Iger’s Defense Rests as Disney Excels
In recent weeks, critics and business analysts alike have taken a longer look at Bob Iger’s tenures at The Walt Disney Company.
Notably, some people who are notoriously not the biggest fans of Disney’s CEO have rushed to his defense.
Most recently, an unlikely source provided some rather provocative arguments in favor of his Disney leadership.
Iger’s defense has rested, and the final argument speaks highly of him as Disney CEO.
The Perils of Disney
A while ago, a noted Disney analyst and author wrote the following…
“Investors, Beware: Disney Is Paying Too Much for…”
Your mind may naturally fill in the blank there with Hulu, Fox, or maybe even the construction of Star Wars: Galaxy’s Edge.
Such criticisms proved plentiful when Disney announced each of those projects.
Alas, I’m citing an older bit of Disney history here, as it’s a James B. Stewart quote about Pixar.
Yes, the famed author of Disney War, the book about Roy E. Disney’s battle with then-CEO Michael Eisner, hated the Pixar deal.
Here’s a link to the article if you don’t believe me. And here’s the applicable quote:
“Disney is paying $7.4 billion to buy Pixar, $1.2 billion in cash and the rest in Disney shares.
What’s it getting in return? Pixar’s most recent balance sheet shows just $1.38 billion in total assets, and $1 billion of that is cash.”
To his credit, Stewart noted that he probably would have made the deal as well but only as a long-term play.
In the short term, the Wall Street Journal analyst (at the time) indicated this move would bite Disney.
We all know that didn’t happen, just as we know critics raised similar concerns about Marvel.
Here’s a Deadline update that states, “Did Disney overpay for Marvel? Well, here’s the argument for a resounding “Yes!”
In both November 2008 and March 2009, Marvel’s stock traded below $24 per share.
And the run-up of the stock since March of this year has been +58%.
If Disney was interested in buying Marvel, why didn’t Bob Iger do it when he could have bought it at a far cheaper price?”
History often repeats itself with Disney purchases, as the immediate analysis proves hyperbolic.
Iger Has Weathered the Storm
A strange phenomenon occurred during Iger’s first year back at Disney.
The returning CEO enjoyed a honeymoon period wherein business analysts gave him the benefit of the doubt due to his track record.
As Iger took a hard look at his company, he recognized how precarious its balance sheet had become.
That was partly due to missteps by former CEO Bob Chapek, but it was mainly because of the pandemic’s savage timing.
Disney was like a giant battleship on the ocean with Iger as its captain.
He called for a pivot, but vessels that large take time to course-correct.
By the time Iger finally had Disney pointed in the right direction, the wolves had decided that the honeymoon period was over.
Suddenly, Iger found himself under attack, something he mentioned he found odd.
When the CEO took the job (again), he knew the recovery would be a process and presumed serious-minded people would understand the same.
Alas, Wall Street doesn’t work like that. It’s always in “win now” mode.
For this reason, Disney faces an activist investor attack from Nelson Peltz, who wants a seat on the board.
I’ve talked about that nonsense enough, but it has led to an interesting reactive measure.
First, people have taken a hard look at Disney and recognized that the stock is undervalued.
At the moment, Disney stock has increased by at least $25 in 2024 alone, which is growth of 28 percent.
As I type this, it’s almost at $30 in growth, but the price has likely fluctuated by the time you read this.
Now, we cannot dismiss the possibility that Disney stock has gone up as people buy the right to take sides in the investor war.
Even if that’s a partial explanation, we’re still talking about $15-$20 of natural, organic growth.
In short, Iger has done his job, and we know this to be true for two reasons. Let’s start with the popularity contest.
Iger Wins Friends and Influences People
One of Iger’s best Disney purchases was Lucasfilm, the company that represented George Lucas’s life’s work.
So, Lucas definitely got an obscene amount of attention when he claimed that he’d sold his company to “white slavers.”
While the famous director quickly walked back his 2015 comments, he definitely has made other snide remarks about Disney.
With Iger in the crosshairs right now, Lucas could have twisted the knife.
Instead, the Star Wars/Indiana Jones creator provided a full-throated endorsement of Iger.
In fact, Lucas lashed out at Iger’s opposition by stating, “creating magic is not for amateurs.”
This unexpected support for Iger came from other noted critics of his as well.
MickeyBlog has chronicled Abigail Disney’s frustrations with Iger on many occasions.
Roy O. Disney’s granddaughter even produced a documentary about Disney’s pay disparity.
She also participated in a Ted Talk on the subject you can watch here:
A few years ago, Abigail Disney assailed Iger for his executive pay, and she lashed out over his strike comments just last year.
Like Lucas, when the time came to pick sides, Abigail Disney wholeheartedly endorsed Bob Iger.
Thus far, the overwhelming majority of public comments over Iger’s current feud have taken his side.
But most of those people all have a vested interest in the company. So, let’s talk about the other Iger defense.
The Math Supports Bob Iger
I read a great deal of business analysis, and one of my favorites is Jeff Sonnenfeld, a frequent contributor at places like CNBC.
Sonnenfeld is Yale University’s most accredited leadership analyst and the professor of its most popular class.
Let’s just say that Sonnenfeld doesn’t think much of Nelson Peltz:
I’m only mentioning that as an FYI that Sonnenfeld would be inclined to take Iger’s side anyway.
However, the professor joined another research director to perform this analysis for Time.
This data-driven evaluation provides ample proof that Iger has done a remarkable job as CEO of Disney…twice!
According to their research, “Disney’s 579% total shareholder returns during Iger’s first term as CEO, from 2005 to 2020, far outpaced” its rivals.
Similarly, since Iger came back, “Disney’s 27% total shareholder returns have far outpaced all its major media rivals.”
But that’s not even the remarkable part. All of Disney’s industry competitors are in the red during the same timeframe.
According to Sonnenfeld, in the time since Iger’s return, Fox lost six percent, Warner Bros. Discovery 22 percent, and Paramount 40 percent.
In short, Iger’s Disney performance vastly exceeds Wall Street’s average returns, and he’s somehow doing it while other media companies are losing value.
I’d encourage you to read Sonnenfeld’s complete analysis to recognize just how emphatic the data is.
The research compares Iger’s returns to other famous CEO comebacks like Steve Jobs at Apple and Michael Dell at Dell.
Remarkably, Iger has achieved his turnaround even faster than those two titans of industry.
Iger’s Defense Rests
There’s a popular saying in the zeitgeist right now that facts don’t care about your feelings.
No matter what any of us thinks about Iger, this deep dive into his track record as Disney CEO tells the whole story.
Iger has excelled at Disney once already, and now he’s doing it again.
In fact, as the article notes, Disney is currently the top performing stock on the Dow Jones Index thus far in 2024.
What more needs to be said? The defense rests.
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Feature Photo:Disney CEO Bob Iger (Getty Images)