After months of scrutiny around the selection process for a new CEO to replace Michael Eisner, The Walt Disney Co.’s board of directors decided not to rock the boat, selecting a longtime executive instrumental in its recent financial resurgence, current president and chief operating officer Robert Iger.
Disney announced March 13 that it had selected Iger to succeed Michael Eisner as CEO -- Iger was the only internal candidate for the job -- after an extensive search process that began last year. Iger, a 30-year veteran of Disney and Capital Cities/ABC Inc., is slated to assume his new position Oct. 1
There was no word on whether a replacement would be named for Iger in the COO post.
Disney has been searching for a new CEO since last September, when Eisner said he would not seek to have his employment contract renewed when it expires in 2006. Disney had said that it wanted to name a replacement by June of this year.
Iger’s appointment came as no surprise -- he had been Eisner’s personal choice for CEO and was long thought to be the front-runner for the job. According to published reports, eBay Inc. CEO Meg Whitman was also being considered for Eisner’s slot, but she removed herself from contention last week.
In a conference call with reporters, Disney chairman George Mitchell declined to reveal how many candidates were being considered, but he said the board of directors unanimously chose the right person for the job.
Disney has been on a financial roll since its contentious annual shareholders’ meeting in April 2003, where Eisner relinquished his chairman position to Mitchell. At that meeting, Eisner received a huge vote of no-confidence when shareholders withheld 45% of the vote for his re-election to the board of directors.
Earnings grew 72% in 2004 and are expected to maintain a double-digit growth rate for the next several years. Also during that time, the ABC broadcast network has climbed from the ratings cellar on the strength of several hit shows.
On a conference call with reporters Sunday, Mitchell stressed Iger’s “deep understanding” of Disney culture and his role in the success of the media giant as key criteria for his selection.
Mitchell also addressed what some critics had feared concerning an Iger appointment -- that he would be a carbon-copy of his former boss, Eisner.
“There will be changes. Bob is not Michael,” Mitchell said on the call. “Change is necessary. We think Bob brings the right combination of qualities -- integrity, candor, the ability to form partnerships -- and the right knowledge of the industry to move the company forward.”
Fulcrum Global Partners LLC analyst Richard Greenfield was not surprised by Iger’s appointment but worried that he may try to close two critical deals quickly -- Disney’s expiring contracts with Pixar animation studios and the National Football League -- when he is at an obvious negotiating disadvantage.
“We worry that Mr. Iger will feel compelled to renew contracts with both as an early sign of his capabilities as Disney CEO,” Greenfield wrote in a research report. “However, we believe that both Steve Jobs (Pixar) and Steve Bornstein (NFL) are well aware of this issue and will likely try to use it as significant leverage to extract far better terms than they might have been able to negotiate with a CEO candidate from outside the company.”
Later, in an interview, Greenfield said that despite Disney’s recent turnaround, there is still much for Iger to do.
“The company has rebounded back to levels that are still below what it earned in 1997,”Greenfield said. “Its ability to grow from here forward will be how Bob Iger is remembered.”