Disney Names One of Its Own as New Chief
Walt Disney Co. directors tapped President Robert Iger on Sunday to succeed Chief Executive Michael Eisner, writing the final chapter for an often stormy 21-year reign during which Disney mushroomed from a moribund studio into a global entertainment giant.
The selection ended a high-profile search for a new leader for the fabled company, which has been under siege by critics who wanted to hasten Eisner’s departure. He will remain at the post until Sept. 30. The next day, Iger will take the helm of a conglomerate that includes more than 100,000 employees, a global theme park empire, a library of such classic films as “Snow White and the Seven Dwarfs,” sports broadcasting powerhouse ESPN, the ABC network and iconic cartoon character Mickey Mouse.
Eisner will remain on the board of directors until Disney’s annual meeting early next year. At that point, he is expected to completely cut his ties to the company he was hired to turn around in 1984.
Under Eisner, Disney grew from $1.5 billion in revenue to more than $30 billion. He himself earned hundreds of millions of dollars in salary, bonuses and stock profits. But his tenure and legacy have been tarnished by widespread criticism of his autocratic management style, his frayed relations with key creative partners and the company’s lackluster performance over much of the last decade.
Neither Eisner, 63, nor Iger, 54, was available Sunday to be interviewed. The announcement about Iger’s ascension was made in a news release, and the only person to take questions was board Chairman George J. Mitchell, in a conference call with reporters.
Eisner said in a letter to Disney directors that he was ready to “clean off my hiking boots, restock my Mickey Mouse backpack and start surveying some of the other peaks that are on the horizon.” In the news release, Iger said it was “truly an honor to be entrusted with the responsibility of guiding this great company that occupies such an important place in the hearts and minds of millions the world over toward a very bright future.”
For Iger, the appointment caps a remarkable turnaround. Just one year ago he was viewed as a longshot.
Critics have said that Iger lacked creative vision, faulting his role in overseeing the once-struggling ABC. Many viewed him as damaged goods because of his close ties to Eisner, whom shareholders rebuked last March with a 45% no-confidence vote.
But over the last year, the longtime TV executive’s stock has soared.
The new ABC shows “Lost” and “Desperate Housewives” have clicked with viewers. ESPN has continued to mint profits, and an improvement in Disney’s overall earnings has tempered shareholders’ concerns. A polished and affable executive, Iger campaigned on Wall Street by holding meetings with top investors and analysts to lay out his vision for the company.
“Bob’s a very likable, well-known quantity,” said Jeffrey Logsdon, an analyst with Harris Nesbitt. “And over the last six to nine months, Bob has taken a more visible role with Wall Street, and that’s raised the confidence of many.”
On Sunday, Mitchell said that Iger was the most qualified candidate and that directors had devoted 11 meetings to discussing the succession.
Mitchell, who will retire as chairman next year, predicted that Iger would make his mark in the fast-evolving entertainment world.
“We believe Bob Iger represents the right blend of continuity ... and the recognition of needed change,” Mitchell said. “We made the right choice.”
Iger was Eisner’s handpicked candidate, although the CEO had in the past expressed reservations about whether Iger had the creative vision to lead.
Iger’s formal naming by the board displeased critics who have said Disney needs nothing less than a housecleaning to fully regain its magic.
Roy E. Disney and Stanley P. Gold, who quit the Disney board in late 2003 and led the shareholder revolt against Eisner last year, accused the board Sunday of failing to find “a single external candidate interested in the job and thus handed Bob Iger the job by default.”
“Shareholders should seriously consider replacing this board and starting anew,” the statement said.
But among several industry analysts and executives, Iger’s elevation was well received.
“I’ve had a great working relationship with Bob Iger,” said Miramax Film Corp. co-founder Harvey Weinstein, who is negotiating a split from Disney amid tensions with Eisner and other executives.
Iger, who cut his teeth in TV as a weatherman and reporter, joined ABC in 1974. He arrived at Disney when the company swallowed Capital Cities/ABC Inc. in 1996, and was promoted to Eisner’s second in command in 2000.
When he becomes chief executive, Iger will confront numerous challenges. Chief among them will be demonstrating to directors, shareholders and Wall Street that he can quickly emerge from Eisner’s long shadow.
Iger also will be under pressure to show he can successfully carry out his strategy for expanding Disney’s business overseas and exploiting new technologies to promote the Disney brand.
What’s more, Iger will be under the gun to soothe nerves at a company that has been rocked in the last year by the shareholder revolt, an unsuccessful hostile takeover bid by cable giant Comcast Corp. and an embarrassing shareholder lawsuit over Eisner’s hiring and firing of Michael Ovitz, Iger’s predecessor as president.
“His biggest challenge is settling down the company,” former Warner Bros. co-Chairman Robert Daly said.
Among Iger’s most important decisions will be whether to replace himself. The short list for president includes Disney Studios Chairman Dick Cook, Chief Financial Officer Tom Staggs and Anne Sweeney, co-chairwoman of the company’s media networks, according to Disney insiders.
Although earnings are up, Iger faces vexing long-term fiscal trials, including shoring up the ailing Euro Disney theme park resort company and rejuvenating Disney’s bedrock animation division, which has slipped from its glory days of the early 1990s when it produced such hits as “The Lion King” and “Beauty and the Beast.”
Some observers believe that Iger may work to salvage Disney’s fractured relationship with Pixar Animation Studios. The Emeryville, Calif.-based computer animation powerhouse broke off talks last year to extend its partnership with Disney.
At one point, the Disney board’s CEO wish list included such executives as Yahoo Inc. CEO Terry Semel; News Corp. President Peter Chernin; Time Warner Inc.'s Jeff Bewkes, chairman of that company’s entertainment and networks group; and Viacom Inc. co-President Tom Freston.
But they all failed to show interest, which sources said was partly because of concerns over Eisner’s participation in the job search.
By last week, it was down to two candidates: Iger and EBay Inc. CEO Meg Whitman, a former Disney executive who impressed directors with her role in building the Internet powerhouse. They were the only two to be interviewed by the full board, according to sources close to the search.
Although many in Hollywood and on Wall Street expected Iger to get the long-sought promotion, few thought the board would move so swiftly for fear that it would be criticized for not conducting an exhaustive search. The board had set itself a June deadline to replace Eisner.
Several events over the last week forced the directors to move quickly. Late Friday night, Whitman removed herself from the race.
Whitman had interviewed in Los Angeles at a Disney board member’s house March 6. The interview lasted three hours and was attended by Eisner, sources familiar with the meeting said.
On Friday, Whitman called Mitchell to inform him that she was pulling out. The sources said Whitman was frustrated that the board didn’t get back to her in a timely fashion as it had promised.
That left board members with the choice of anointing Iger or jump-starting the interview process.
After several hours of vigorous discussion Saturday night, the directors decided that it was in the company’s best interest to name Iger and bring an end to a process that was becoming a distraction for executives and employees.
“Finally,” one weary Disney executive said.
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At a glance
Key dates in the entertainment company’s recent history.
Nov. 30, 2003: Two Disney directors, Roy E. Disney and Stanley P. Gold, resign and launch campaign to unseat Chief Executive Michael Eisner.
Mar. 3, 2004: Hobbled by a shareholder revolt, Eisner is removed as chairman of the board but remains chief executive.
May 2004: Disney’s second-quarter profit rises 71%.
Sept. 10, 2004: Eisner announces his retirement, effective September 2006. Board pledges to name his successor by June 2005.
Sept. 21, 2004: Disney’s board announces search for new CEO and says President Robert Iger is the sole internal candidate.
Oct. 25, 2004: Disney’s board hires search firm Heidrick & Struggles.
Nov. 18, 2004: Disney’s fourth-quarter profit jumps 24%.
Feb. 11, 2005: Iger is reelected to Disney’s board with 95% of the vote at the annual shareholder meeting.
Mar. 10, 2005: Dissident shareholders Roy Disney and Gold protest Eisner’s involvement in the search, calling it a mockery.
Mar. 11, 2005: In a phone call to board Chairman George J. Mitchell, EBay Inc. CEO Meg Whitman withdraws her candidacy.
Mar. 13, 2005: Disney announces that Iger will become its CEO, effective Oct. 1.
Times staff writer Chris Gaither contributed to this report.