In about 698 days, the Walt Disney Company is supposed to have its fourth CEO in three years.
Optimistically presuming that past and current House of Mouse boss Bob Iger really does hand over the keys to the Magic Kingdom in late 2024 to a designated successor, the soon-to-be 100-year-old media giant may look very different than it does now — as could the contracting industry overall.
It’s a reality in a self-described “age of great anxiety” that Iger himself is markedly responsible for in many ways, but rarely is held accountable for.
“Iger gets a lot of praise as an executive, a lot of it well deserved,” noted an agency captain of the Disney vet, who returned on November 20 to the CEO job he handed to Bob Chapek less than two years ago. “But one of his greatest accomplishments may be sidestepping his missteps. The billions in debt that came with the Fox purchase, going all in on streaming, hemorrhaging TV and ESPN viewership, and the succession fiascos alone would have killed any other CEO.” Lauded by some as the man in the center of the room where it happens, in a nod to his beloved Hamilton, one studio insider added of Iger: “He’s teflon like Reagan, but left a lot of mess over the years for others to clean up like (Bill) Clinton.”
Still, eulogized and feted by fellow grand viziers both during his previous stint running Disney and during his short-lived but socially-crammed retirement, Iger will wake up on Christmas morning facing a new year likely full of economic austerity and hard choices as the company and the entertainment business heads deeper into choppy waters.
Perhaps in his sleep, Iger will have heard whispers from ghosts like one-time heir presumptive Tom Staggs, real life successor Chapek, and Apple boss and pal Tim Cook. Perhaps such ghosts recited Percy Bysshe Shelley’s poem “Ozymandias” and, as in Charles Dickens’ A Christmas Carol, showed the 71-year old Iger frightening visions of the past, present, and future. Perhaps he will be haunted by sins of the past that could determine his and the company’s next era.
After checking the Avatar: The Way of Water box office in the pre-dawn hours and looking out over Brentwood, the notoriously early-rising Iger may have started mulling over the usefulness of that checklist of optimism, courage, focus, decisiveness, curiosity, fairness, thoughtfulness, authenticity, the relentless pursuit of perfection, and integrity he laid out as principles of “true leadership,” described in his 2019 Ride of a Lifetime memoir. Ticking off another day on his present two-year contract as Disney CEO and looking for the icebergs in front of him and the pressing need to pick a corporate heir, Iger may ask himself, “Why the hell did I agree to do this again?” It certainly wouldn’t be an unprecedented question in an industry that Rupert Murdoch and Iger himself recently predicted would see the Big Screen becoming smaller, linear TV collapse and streaming confront a culling.
The November coup against Chapek orchestrated by CFO Christine McCarthy and the sudden back-to-the-future change in Disney’s corner office followed a bleak end of fiscal 2022.
The company last month issued revised guidance for single-digit revenue and profit growth in 2023, a fraction of the gains outlined in previous internal and Wall Street forecasts. While Disney’s focus on streaming has yielded strong results in ever growing subscriber totals, the initiative has also become a financial drain, causing almost $1.5 billion in operating losses in just the most recent quarter. The brass has insisted that the worst losses are in the rear-view mirror and they still expect streaming to become profitable by next fiscal year.
Despite the talk of wish fullfilment, though, investors haven’t responded well to the company’s narrative. After a short-lived rally on the news of Iger’s return, Disney shares have recently slumped to multi-year lows below $90. They have declined more than 40% in 2022 to date — not the steepest drop in the battered media sector, but an unsettling one for investors in a Dow component long known as a beacon of stability.
It’s a “Bah Humbug” state of affairs that puts Iger’s shortcomings as well as his strengths in the spotlight, as his latest swan song commences:
GHOST OF DISNEY PAST – Tom Staggs literally saved Iger’s life in 2003 by using the Heimlich maneuver to dislodge a chicken bone that was caught in the choking exec’s windpipe. However, in a series of ruthless moves Iger repaid that debt by kicking then heir apparent and COO to the curb in March 2016. A year after then CFO and CEO contender Jay Rasulo was passed over for promotion and took the hint before he was pushed. Bob Chapek did get the CEO job in 2020, but Iger quickly made sure to never hand his successor real power while he was still at Disney. Once Iger left, the white gloves came off. “Iger made it clear, loudly, to anyone who had lunch with him (that) he considered Chapek a failure,” a former studio executive said.
Looking at the bottom line, Iger is revered for a triumvirate of acquisitions: Pixar (2006, $7.4 billion); Marvel (2009. $4 billion); Lucasfilm (2012, $4 billion) that have more than made back their purchase price. Not so the $71 billion for Fox, a price tag that scared away even Brian Roberts. Remember, Comcast offered $65 billion for the Murdoch-owned company but waved the white flag after Disney topped the bid. Deal saddled Disney with a $19 billion debt that’s followed it since. A debt that became hobbling during the pandemic when revenue streams for Disney (like everyone else in the industry) dried up. It was thanks to CFO McCarthy that the company was able to manage the load and raise cash over those bleak months.
GHOST OF DISNEY PRESENT – Almost no one will argue that the transition to Bob Chapek as CEO in early 2020 was a smooth affair. Exacerbated by the Covid-19 pandemic, Iger halted his exit and installed himself as Executive Chairman, effectively knee capping the former Parks boss in his new position from the start even before a public chill set in between the two. Slow walking his Disney retirement a number of times over the years even before he finally left at the end of 2021, Iger has put the breaks on a successor so many times, some doubt if he will really leave in 2024 and if he will have empowered anyone to take over. The two-year limit on his current contract places a successful succession as the top priority, but, wishful thinking aside, that’s simply not Iger’s strong suit. Once this latest honeymoon is over, could the once-in-a-generation exec fail to pass the baton again and find himself shown the door by the board like his predecessor Michael Eisner?
GHOST OF DISNEY FUTURE – Grown exponentially by Iger over his previous 15-year bossman status, the Disney empire is now so big and so sprawling that there are few platforms or mediums they don’t play a prominent, if not dominating, role in. Which, for some on the Street, is part of the bottom line problem. Recently, after Mr. Merger a.k.a. Iger axed rumors of a deal with the $2.1 trillion market-capped Apple that no one took seriously, Wells Fargo’s Steven Cahall suggested Disney dump dwindling ABC and ESPN to stem revenue losses. Despite that and belt tightening all over, it still looks more than likely that the company will write Comcast a nice big juicy check in early 2024 to buy out the remaining 33% in Hulu. “Iger likes deals, and he loves acquisitions, so it is only a matter of time for the next one, just watch,” the studio insider prophesied. With the past relationship between Apple and Disney, never really say never there. There’s always also a chance Iger could make a move for Candle Media and bring co-CEOs Kevin Mayer, who was the Mouse House’s strategic planning head, and Tom Staggs back to Burbank to be on the Disney chief contenders shortlist.
Additionally, a centerstage showman who knows how to keep the audience interested, Iger has over the years pivoted between reveling in his position as the Disney boss with the golden touch and rumblings of political office and more. Gaining headlines galore, underlings and flatterers have floated trial balloons of White House and gubernatorial bids, NFL ownership status, and even prestige ambassador postings. None of which have ever materialized, and have drawn giggles in electoral circles where Iger and Disney’s track record with China alone is seen as a non-starter. Not that such a track record stopped Iger himself from throwing out there in a November 28 town hall that spouse Willow Bay encouraged his return to Disney so he wouldn’t run for President — don’t think you’ve heard the last of this fantasy.
Of course, with all that, not wanting to leave just coal in the Christmas stocking this holiday, it would be negligent to ignore that Bob Iger is an executive with many, many strategic skills. Foremost among them must be his talent relations, his greatest superpower and virtue. Perhaps it is because there’s undoubtedly still a splotch of the Long Island boy who dreamed of being a TV anchor inside the seasoned septuagenarian exec, but Iger has long had an innate ability to connect with creatives on both sides of the camera.
“Not only do you feel he hears you, but that he will both protect you and your vision,” a tentpole scribe said of the CEO. That deft touch developed the powerhouse silos that are Pixar, Marvel and Star Wars within the Disney empire and grew the theme parks in China and elsewhere.
Iger’s eye for talent also, more often than not, delegated the execution of corporate goals to trusted deputies. The likes of Alan Horn, Kevin Feige, Kathleen Kennedy, communications adviser Zenia Mucha, the once valued Chapek, and Mayer, as well as Staggs and Rasulo all held those coveted spots. Displaying the curiosity, he mentioned in his Ride of a Lifetime book, Iger brought the likes of Peter Rice into the inner circle after the Fox acquisition. “He lives and breathes Disney, he connects its success and impact to himself, and that will always drive him,” a studio insider succinctly states.
So, what would make for a storybook ending in two years for Iger and Disney?
Playing the long game, literally and figuratively.
Even in an erratic market like we’ve seen the past few months and with talk of a recession, the Disney stock should stabilize once Wall Street picks up that the company once again has a strong leader. A leader who won’t try to anticipate what will please the bankers with cost cutting layoffs and shedding valuable assets, but rather one who aims to build a company worth investing in.
Widely extolled now, not everybody at the time saw the wisdom in purchasing Pixar when Iger was courting Steve Jobs, or in Marvel or LucasFilm for that matter. Any studio in town could have made those deals, but Iger actually made those deals. While even more costly than ever with digital players like Amazon and YouTube place big bets, live sports has shown itself to be a linchpin for streaming. Positioned for that reality, ESPN gives Disney the best beachhead brand name, so why sell it off? Iger has stressed his 2.0 reign will return Disney to emphasizing and empowering creatives over accountants. That’s the thinking that empowered the likes of Marvel’s Feige and LucasFilm’s Kennedy and positioned Disney for its ongoing historic content run that started about a dozen years ago.
Even the debt heavy Fox acquisition can prove to have a significant future forward payout if James Cameron and his Avatar sequels become another valuable silo for the screen and the parks.
Like any good narrative, the fact is confidence inspires confidence.
Bob Chapek lost the support of the town and the Susan Arnold-led Disney board because he shifted positions that robbed confidence in his judgment.
If Iger can repeat and follow up on just some of his past success, it is very possible the CEO can achieve exactly what the board hoped he would by reinstating him last month. And then the question will be this: if Iger truly is hard pressed in two years to find a successor more capable than he, rather than risk being bored in retirement and preside over another possible Game of Thrones exercise that will lead more of his lieutenants to head for the exits if they don’t get the crown, why not stay awhile?
That could end up being a very nice early Christmas present for all concerned.
Dade Hayes and Jill Goldsmith contributed to this report