At Disney, Bob Iger's Successor Will Inherit His Big Streaming Bet

04/12/19 05:23 PM EDT
By Erich Schwartzel 

LOS ANGELES -- Walt Disney Co. Chief Executive Bob Iger won high marks from investors after showcasing the company's new streaming-video service on Thursday.

Before too long, another executive will be seeing that strategy through.

Mr. Iger said he plans to leave when his contract expires in 2021. Disney's board is currently engaged in finding a successor and should be able to identify one "on a timely enough basis," he said.

Mr. Iger wasn't describing a formal search kickoff, said one person familiar with the process, since the Disney board evaluates contenders on a continuing basis. Some of the internal candidates at the moment include Robert Chapek, who oversees parks and consumer products, and Kevin Mayer, who is in charge of international operations and the company's direct-to-consumer efforts, including the new Disney+ streaming service.

Jimmy Pitaro, who was moved from running Disney's consumer products and interactive division to the helm of ESPN in March 2018, is also considered a possible contender.

"I think they're still in these early days," said Peter Crist, chairman for executive recruiter Crist|Kolder Associates, adding that a typical search can take six months.

Whoever gets the gig will have big shoes to fill. Disney shares were trading at around $23 when Mr. Iger got the top job. On Friday, they hit a record at $130 a share, up more than 11% as Wall Street responded favorably to Mr. Iger's outlining of Disney+, the new streaming-video service.

The $6.99-a-month service will offer access to a library of hundreds of Disney movies and television shows, as well as new original programming based on franchises like "Star Wars" and "High School Musical." The service's low price and stable of quality programming could make it a game-changer in the streaming landscape, several analysts said in investor notes issued Friday.

Shares in Netflix Inc., the dominant streaming-video player, fell nearly 5% on Thursday.

The next Disney CEO will be inheriting the financial bets Mr. Iger is placing now. The company expects spending on the new service to rise to $2.5 billion by 2024, and predicts operating losses to peak between 2020 and 2022, due mostly to content costs.

Mr. Iger has been CEO of Disney since October 2005, overseeing a massive expansion of the company that has won him many fans on Wall Street. He spearheaded the acquisition of Pixar Animation, Marvel Studios, Lucasfilm Ltd. and, most recently, entertainment assets of 21st Century Fox- -- deals that have built Disney into a powerhouse of blockbuster franchises.

The question of who will succeed Mr. Iger has loomed over Disney for several years. The succession process was thrown into disarray in April 2016 when Tom Staggs, a longtime executive considered an heir apparent to Mr. Iger, stepped down as chief operating officer after being told he was unlikely to be named CEO.

Mr. Iger has delayed his retirement four times. He made light of that in his remarks at the Disney + investor event. "I was going to say, 'This time I mean it,' but I've said that before," Mr. Iger told the crowd.

Thursday's remarks were his most definitive yet on the topic. "As I've said many times, there's a time for everything and 2021 will be the time for me to finally step down," he said.

A wild card in the Disney search is how big an influence Mr. Iger will play in the selection, Mr. Crist said. "As much as boards like to think they own the process on succession and the ultimate selection of the CEO, it's influenced greatly by a strong existing CEO," he said.

Multiple recruiters predicted Disney would choose an insider for its next leader, but said the company would still look at external candidates.

Mr. Mayer, who has helped orchestrate Mr. Iger's biggest deals, played a visible role in Thursday's presentation to investors, offering details on the price and rollout strategy.

Since Disney's acquisition of Fox assets closed, a new candidate has also emerged among Hollywood tea-leaf readers: Peter Rice, the former 21st Century Fox president who joined Disney after the acquisition.

He has both movie and television experience, having overseen the Fox Searchlight studio before heading all of Fox's television operations, with the exception of Fox News.

At Disney, the ABC broadcast network and ABC News as well as the entertainment cable networks including Disney Channel report to Mr. Rice. He doesn't have oversight of ESPN.

Write to Erich Schwartzel at erich.schwartzel@wsj.com

 

(END) Dow Jones Newswires

April 12, 2019 17:23 ET (21:23 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.