By R.T. Watson, Joe Flint and Ben Fritz
Robert Iger stepped aside as chief executive of Walt Disney Co.,
though he will retain significant power over the company that he
expanded into Hollywood's biggest and most powerful entertainment
conglomerate over a more than 14-year tenure.
Disney on Tuesday named the company's head of parks and resorts,
Bob Chapek, CEO effective immediately. But Mr. Iger will stay on as
executive chairman, overseeing the company's creative endeavors
through the end of next year, when his contract expires.
Mr. Chapek will report jointly to the 69-year old Mr. Iger and
to the company's board of directors, according to an amended
version of his contract the company released Tuesday.
"The company has gotten larger and more complex," Mr. Iger said
during a call with analysts. "I should be spending as much time as
possible on the creative side of our businesses."
Mr. Chapek's experience heading key Disney units over his nearly
three-decade career at the company put him ahead of other potential
successors to Mr. Iger, current and former Disney executives say.
He beat out internal competitors including the executive who
oversees the company's streaming service, Kevin Mayer.
Though Mr. Iger had said as recently as last year that he
planned to retire in 2021, the afternoon announcement caught
company insiders by surprise, several Disney executives said. There
had been no rumblings or whispers inside the Magic Kingdom that Mr.
Iger and the Disney board had finally agreed on a successor.
"No one knew this was coming," said one senior Disney
executive.
Disney employees didn't receive an internal email about the
change in leadership until more than an hour after the company sent
out a press release. The internal communique arrived shortly after
a joint appearance by Mr. Iger and Mr. Chapek on CNBC, which
followed a hastily convened conference call with Wall Street
analysts.
Indeed, even Mr. Mayer was caught off guard, people close to him
said. On Tuesday, Mr. Mayer held a town hall for Hulu, the
streaming platform he oversees. Among other points, he touted how
closely Disney works together as a company. He learned only
afterward of the succession news, people familiar with the
situation said.
Mr. Iger started making his mark on Disney almost as soon as he
took the reins in 2005. He led the purchase of Pixar Animation a
few months later, the first of several multibillion-dollar
acquisitions that transformed the company. Deals followed for
Marvel Entertainment and Lucasfilm, giving Disney three of the
best-known brand names in the entertainment business and making it
the leader in the franchise-focused approach to film production
that currently dominates the movie business.
In 2018, Mr. Iger led his biggest deal of all, the $71.3 billion
purchase of the entertainment assets of 21st Century Fox, including
its film and television studio. That deal was part of Mr. Iger's
final shake-up of the company, repositioning it to distribute
entertainment directly to consumers online and compete with
companies like Netflix Inc., rather than simply sell programs and
films to streaming-video services.
The Fox deal gave Disney significantly more content to stream
and majority control of the subscription video service Hulu, which
is being aimed at adults. In the past year, Mr. Iger has also
overseen the launch of ESPN+ for sports fans and Disney+, which
many in Hollywood consider one of the most credible rivals facing
Netflix, just a few months after it launched.
One of his other major initiatives has been the company's
expansion in China, particularly the opening of a theme park in
Shanghai in partnership with that country's government.
Mr. Iger's succession planning has long been enigmatic. He has
announced four separate retirement plans in the past, beginning
with an announcement in 2011 that he would step down as CEO in
2015. Since then, Mr. Iger has announced and then delayed his
retirement a total of four times.
In the process, other potential successors have left, including
most notably former Chief Operating Officer Tom Staggs in 2016.
Mr. Iger said that naming Mr. Chapek CEO effective immediately
made the transition "frictionless," allowing Disney to avoid
"endless months of speculation, anxiety or competition."
Mr. Iger's record as one of the most successful CEOs in modern
entertainment history is widely acknowledged. Disney's share price
has increased more than sixfold under his tenure, its annual
revenue has more than doubled and its annual net income has more
than quadrupled.
He also earned a reputation as one of the most controlled and
polished executives in Hollywood, nearly always on-message and
beaming with charisma. He has been a frequent speaker at company
events for fans and was regularly stopped by park visitors asking
to take selfies with him while he walked around Shanghai Disneyland
the week it opened.
Mr. Chapek, by contrast, is described by colleagues as less
charismatic and polished, but highly intelligent and organized. In
an interview Tuesday, Mr. Iger said Mr. Chapek "has all the
qualities we look for in a CEO."
The 60-year-old executive has spent 27 years at the company,
most recently atop the division that includes theme parks and
consumer products, where he stewarded the opening of the Shanghai
resort and nearly doubled Disney's fleet of cruise ships. Mr. Iger
called those moves the largest capital expansion in the division's
history. Mr. Chapek also oversaw the recent opening of Star Wars
attractions Galaxy's Edge and Rise of the Resistance, installations
of each beginning to operate at Disneyland and Walt Disney
World.
Before the two divisions were combined, Mr. Chapek ran theme
parks alone and, before that, consumer products. Prior to 2011, he
was a senior executive at Disney's movie studio, overseeing the
home-entertainment division, which at the time meant primarily
oversight of the company's DVD business, followed by a brief stint
as head of all distribution. People who worked with him at the time
said the executive focused primarily on business matters, rather
than the creative process.
Mr. Chapek said he will lean on his extensive experience in
consumer-driven areas.
"I feel that I know the company extremely well," Mr. Chapek said
during the call with analysts on Tuesday. "Everything in my career
has been a consumer-oriented bsiness. That's where I've
played."
The list of potential contenders for the top job included Mr.
Mayer, who as chairman of Disney's direct-to-consumer and
international operations oversees the company's recently launched
streaming platform Disney+.
While Mr. Mayer has been on a fast-track at Disney and is
charged with guiding its digital future, he doesn't have the
breadth of operating experience that Mr. Chapek has, having spent
much of his career in strategic planning.
In addition, Mr. Mayer is still piecing together Disney's
digital strategy, which is crucial to the company's long-term hopes
to remain an entertainment colossus. Finding a successor for him
would be an added burden for the company, people at Disney
said.
Mr. Iger said the decision will provide the time needed to groom
Mr. Chapek for the day when he leads Disney on his own.
"This gives him the opportunity to work with me over the next
number of months to create the smoothest possible transition," said
Mr. Iger. "So that when I leave he'll be familiar with all elements
of the company, not just those that he's already managed."
In recent years Mr. Chapek's work as head of parks and resorts
exemplified a model of consistency. The division's annual income
growth averaged about 13% between 2015 -- the year he took over --
and 2019. In 2017, under Mr. Chapek's stewardship parks and resorts
was the only division to escape ending the year in a deficit.
"Bob was somebody who could look at a marketplace and identify
where the business is," said Ann Daly, a former Disney
colleague.
Starting last year, Mr. Chapek's responsibility expanded as his
segment added consumer products, previously a separate division.
Before running parks Mr. Chapek also did stints presiding over both
home entertainment and the studio's theatrical distribution.
Mr. Chapek signed a new three-year contract with the company
that sets his target compensation at a minimum of $25 million
annually.
Mr. Iger, an active Democrat, has previously said that he
considered running for president but decided against it. People
close to him have said they could envision him working in the
administration of a Democratic president. He also led a failed
attempt to build a National Football League stadium near Los
Angeles, was a contender to become commissioner of Major League
Baseball and has been building a sailboat on which he told
colleagues he might spend time following his Disney tenure.
--Erich Schwartzel contributed to this article.
Write to Joe Flint at joe.flint@wsj.com and Ben Fritz at
ben.fritz@wsj.com
(END) Dow Jones Newswires
February 25, 2020 19:41 ET (00:41 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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