Disney CEO Bob Iger says he’s ‘open’ to staying on after his contract expires in 2018
Walt Disney Co. Chief Executive Robert Iger opened the door Tuesday to the possibility of remaining head of the Burbank entertainment giant longer than previously planned.
Iger said he was “open” to the prospect of remaining CEO after his contract ends in June 2018 — if the company’s board of directors decides that is the best course.
His comments came during a conference call with analysts to discuss the company’s first-quarter earnings, which included a profit of $2.48 billion, down 14% from a year earlier, but easily ahead of analysts’ estimates.
“I am going to do what is in the best interest of this company,” Iger said. “While I am confident that my successor is going to be chosen on a timely basis and chosen well, if it is in the best interest of the company for me to extend my term, I am open to that.”
Thomas Staggs, Iger’s former heir apparent, left Disney’s No. 2 post last year. Staggs’ departure, which came after Disney’s board privately expressed a lack of confidence in him, threw Disney’s carefully orchestrated succession plans into question.
Until Tuesday, Iger, also Disney’s chairman, had said little about the effort to find a new CEO, except to note that the board is conducting a robust search. With few obvious internal candidates who have the experience necessary to head Disney, the company seems increasingly likely to turn to an outside candidate.
Iger’s comments come amid growing speculation among investors and company insiders that the 65-year-old executive may have to extend his tenure to train a successor, a possibility first reported by the Wall Street Journal.
“We would welcome Bob Iger staying on [longer] — he’s done a marvelous job in managing their portfolio of businesses,” said Jeff Krumpelman, managing director and chief investment officer of RiverPoint Capital Management, which own 230,000 shares of Disney. “I think it would be a good outcome for the stock.”
Disney shares closed down 57 cents, or 0.5%, to $109 in regular trading. They lost an additional 70 cents at one point in after-hours activity.
I am going to do what is in the best interest of this company.
Disney CEO Robert Iger
Iger, the company’s chief executive since 2005, previously had been set to vacate his post at the end of June 2016, but in 2014 his deal was extended two years.
A few years ago, Iger laid the groundwork for a potential move into the NFL. In 2015, he joined an effort by the San Diego Chargers and Oakland Raiders to build a $1.7-billion football stadium in Carson. Iger was named non-executive chairman of the joint venture of the Chargers and Raiders, and he was given an option to buy a minority stake in one of the two teams. However, in January 2016, NFL owners voted to allow the Rams franchise to move to Inglewood, scuttling Iger’s plans.
Analyst Robin Diedrich of Edward Jones Research said that “investors will be pleased” by Iger’s willingness to consider staying longer.
“Given the situation with not really having an apparent successor … and that Disney continues to do pretty well under his leadership, it is not a surprise to hear him say that,” Diedrich said. “But I think there is still the looming question of who” takes over.
The decline in Disney’s profit for the quarter that ended Dec. 31 reflected a slowdown in its film and cable television businesses, among other issues. The company reported earnings of $1.55 a share and revenue of $14.78 billion, which was down 3% from a year earlier. Disney was challenged by a difficult comparison: In the first quarter of 2016 it delivered a record profit.
Still, Disney partly beat expectations. Analysts had predicted the company would earn $1.49 a share on revenue of $15.26 billion, according to Thomson Reuters.
The film studio reported operating income of $842 million, down 17% from a year earlier. Nonetheless, the results were the second best in the studio’s history, topped only by its performance during the same quarter last year, when it got a massive lift from the release of “Star Wars: The Force Awakens.” That movie grossed more than $2 billion at the box office. During the most recent quarter, Disney released “Rogue One: A Star Wars Story,” which has taken in $1.04 billion worldwide.
Disney’s closely watched media networks group, which includes crown jewel ESPN, had a tough quarter, with operating income dropping 4% to $1.36 billion. Lower results in the unit’s cable division — operating income there was down 11% — were partly caused by a decline in subscribers. According to Nielsen data, ESPN, which is part of the cable division, has lost more than 9 million subscribers since 2013.
Disney has made several moves in recent years designed to strengthen its media operation, including a $1-billion investment last year in video streaming company BamTech, which has been tapped to create and distribute a new ESPN-branded sports subscription streaming service. Iger said the direct-to-consumers offering would launch this year, but he gave no specifics.
Analysts welcome such initiatives.
“They need to present compelling offerings with attractive pricing for consumers, and the more they wait, the more they face the possibility of losing younger eyeballs to the growing number of substitutes out there,” said Motley Fool analyst Jason Moser.
Disney’s consumer products and interactive group reported operating income of $642 million, which was down 25%, reflecting decreases in merchandise licensing, games and retail businesses.
The parks and resorts unit was a bright spot with operating income of $1.11 billion, up 13% from a year earlier, reflecting an increase in guest spending at the company’s domestic properties. Iger announced on the conference call that an “Avatar”-themed area will open May 27 at Walt Disney World’s Animal Kingdom in Florida.
“This is a very big land with an extremely unique design and architecture,” Iger said. “It really does make you feel as though you’re in Pandora, that great world that [director] Jim Cameron created.”
5:10 p.m.: This article was updated with comments from investors.
2:30 p.m.: This article was updated with additional comments from Iger.
This article was originally published at 1:55 p.m.
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