Deft Iger Calms Disney’s Waters

Jul 18, 2005  •  Post A Comment

Robert Iger is still more than two months away from officially becoming CEO of The Walt Disney Co., but already he has put his stamp on the media giant, sending a clear signal that it will not be business as usual at the house that Mickey Mouse built.

Ever since he was named CEO-elect in March, with the expectation of replacing the retiring Michael Eisner on Oct. 1, Mr. Iger has been busily working to calm what had devolved into very choppy waters surrounding Disney. At the same time, he is laying to rest questions that have surfaced over the months about his fitness to lead the company, which booked $31 billion in revenue for the fiscal year ended Sept. 30, 2004.

Nearly two weeks ago, both efforts got a big boost when two of the company’s most ardent critics, former board members Roy Disney and Stanley Gold, agreed to end their two-year battle with the company over its leadership and call a truce.

While neither side will talk about how they reached their settlement, people familiar with both sides say that Mr. Iger’s conciliatory nature likely helped repair what had become an acrimonious relationship under Mr. Eisner’s leadership.

The resolution not only removes what could have been a dark cloud over Mr. Iger’s first official day as CEO but also enables him to focus on his company’s new resurgence without any distractions.

“This is good for Bob Iger,” said Harold Vogel, CEO of Vogel Capital Management, who believes that Mr. Disney and Mr. Gold rightly ended their fight because of the realization that continuing to wage war “didn’t advance their interests.”

Added Jack Liebau, whose Liebau Asset Management in Pasadena, Calif., owns Disney shares: “This removes a significant distraction for Bob Iger and everybody involved at the Disney management level and board level, and it prevents Disney from being in the headlines.”

“It’s another very positive move, and one of many since Bob Iger was named [CEO],” he said.

Indeed, Mr. Iger has been quietly but aggressively putting out fires caused by Mr. Eisner’s testy personality and penchant for micromanagement ever since he was tapped by the board to be Mr. Eisner’s successor. It has all been done with an eye toward wiping the slate as clean as possible before he officially takes over.

Mr. Iger has had his work cut out for him. At the time that he was named CEO-elect, Disney was fighting battles on several fronts beyond the war waged by Mr. Disney and Mr. Gold.

But since then the company, led by Mr. Iger, has moved forward with efforts to smooth out some of the rough patches, including reopening talks with Pixar Animation Studios over the two companies’ lucrative animated-film alliance. Pixar CEO Steve Jobs had refused to hold discussions while Mr. Eisner ran the company. Mr. Iger is also viewed as being responsible for negotiating an exit package for Miramax’s Harvey and Bob Weinstein, whose relationship with Mr. Eisner had deteriorated.

Internally, Mr. Iger has taken equally important steps, pushing out Peter Murphy as chief strategic officer and downsizing the strategic planning group, which had been criticized inside and outside the company as an impediment to launching new initiatives.

“That sent a strong message internally that things will be different [under Mr. Iger’s leadership],” said one person close to the company.

But the resolution of the fight with Mr. Disney and Mr. Gold might be Mr. Iger’s biggest achievement to date, because it removes a distraction that has dogged the company for nearly two years and had the potential of being a drag on the company at a time when its performance, particularly at the ABC Network, is on an upswing. People familiar with the situation said it was Mr. Iger who held talks with the former board members leading up to the truce.

As part of the settlement, Mr. Disney and Mr. Gold agreed to withdraw all lawsuits and agreed not to submit an alternative slate of directors or any shareholder proposals for five years. In exchange, Mr. Disney was named director emeritus, though it will be an honorary position with no voting power on the board.

And in perhaps a sign of Mr. Iger’s ability to persuade, both Mr. Disney and Mr. Gold publicly expressed confidence in Mr. Iger’s leadership.