The fact that The Walt Disney Co.’s board of directors is considering a comparatively low-key executive such as President and Chief Operating Officer Robert Iger to replace CEO Michael Eisner could signal a new era for media executives everywhere, Wall Street analysts said last week.
Largely gone are the mercurial and profligate entrepreneurs who once ruled Hollywood-and vanishing are the corporate types who imitate them. In their place are a growing number of executives with decidedly lower profiles who, while earning the praise of Wall Street, do not have what people might call mogul-like tendencies.
Among them: Richard Parsons, the lawyer-turned-banker who’s the chairman and CEO of Time Warner, and former casino executive Alex Yemenidjian, chairman and CEO of Metro-Goldwyn-Mayer, which has agreed to merge with Sony Pictures Entertainment. Both are very much focused on shareholder value, spend money conservatively and keep Wall Street in mind as they execute their business plans. Mr. Parsons is well known for underpromising to investors to keep expectations low and overdelivering on results to surpass expectations.
Waiting in the wings to join those two could be Mr. Iger. He has been given the inside track to replace Mr. Eisner, who earlier this month announced his plan to retire at the end of his current employment contract in September 2006. Mr. Eisner has praised Mr. Iger as an ideal successor, and last Tuesday the Disney board hailed Mr. Iger as “an outstanding executive” whom it views as “highly qualified for the position” of CEO.
To be sure, the entertainment industry still has its executives with big personalities-News Corp. Chairman Rupert Murdoch and Viacom Chairman Sumner Redstone, to name two. But both men get high marks because even though they’re moguls in the traditional sense-having built their respective companies from the ground up-they are generally highly regarded on Wall Street for having delivered robust financial performance.
That Mr. Iger, a longtime ABC and now Disney executive known more for his polish and grace under pressure than anything else, is a top candidate to replace the controversial Mr. Eisner is a signal to many on Wall Street that Disney’s board isn’t so much looking for a big-name mogul type as Eisner’s successor, but instead seeks someone who can be a calming force at a company rocked by shareholder dissatisfaction over Mr. Eisner’s leadership.
“[Mr. Iger] is a different kind of media executive,” said David Joyce, a media analyst at J.B. Hanauer. “He’s not a mogul, a big personality. He’s more low-key. The spin on Bob Iger is that he exudes a very steady influence.”
But even with the board celebrating him, it is likely Mr. Iger will have to prove himself, observers said. While he is up for consideration, the board said last week that it would engage an executive recruiting firm to identify candidates outside the company. The board hopes to identify the company’s next CEO by June 2005.
“Iger gets a leg up, but it is not assured he’s taking the prize,” said Harold Vogel, CEO of Vogel Capital Management.
ABC Finds Hope in `Lost’
One issue that could loom over him is the performance of ABC. Having run the network once, and in recent years having taken a personal interest in turning the network around, Mr. Iger might suffer some dings for having been unsuccessful thus far. And even though there were signs last week that a recovery might take place this season, particularly with the strong performance of “Lost” last Wednesday, most analysts said any improvement at ABC won’t happen in time to help Mr. Iger’s chances.
However, a number of analysts see Mr. Iger as the right choice, even with his ABC baggage.
“Mr. Iger has received the brunt of the blame for [ABC’s] shortcomings over the past two or three years, and we believe that if one puts the blame of ABC to him, then the credit for the other five or six major things going right”-including Disney Channel, ESPN, the film and video business, theme parks and consumer products-“should accrete to him as well, since they all report up to him, as does the ABC network,” wrote Credit Suisse First Boston media analyst William Drewry in a research note.