Walt Disney Co. Reorganizes to Focus on Streaming -- 2nd Update
March 14 2018 - 3:29PM
Dow Jones News
By Ben Fritz
Walt Disney Co. is reorganizing its operations in a move that
positions two top executives as potential successors to Chief
Executive Robert Iger.
Kevin Mayer, the company's longtime head of strategy who has
specialized in acquisitions and digital investments, was named
chairman of a new direct-to-consumer and international segment,
while parks chief Robert Chapek added consumer products to his
portfolio, giving him oversight of what would be the company's
biggest business unit by revenue and profit.
Wednesday's moves come a week after Disney made former consumer
products head James Pitaro the head of ESPN, further raising the
profile of a third fast-rising executive. Disney insiders consider
him another possible future CEO but a longer shot. Messrs. Chapek
and Mayer have both worked at Disney for more than 20 years, while
Mr. Pitaro joined in 2010.
Mr. Iger recently extended his contract through 2021, contingent
upon the company's closing its December agreement to acquire most
of the assets of 21st Century Fox Inc. for $52.4 billion. Since
former Chief Operating Officer Tom Staggs was pushed out two years
ago, there hasn't been a clear successor to Mr. Iger.
Mr. Mayer was intimately involved in the Fox deal and the
purchase of streaming-technology company BamTech. He has also been
heavily involved in plans to launch next year a Disney-branded
streaming service that would compete with Netflix Inc.
His new business unit would oversee that service and BamTech, as
well as an ESPN streaming service set to debut by early April. In
addition, should the Fox deal be approved by regulators, it would
give Disney and Mr. Mayer's division control of a third streaming
service, Hulu. The new segment will also oversee global advertising
sales for Disney-owned television channels, sales of content to
other distributors, and the international Disney Channels.
Mr. Mayer, who has overseen strategy and business development
since 2005, has never previously had an operating role at the
company, a significant deficiency in his potential candidacy to
succeed Mr. Iger. He now has oversight of nearly all distribution
of Disney-produced films and television shows outside of theaters,
home video and domestic broadcast and cable-TV networks.
The new parks, experiences and consumer products division headed
by Mr. Chapek, will combine the parks and resorts business he
currently oversees with the smaller consumer-products business he
used to run, before it joined with interactive media. He now has
oversight of translations of Disney characters and stories created
in film and TV into other forms of media, whether in theme parks,
on toy shelves, online or in games.
During Disney's fiscal first quarter that ended Dec. 30,
combined revenue for consumer products and theme parks would have
been $6.6 billion and operating income would have been $1.97
billion. Both figures would exceed television to become the
company's largest business.
With his background in deal-making and digital savvy, Mr. Mayer
could be well positioned to lead Disney in the new businesses it
will need to conquer to maintain its dominant position in
entertainment in the next decade. He has previously maintained a
low public profile, however, and some of his prior digital
acquisitions have been flops, including the YouTube network Maker
Studios.
Mr. Chapek, who also previously ran home video for Disney's
movie studio, has less experience in digital media but is a
seasoned operational executive who has held senior positions in
several of the company's major businesses.
Succession at Disney has been murky since Mr. Staggs left after
Mr. Iger informed him he was unlikely to become the next CEO, as
had previously been expected. Mr. Iger has since extended his
employment contract twice, first through 2019 and then, should the
Fox deal close, until the end of 2021.
Mr. Iger last week faced a rare expression of criticism from
shareholders when 52% of them voted not to approve of his
compensation following the board's decision to grant him lucrative
bonuses to stay on to help integrate the Fox assets. The
shareholder vote was nonbinding.
Disney hares rose 0.4% to $104.11 during afternoon trading. The
stock has fallen 3% so far this year while the S&P 500 has
risen 3%.
--Imani Moise contributed to this article.
Write to Ben Fritz at ben.fritz@wsj.com
(END) Dow Jones Newswires
March 14, 2018 15:14 ET (19:14 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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