLEARLY ADDED TO THE STRENGTH, PARTICULARLY ON THE ANIMATION FRONT. AND JOHN LASSETER AND ED CATMULL, WHO CAME WITH PIXAR, TURNED DISNEY ANIMATION AROUND. MARVEL, OBVIOUSLY A PHENOMENAL BRAND, A GREAT FRANCHISE. AND THE SUCCESS OF MARVEL IN THOSE FILMS SINCE WE BOUGHT IT HAS BEEN WELL BEYOND OUR EXPECTATIONS WHEN WE PURCHASED MARVEL IN 2009. I'VE TALKED ABOUT LUCAS AND "STAR WARS." THE BEST IS YET TO COME. WE HAVE SIX "STAR WARS" FILMS IN THE WORKS. THERE WILL BE THREE RELEASED BETWEEN NOW AND MAY 2017. SO I THINK AS A COMPANY, WE'VE GOT A GREAT HAND. WE DON'T REALLY NEED MORE. WE CLEARLY HAVE DEMONSTRATED INTEREST IN INTELLECTUAL PROPERTY AND ABILITY TO LEVERAGE IT ACROSS OUR BUSINESSES OVER TIME, OVER MANY TERRITORIES AROUND THE WORLD. SO I DON'T WANT TO SUGGEST THAT WE ARE SATED OR NOT. BUT I DON'T THINK THERE ARE ANY SPECIFIC NEEDS RIGHT NOW. THERE ARE NO HOLES TO FILL.
DAVID FABER: BOB, IT'S DAVID. DURING THIS QUARTER, VERIZON'S FIOS CAME OUT WITH A NEW PLAN TO TIER VARIOUS OFFERINGS FOR ITS VIDEO CUSTOMERS. SPORTS OBVIOUSLY ALWAYS FIGURES PROMINENTLY IN THESE SO-CALLED BUNDLES, BUT IN THIS CASE IT APPEARS THEY MAY HAVE RUN AFOUL OF SOME OF THE AGREEMENTS OUT THERE AND THERE HAS BEEN REPORTING THAT SUGGESTS YOU GUYS AT ESPN MAY UNDERTAKE LEGAL ACTION AGAINST THEM. CAN WE EXPECT MORE OF THESE TYPE OF DIFFERENT TIERED OFFERINGS WHEN IT COMES TO THE BUNDLE? AND ARE YOU GOING TO GET OR HAVE TO GET MORE LITIGIOUS WHEN IT COMES TO SOME OF THESE COMPANIES TRYING TO BE CREATIVE AND PERHAPS VIOLATING YOUR PROGRAMMING AGREEMENTS?
IGER: WELL I THINK, FIRST OF ALL, WITH REGARD TO VERIZON, I THINK IT IS VERY SPECIFIC. WE BELIEVE THAT THEY HAVE VIOLATED OUR AGREEMENT, AND THEREFORE, WE HAVE TAKEN LEGAL ACTION. WE ARE CERTAINLY WILLING TO WORK WITH VARIOUS DISTRIBUTORS TO COME UP WITH PACKAGES THAT ARE OF VALUE TO THEIR CONSUMERS AND ALSO CONTINUE TO PROVIDE VALUE FOR US. SO I DON'T THINK THIS IS THE BEGINNING OF AN ERA OF LITIGATION BETWEEN THE PROGRAMMERS AND THE DISTRIBUTORS. I THINK THERE'S A LOT THAT NEEDS TO BE SAID AND CONSIDERED AS IT RELATES TO THE BUNDLE. I DON'T WANT TO SOUND POLYANNA-ISH ABOUT THIS, BUT I DON'T HAPPEN TO BELIEVE THAT THE BUNDLE AS WE KNOW IT IS DEAD. WE DON'T SEE ANY DISTURBING TRENDS IN THAT REGARD BECAUSE WE BELIEVE THE BUNDLE BASICALLY PROVIDES GREAT VALUE TO THE CONSUMER IN TERMS OF CHOICE AND IN TERMS OF PRICE. NOW, WE ARE IN A NEW ERA OF GREAT CONSUMER CHOICE AND CONSUMER AUTHORITY WHERE THERE HAS BEEN A SHIFT. AND I THINK CONSUMERS ARE GOING TO DEMAND MORE FLEXIBILITY AND MORE CUSTOMIZATION. AND AS A COMPANY, WE'VE BEEN AT THE FOREFRONT OF OFFERING THAT AND BEING WILLING TO OFFER MORE. TECHNOLOGY IS, WE BELIEVE, FRIEND NOT FOE, BOTH TO THE PROGRAMMER AND TO THE CONSUMER. I THINK THE KEY IN TERMS OF BUNDLES IS, AGAIN, HOW MUCH VALUE IS THE CONSUMER GETTING? HOW MUCH CHOICE DO THEY HAVE AND AT WHAT PRICE? IS THE NAVIGATION GOOD? THAT'S REALLY CRITICAL. USER EXPERIENCE IS GOING TO GET EVEN MORE IMPORTANT. THE LAST THING I WANT TO BRING UP BECAUSE A LOT HAS NOT BEEN SAID OR CONSIDERED ABOUT SKINNY PACKAGES, IS THAT WHEN YOU UNBUNDLE BROADBAND, THE BROADBAND COSTS ARE GOING TO GO UP. A LOT OF CONSUMERS WHO ARE BUYING THE EXPANDED BASIC BUNDLE ARE GETTING BROADBAND BUNDLED WITH THAT AT A BARGAIN RATE. WHEN YOU GO TO A SKINNY PACKAGE, YOU ARE GOING TO HAVE TO PAY FOR BROADBAND SEPARATELY. AND THAT'S GOING TO BE VERY EXPENSIVE. SO I HAVEN'T SEEN A SKINNY PACKAGE THAT IN MY OPINION CREATES GREAT VALUE TO THE CONSUMER YET. BUT WE WILL SEE. AND WE ARE OPEN TO DISCUSSION ABOUT IT.
CRAMER: BOB, YOU RAISED THE ISSUE OF COST OF PROGRAMMING. I DIDN'T. OBVIOUSLY, THIS IS SOMETHING THAT MATTERS A LOT FOR SPORTS. IS THERE A CAP? IS THERE SOME WAY YOU WOULD BE ABLE TO PIT THESE LEAGUES AGAINST EACH OTHER? BE ABLE TO SAY LISTEN, WE ARE NOT GOING TO PAY ANY MORE FOR NFL? WE'RE GOING TO SAY LISTEN, THE BCS, THIS IS ALL WE'RE GOING TO DO AND WE'RE GOING TO FIND NEW SPORTS THAT PEOPLE WATCH BECAUSE WE ARE JUST NOT GOING TO TOLERATE ENDLESS INCREASES IN THE PRICE OF SPORTS NO MATTER WHAT BECAUSE WE NEED LIVE PROGRAMMING?
IGER: LOOK, WE'VE BOUGHT SOME THINGS AGGRESSIVELY. THE COLLEGE FOOTBALL CHAMPIONSHIP IS ONE MORE RECENT EXAMPLE OF THAT. AND WE'VE ALSO PASSED ON SOME PACKAGES. WE FEEL AT ESPN THAT WE'VE GOT A GREAT HAND IN TERMS OF PROGRAMMING. WE DON'T BELIEVE ANYBODY COMES CLOSE. THAT'S ENABLED US TO DRIVE RATINGS AND ADVERTISING GROWTH. AND ALSO TO CONTINUE TO DRIVE SUB FEE GROWTH WHICH OBVIOUSLY CREATES HUGE VALUE AND HITS THE BOTTOM LINE IN VERY DRAMATIC FASHION. WE DID SAY, BY THE WAY, JIM, THAT THE COST FOR ESPN PROGRAMMING WOULD BE HIGHER THIS FIRST HALF OF THE YEAR BECAUSE OF A NEW NFL DEAL. THE NFL WILD CARD, THE COLLEGE FOOTBALL PLAYOFFS. SO YOU ARE NOT GOING TO SEE COSTS RISE IN THE SECOND HALF OF THE YEAR FOR ESPN THE WAY THEY DID IN THE FIRST. ESPN HAS ALSO EXTENDED MULTIPLE DEALS OVER THE NEXT DECADE. SO THE NEXT BALLOON IS GOING TO BE DUE TO THE NEW NBA DEAL WHICH KICKS I THINK IN 2017,2018. BUT BEYOND THAT, YOU ARE NOT GOING TO SEE THE KIND OF DRAMATIC COST INCREASES THAT WE'VE SEEN THESE LAST FEW YEARS. SO ESPN'S COSTS ARE GOING TO FLATTEN OUT. WE ARE NOT GOING TO BUY EVERYTHING. WE CAN'T. BUT WE'RE GOING TO BUY WHAT WE BELIEVE THE VIEWER WANTS AND WHAT WE BELIEVE IS GOING TO CREATE VALUE FOR THE COMPANY.
FABER: BOB, WHEN I TALKED TO INVESTORS WHO ARE ALMOST UNIFORMLY HAPPY IF THEY HAVE OWNED YOUR STOCK FOR ANY LEVEL OF ANY PERIOD OF TIME. THEY TALK ABOUT DISNEY BECOMING BASICALLY JUST A CONSUMER DISCRETIONARY COMPANY A LA PROCTER AND GAMBLE. AND SAY THAT IT DESERVES AN EVEN HIGHER MULTIPLE GIVEN THAT. DO YOU AGREE WITH THAT?
IGER: YOU KNOW, WE ARE STORYTELLERS FIRST. IF YOU LOOK AT WHETHER IT'S ESPN AND THEIR COVERAGE OF SPORTS, YOU LOOK AT OUR MOVIES, YOU LOOK AT TELEVISION, WE TELL A LOT OF GREAT STORIES. AND PEOPLE LIKE STORIES. THEY DEMAND STORIES. THEY LIKE TO BE ENTERTAINED. THEY LIKE TO BE INFORMED. I DON'T THINK THAT WE ARE SIMILAR TO PROCTER AND GAMBLE EXCEPT IN THE COLLECTION OF GREAT CONSUMER BRANDS THAT WE HAVE. BUT I THINK OUR PRODUCT IS CONSUMED IN VASTLY DIFFERENT WAYS THAN PEOPLE WILL USE TIDE OR CREST TOOTHPASTE, AS A FOR INSTANCE. SO I THINK THERE IS SOME SIMILARITIES BECAUSE OF THE BRAND VALUE, BUT I THINK THERE ARE A LOT OF THINGS THAT ARE NOT LIKE THE BIG CONSUMER PRODUCTS COMPANIES.
CRAMER: BOB, LAST QUESTION. YOU TALK ABOUT NOT NECESSARILY WILLING TO BUY ALL SORTS OF PROGRAMMING. I SAW, ONCE AGAIN, YOU WERE IN THERE BUYING A HUGE AMOUNT OF YOUR STOCK. YOU'RE IN THERE ON THE DAYS THAT THE STOCK GOES DOWN, AREN'T YOU?
IGER: WE ARE GOING TO GET A LITTLE BIT MORE SPECIFIC ABOUT THAT ON THE CALL, BUT WE'VE BEEN BUYERS OF OUR STOCK OVER THE LAST NUMBER OF YEARS. WE'VE ACTUALLY LOOKED AT RETURNING CAPITAL TO SHAREHOLDERS IN A VARIETY OF DIFFERENT WAYS. CLEARLY, WE'VE HAD A GREAT RUN IN TERMS OF OUR STOCK PRICE. WE'VE ALSO MANAGED TO CONTINUE TO INCREASE THE DIVIDEND OVER THE YEARS. ANOTHER BIG INCREASE THIS PAST YEAR. AND WE'VE BEEN BUYING BACK OUR STOCK. AND ON TOP OF ALL THAT, WE'VE BEEN INVESTING IN OUR BUSINESSES AND ACQUIRING COMPANIES. SO WE THINK THAT WE'VE MANAGED TO DELIVER A GREAT BLEND IN TERMS OF HOW WE'VE RETURNED CAPITAL TO INVESTORS. AND I DON'T KNOW THAT THAT'S NECESSARILY GOING TO CONTINUE IN THE EXACT FASHION THAT IT HAS. WE TALKED ABOUT ACQUISITIONS, FOR INSTANCE. BUT I THINK THIS COMPANY'S FREE CASH FLOW IS LIKELY TO CONTINUE TO BE ROBUST. AND DECISIONS IN TERMS OF HOW WE RETURN CAPITAL WILL HAVE TO BE MADE ON AN ANNUAL BASIS. AND I'D GUESS THAT DIVIDEND INCREASES AND SHARE BUYBACKS ARE GOING TO BE PART OF THAT.
CRAMER: WELL BOB, I WANT TO THANK YOU SO MUCH. I KNOW IT'S A TOUGH SCHEDULE TODAY. BOB IGER, CHAIRMAN AND CEO OF DISNEY. CONGRATULATIONS, YES INDEED, ON A QUARTER THAT REALLY PLEASES PRETTY MUCH EVERYBODY. GOOD TO SEE YOU, SIR.
IGER: THANKS, JIM. THANK YOU.
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