Bob Iger faces daunting challenges in his return to lead the Walt Disney Co. What to do about ESPN? How to make Disney+ profitable? Preserving fan loyalty at Disneyland and Walt Disney World. Navigating a possible recession.
But the tallest order of all may be the one that Iger, 71, has struggled with for years: coaching his own replacement.
Disney’s board will ultimately choose the company’s next chief executive, though Iger, who retired as executive chairman at the end of 2021, will clearly have an influential role in the succession process.
The company on Sunday said that Iger would “work closely with the Board in developing a successor.” That’s on top of the immediate tasks required to restore Disney’s glory after the sudden ousting of Iger’s CEO successor — and now predecessor — Bob Chapek.
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Iger and the board’s previous attempts at succession planning have proved unsuccessful, with Chapek’s rocky tenure being just the most recent example. Iger handpicked Chapek, a skilled operator and a Disney insider of nearly three decades, with the idea that Chapek would execute on the strategy that Iger set in motion, which included a major pivot to streaming. A series of missteps and a disastrous fourth-quarter earnings report led chairman Susan Arnold to tap Iger for a hero’s return.
The situation has echoes of years past. In 2015, the company appeared to be grooming Disney veteran Tom Staggs for the top job. He’d been promoted to chief operating officer, besting another potential candidate, then-Chief Financial Officer Jay Rasulo. But instead of going with what looked to be a smooth transfer of power, Disney changed course in 2016, prompting Staggs to leave the company.
It’s not just an Iger problem, though.
Disney has been hobbled by turbulent leadership transitions for decades, dating back to when it was still a family business.
Walt Disney, the company’s namesake and co-founder, sometimes fought fiercely with his brother, Roy O. Disney. After Walt died, it was up to Roy to shepherd his brother’s legacy. Ron Miller, Walt Disney’s son-in-law, was forced out as CEO in 1984 amid the company’s flagging performance.
Later, Roy E. Disney, Roy O.’s son, led a shareholder revolt with former board member Stanley Gold, leading to the early exit of Michael Eisner in 2005 after a 21-year run. Though Eisner had blessed Iger’s ascent to the top, he was reluctant to leave.
“In the entire history of the company, there hasn’t really been one smooth succession,” said Jeffrey A. Sonnenfeld, a senior associate dean at the Yale School of Management. “They’ve never been great at that part of the management equation.”
There are clear reasons why Disney’s leadership transitions have been so hazardous. Leading Disney requires multiple skills. Those include the ability to manage creative types while operating a multifaceted business with theme parks, cruise lines, merchandising, theatrical films, a sports cable network (ESPN), a major broadcaster (ABC) and several streaming services.
A Disney CEO also needs to stay on top of global politics and technological changes in the industry, all while demonstrating financial acumen.
That’s a rare combination of abilities for one person to have. Hollywood and corporate America viewed both Iger and Eisner not just as suits, but as visionaries.
And Disney became only more complex under Iger, particularly after the company in 2019 acquired the entertainment assets of Rupert Murdoch’s 21st Century Fox, through which it subsumed a storied film studio, a massive TV production operation and a majority stake in Hulu. The size and scope of the firm, plus persistent red ink in streaming and declines in traditional television ratings and cable subscriptions, make Disney a difficult beast for anyone to wrangle.
“It’s a massively complex enterprise,” said Craig Garthwaite, professor of strategy at the Kellogg School of Management at Northwestern University. “And so part of finding a successor is finding out what’s the right size of the company for that successor to run.”
This time, the board has given itself just two years to pick a replacement before Iger’s contract ends.
Disney said Iger was not available for comment.
Identifying and developing someone in that time frame won’t be easy. The company has few, if any, executives left who could step in right away. Disney has typically shied from bringing in outsiders, preferring to promote people who already understand the inner workings of the company, which has its own unique politics and ethos.
Longtime Disney observers still draw lessons from the decision to bring in CAA’s Michael Ovitz as president under Eisner, a disaster that resulted in a reported payout of $140 million for Ovitz after his firing.
Iger’s team includes multiple capable executives. There’s Alan Bergman, chairman of Disney’s studio content business; Dana Walden, who leads the television unit; James Pitaro, chairman of ESPN and sports; theme parks topper Josh D’Amaro; and CFO Christine McCarthy. But all would need to be built up before taking the mantle.
In one of his first moves as returning CEO, Iger on Monday tasked Bergman, Walden, Pitaro and McCarthy with restructuring Disney’s media and entertainment businesses, essentially unwinding a controversial structure Chapek established that separated content decisions from distribution strategy.
As part of the sweeping initiative, Iger ousted Kareem Daniel, Chapek’s longtime deputy who ran Disney Entertainment and Media Distribution, known as DMED.
Other options exist but would be complicated. Former Fox TV executive Peter Rice was seen as a potential replacement for Chapek, but Chapek fired him in June with little explanation. If Disney wanted to bring back Staggs or Kevin Mayer, who exited after being passed over in favor of Chapek, it likely would have to acquire their startup company, Candle Media.
Longtime CEOs have come back from retirement before and managed to set up their replacements for success. A floundering Apple turned to its ousted co-founder Steve Jobs to reshape the company, eventually setting the stage for Tim Cook to step in just weeks before Jobs died of cancer. Starbucks brought back Howard Schultz twice — first in 2008 and most recently as interim chief this year before appointing Laxman Narasimhan as its next leader.
Still, there’s the nagging question of whether Iger will actually leave in two years, having delayed his retirement several times even before the Chapek swap.
In January, Iger told journalist Kara Swisher that rumors of his eventual boomerang to Disney were “ridiculous.” “You can’t go home again,” he said. “I’m gone.”
Sonnenfeld said he thinks Iger means it this time.
“He really had the attitude of, ‘Been there, done that,’” Sonnenfeld said.
Now where have we heard that before?
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