Why Bob Iger Is Staying at Disney
The rumors have proven true!
The Walt Disney Company just confirmed that Bob Iger will remain as CEO until November 2026.
BREAKING! 🚨
Bob Iger to Remain Disney CEO Through 2026https://t.co/FvXmSxGAp0— MickeyBlog.com (@MickeyBlog_) July 12, 2023
That’s right, folks! Disney’s CEO has signed a two-year contract extension.Here’s why Bob Iger is staying at Disney.
Bob Iger’s Sell By Date is Now December 2026
In the latest batch of Disney Headlines, I discussed Harrison Ford’s age and Bob Iger’s willingness to remain as Disney CEO.
Now, those stories somewhat intersect, as Iger will remain at Disney through December 31st, 2026.
At that point, he’ll be 75 years old, which puts him in elderly Indiana Jones territory.
Obviously, most 72-year-olds are thinking about retirement or already have. In Iger’s case, both statements are true.
Remember that Iger DID retire in December 2021 after a storied tenure with Disney and, before that, Capital Cities.
His retirement lasted for 11 months before Bob Chapek’s struggles forced Disney’s Board of Directors to reconsider its options.
When then-Chairman of the Board Susan Arnold asked Iger to return, he happily accepted, having realized that he wasn’t ready to leave Disney yet.
While Iger’s advanced age of 71 may seem unusual in most industries, it’s not in media.
Sumner Redstone, the leader of Viacom/CBS, famously worked until he was 92!
By “worked,” I probably mean napped and said inappropriate things to his caretakers.
But the point remains that media companies treasure institutional knowledge.
As arguably the greatest media CEO in corporate history, Iger’s name alone differentiates him from competitors.
Simply by having Iger back in the fold, Disney reassured Wall Street investors about its short-term viability.
Alas, Bob Chapek screwed up a lot. Some of it wasn’t his fault, as he took the job two weeks before the first global pandemic in a century.
Still, Iger spent his first six months on the job putting out the fires that Chapek had started.
Understandably, that wasn’t enough time to solve all the problems.
Iger Extends the Ticking Clock
As I mentioned in Headlines, July 20th marks eight full months since Iger’s return. That’s one-third of a two-year contract extension.
In the interim, Iger likely chased away former CFO Christine McCarthy, who claimed after the fact that the two butted heads over Disney’s direction.
Replacing a capable CFO like McCarthy comes with its own challenges. The instant she left, many of us speculated that Iger would stay.
Otherwise, Disney’s Board must look for a new CFO and CEO simultaneously.
So, we’ve known for a month that Iger was probably staying for a while longer.
What we lacked was specificity regarding how long he’d agree to extend his contract.
Also, we should acknowledge that this is a two-way street.
While Iger has hired most of Disney’s Board, they could feasibly be tired of him. Iger’s return hasn’t gone smoothly at all.
Just yesterday, I asked whether Disney has improved under Iger.
Today, I committed the cardinal sin of the internet and read some of your comments.
First, thank you for the respectful debate. I recognize how rare those are these days.
Second, I casually tracked the responses and noted that about 70 percent said yes, 20 percent said no, and 10 percent said wokewokewoke compulsively.
That split is at least somewhat surprising in that virtually everyone happily welcomed Iger back.
Since then, his at least slightly divisive performance underscores the problem that many major media companies are facing right now.
Disney’s New Business Model
Let’s talk about the primary reason Iger had to stay longer and Disney’s underlying problem.
Before the contract extension, Disney’s CEO had only 16 months remaining in his tenure.
That’s nowhere near enough time to fix what’s broken within the company, much of which Iger saw coming.
In 2016, Iger embarked on a plan to address cord-cutting, a phenomenon wherein longstanding cable customers dropped their service.
At the time, Disney’s linear television revenue stream provided much of the company’s profits. In fact, it’s still a top earner even with the industry in turmoil.
The rapidity of cord-cutting since the pandemic’s start suggests that the money train is coming into the station, though.
That decline in revenue explains why Iger invented Disney+ as a strategy to modernize Disney’s content machine.
To the credit of Iger (and Chapek), Disney+ has earned 157.8 million subscribers, with ESPN+ at 25.3 million and Hulu at 48.2 million.
These combined stats make Disney’s three-pronged streaming service strategy successful in claiming customers.
Unfortunately, streaming isn’t profitable yet, though, and it’s dragging down the bottom lines of several established businesses, including Disney.
Few people mention this, but Disney recorded record revenue last year and is tracking to do so again during the current fiscal year.
That fact doesn’t earn attention because Disney’s profits have decreased. How is that possible?
Disney’s Biggest Problem vs. Iger’s Timeline
The company will lose several billion dollars on streaming in fiscal 2023.
Thus far, gaining more customers hasn’t meant more profit. There’s more revenue, sure, but the cost of doing business has increased dramatically.
This problem won’t fix itself over the next 16 months. Everyone can check the math on that to know for sure.
While Disney has reiterated that Disney+ will turn a profit at some point in 2024, it hasn’t said when.
Also, nobody has said the profit will be for the entire year. Disney could feasibly lose money on its streaming services in 2023 and 2024.
If Bob Iger left in November 2024 as previously scheduled, he would have done so under a cloud of scrutiny about his performance and legacy.
Iger cares very much about his reputation and wouldn’t want that.
For its part, Disney’s Board wasn’t going to find someone off the street who could come in and match Iger’s performance.
The knowledge gap is too large between Iger and other potential media executives.
Sure, they’d eventually catch up for the most part, but the forward progress would slow down or possibly even get derailed in the interim.
We just watched (in horror) as Disney picked the wrong person as CEO and saw that individual systematically destroy Iger’s vision.
Neither Iger nor the Board wants that nightmare to happen again.
Why Bob Iger Is Staying at Disney
So, we’ve reached that commonsense moment wherein everyone acknowledges reality.
Iger needs to stay at Disney, and Disney needs Iger to stay. It’s that simple.
As of now, Iger gains a longer runway of 42 months to solve the streaming revenue model enigma.
Should he fail, Iger’s reputation will be tarnished. Should he succeed, history will remember him as one of the greatest CEOs ever.
For its part, Disney can reassure investors that it’ll enjoy stability at the top of its org chart for the foreseeable future.
That wasn’t the case when Iger returned with a two-year contract. Simply put, the contract length matters and aids Disney’s Wall Street perception.
This move is a win/win for everyone, which is why MickeyBlog has been predicting it since the day Iger came back.
Someone like Iger doesn’t unretire for just two years. And Disney’s Board wants a viable successor in place next time, not a gamble like Chapek.
Finally, let’s not lose sight of the funny part of this story.
Should Iger’s contract end as expected, he’ll retire again five years to the day after he retired the first time.
He will have first left Disney on December 31st, 2021, and again on December 31st, 2026. Weird, huh?
Feature Image: Chip Somodevilla/Getty Images
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