Disney shares dip as Iger succession plan is thrown into question
Walt Disney Co. shares took a hit on Wall Street after the company’s succession plan for Chief Executive Robert Iger was thrown into question.
The stock fell $2.37, or more than 2%, to $96.31 in midday trading on Tuesday, the day after the Burbank entertainment giant said its chief operating officer and Iger’s heir apparent, Thomas Staggs, is leaving the company.
Monday’s announcement shocked Wall Street analysts, who had gotten to know Staggs well during his tenure as Disney’s chief financial officer.
“This is certainly surprising and unexpected, particularly given the care that Disney and its board had previously taken towards the succession process, seemingly to avoid precisely this sort of disruption,” Anthony DiClemente, an analyst at Nomura Securities, said in a research report.
It is still unclear what led to the exit of Staggs, who is stepping down from his position in May. Analysts and industry insiders said Staggs’ lack of experience in entertainment content may have led the company’s board to change course on the succession plan.
Topeka Capital Markets analyst David Miller, in a note to investors, called Staggs’ impending departure “truly stunning.”
“Having known Tom for quite some time, we highly doubt that he would just voluntarily leave on his own accord after 26 years with the company, and oh so close to the CEO role, unless someone had called out his qualifications,” Miller wrote.
Analysts agreed that the change increases the likelihood that Iger will extend his reign as CEO.
Todd Juenger, analyst at Sanford C. Bernstein & Co., said investors would have been satisfied with the pick of Staggs as CEO, despite his lack of experience on the content side of the business.
While analysts were reluctant to speculate, some did not rule out internal Disney candidates. Topeka’s Miller cited ESPN head John Skipper and media networks co-chair Ben Sherwood as possibilities.
But Nomura’s DiClemente said the company has ample time to figure out its path forward.
“We do know that while this news is clearly a setback to the company’s efforts to find an adequate successor to Bob Iger, that Mr. Iger does not plan to step down from his role as CEO until at least June 2018,” he said.
Follow Ryan Faughnder on Twitter for more entertainment business coverage: @rfaughnder
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