By Ben Fritz
Robert Iger owns a license-plate frame printed with the
question: "Is there life after Disney?"
The chairman and chief executive of the world's largest media
conglomerate, Walt Disney Co., doesn't keep the frame on his car
anymore. "I decided it's not worth it," Mr. Iger said in March at a
conference sponsored by the University of Southern California. "I'd
get stopped every once in a while by people who asked what it
means."
The same question transfixes people throughout Disney and the
entertainment industry, who wonder how much longer Mr. Iger, 66
years old, will keep his grip on the company behind Snow White,
"Star Wars" and "SportsCenter." Twelve years into his tenure as
CEO, the question of who will succeed Mr. Iger is more uncertain
than it has been for nearly a decade. He isn't about to let go.
The strongest internal candidates have left, and the most
frequently mentioned external candidates are uninterested. Some
people who know Mr. Iger believe he simply doesn't want to retire
yet, despite stating repeatedly that he intends to. A contract
extension signed in March runs through July 2, 2019. That is the
fourth date he has announced for stepping down as CEO.
Disney's board of directors and investors seem happy to back Mr.
Iger for as long as he wants to stay. Under his widely acclaimed
leadership, the Burbank, Calif., company's share price has nearly
quintupled, increasing the stock-market value of Disney to about
$170 billion. Disney is the most successful entertainment company
in modern history.
The longer Mr. Iger stays, though, the harder it gets to imagine
the future of Disney without him -- or who could possibly replace
him.
Mr. Iger has led the company for so long and with such hands-on
attention that he and Disney now seem inseparable to many employees
and outside partners. That dynamic also occurred with founder Walt
Disney and Mr. Iger's predecessor as CEO, Michael Eisner. Mr.
Eisner left following strife among Disney shareholders and its
board, a problem Mr. Iger isn't facing.
Mr. Iger's ever-extending leadership might be just what Disney
needs to keep thriving where it is strong and solve problems
looming on the horizon, such as declines in viewership at ESPN and
the company's other television networks. If the problems worsen,
though, Disney shareholders might turn less sanguine about
succession questions.
On a conference call with analysts last Tuesday, Mr. Iger said
that "more has been made about our succession than it really
deserves." He and the board are trying to ensure "we have enough
time to not only consider the right candidates but to make the
right decision and to craft a handover of sorts of a transition
that should be successful," added Mr. Iger.
Five-year bake-off
Two years ago, the succession question seemed to be settled.
After a five-year bake-off during which Mr. Iger's retirement as
CEO was delayed from 2015 to 2016 and then to 2018, Disney promoted
Tom Staggs, head of its parks and resorts division and former
finance chief, to operating chief.
The move positioned Mr. Staggs, a 26-year Disney veteran, as the
natural successor to Mr. Iger.
In March 2016, Mr. Iger told Mr. Staggs that they needed to
talk.
Mr. Staggs's first year in the No. 2 job was bumpy. Because the
chief operating officer had few solo responsibilities and no
business units reporting directly to him, Disney employees were
uncertain how much authority he carried.
Still, many people inside the company assumed those obstacles
would be surmountable. Messrs. Iger and Staggs were longtime
friends who had similar leadership styles and whose children
attended the same school. But Mr. Iger had a very different message
during their meeting in March 2016.
Disney's board of directors, led by Mr. Iger as chairman, had
lost confidence in Mr. Staggs's ability to ascend to the top job,
the CEO said, according to people familiar with the discussion.
Without citing any shortcomings that emerged during Mr. Staggs's
year as operating chief, Mr. Iger said the board would expand its
search process for a new chief executive. Mr. Staggs felt he had no
choice but to resign.
When his exit was announced, Disney said the board would
"broaden the scope of its succession-planning process to identify
and evaluate a robust slate of candidates for consideration."
Throughout Hollywood and Disney, some executives, producers,
agents and other business associates believed Mr. Iger had decided
he wasn't ready to step down.
Building a boat
Those people pointed to issues ranging from professional,
including his desire to conquer the challenges at ESPN from
cord-cutting, to personal, such as the failure of a bid he chaired
to build a National Football League stadium near Los Angeles that
might have been an anchor of post-Disney life.
In private conversations, Mr. Iger has discussed possibly
running for office, serving in a Democratic presidential
administration or spending time on a sailboat he is building, say
people who have worked at Disney and spoken with him. Those people
say they weren't sure how seriously to take Mr. Iger.
A person close to Mr. Iger says he wanted to retire in 2018 but
felt he had to stay longer after the plan for Mr. Staggs to succeed
him failed. This person adds that if Mr. Iger's goal was simply to
extend his tenure as CEO, he could have kept Mr. Staggs as
operating chief past 2018.
Disney's board is now focused on hiring or promoting someone
directly into the CEO job, rather than an evaluation or training
period as operating chief, according to people close to the
company. There have been no obvious signs of progress in the past
year toward selecting such a person.
Orin C. Smith, Disney's independent lead director, said in March
that the board would continue its "robust process of identifying a
successor."
Speculation inside and outside Disney has centered on three
widely respected outsiders: Steve Burke, chief executive of Comcast
Corp.'s NBCUniversal, which includes cable and broadcast networks,
film and TV studios and theme parks; Sheryl Sandberg, Facebook
Inc.'s operating chief and a Disney director, and Peter Chernin, a
producer and investor who was News Corp. president until 2009.
News Corp. later spun off its newspaper and book-publishing
assets, including The Wall Street Journal, and changed its name to
21st Century Fox Inc.
No interest
Disney hasn't approached Mr. Burke, Ms. Sandberg or Mr. Chernin
about the CEO job, according to people familiar with the matter.
None of them is interested in taking it.
Some people at Disney believe the board should try to hire from
the inside. Disney prides itself on a corporate culture that
focuses obsessively on what it calls "franchises" -- or
entertainment juggernauts that live on for many years as theme-park
rides, toys, videogames, television shows and merchandise.
No one already at Disney has emerged as a strong potential
successor to Mr. Iger, either. The company's theme-park chief for
the past two years, Bob Chapek, is the only senior executive who
has worked in multiple Disney divisions. He spent much of his
career heading home video for Disney's movie studio before taking
over the consumer-products business in 2011.
Mr. Chapek has no experience in Disney's television business,
the biggest unit in terms of revenue and profit.
Finding a successor to Mr. Iger wasn't supposed to come down to
the wire.
Mr. Staggs and Jay Rasulo emerged as leading CEO contenders as
far back as 2010, when they swapped jobs, with Mr. Staggs taking
over the theme-park division and Mr. Rasulo becoming chief
financial officer.
The idea of Mr. Iger and Disney's board was that Messrs. Staggs
and Rasulo would broaden their exposure and skill sets so that
either one would become seen as qualified to rise to the CEO spot
held by Mr. Iger.
Four months after being passed over in 2015 to be Mr. Iger's
second-in-command, Mr. Rasulo resigned from Disney.
Mr. Iger, Disney's president since 2000, spent several years as
the likely successor to Mr. Eisner before being promoted to the top
job in 2005.
Mum until 2018
People close to the company say it appears that Disney's board
isn't close to zeroing in on a successor to Mr. Iger and is
unlikely to announce the company's new chief executive until 2018
at the earliest.
Meanwhile, Mr. Iger is as hands-on as he has ever been.
Initially cautious about getting involved in the film business
because his background was in TV, he now reads scripts regularly
and discusses release plans.
He tasted the food at Shanghai Disneyland before it opened last
year. Mr. Staggs was heavily involved in the new theme park but
exited Disney a month before the opening.
Mr. Iger also is leading the charge to figure out a new digital
future for profit machine ESPN, which has lost 12 million
subscribers in the past five years as consumers become less
interested in pricey pay-TV packages.
Solving the ESPN problem is a top priority for Mr. Iger, a
perfectionist who wants to leave Disney in as flawless shape as
possible, people close to him say.
TV is the biggest challenge for Disney, which otherwise has been
succeeding on all fronts. Mr. Iger engineered the purchases of
Pixar Animation Studios, Marvel Entertainment Inc. and Lucasfilm,
which cost more than $15 billion combined. They are largely
responsible for Disney's dominance of the movie business in the
past few years and have helped generate growing profits for parks
and consumer products.
Insiders and outsiders are split on whether Disney's future
would be brighter with a CEO from Silicon Valley who could guide
the company's digital transition, an expert in brand management or
someone already in the creative bubble of Hollywood. Mr. Iger and
the board have given themselves two more years to answer that
question.
--Joe Flint contributed to this article.
(END) Dow Jones Newswires
May 16, 2017 10:43 ET (14:43 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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