Disney's Dilemma: Can Bob Iger Ever Find a Successor?

Illustration by Scott Anderson

The CEO says he's "serious this time" about retiring in 2019, but few possible heirs have emerged as Paramount finds a film chief and speculation centers on the next moves at Sony and Legendary.

Disney executives gathered March 28 for the unveiling of their $200 million-plus Pirates of the Caribbean: Dead Men Tell No Tales at CinemaCon in Las Vegas, hopeful that the summer release will succeed despite Johnny Depp's personal dramas and rumors of his repeated on-set tardiness.

But that may matter less than a larger question lingering over the $179 billion company: What will happen now that Walt Disney Co. CEO Bob Iger has said he's "serious this time around" about retiring in July 2019?

Days after Iger, 66, revealed that he had extended his contract by a year — he cleverly broke the news March 23 during a USC-hosted tech conference in an interview by his wife, Willow Bay, the new dean of the Annenberg School of Journalism — the issue is front and center for Disney's 10-person board. "Succession is a complicated thing," Iger said in a slight case of understatement, "and the board and I felt that we could use more time to not only spend on succession but to create a better transition."

The seemingly endless successor search has become the rare stain on Iger's stellar career. Ironically, the CEO is trapped in the same vise as his predecessor, Michael Eisner, who named Michael Ovitz his No. 2 in 1995, only to fire him a little more than a year later, with a subsequent settlement of more than $140 million.

At the time Eisner resigned in 2005, he was said to have had lukewarm feelings toward Iger, but that has changed; he was among the first to embrace him after the re-upping, posting on Facebook, "[Iger] is staying another year @Disney. Great for shareholders. We are protected!"

Perhaps for now. But by Wall Street consensus, no internal candidate has emerged as a clear heir apparent since Disney jettisoned Iger's first pick, Tom Staggs, in 2015. While Ben Sherwood, who serves as co-chair of Disney Media Networks and president of Disney/ABC Television, oversees a key profit center, it's unclear whether Iger favors him. Bob Chapek, who chairs Disney's parks and resorts, has broad experience and also appears to have Iger's trust; James Pitaro, the head of consumer products and interactive media, has digital experience, having served as head of Yahoo Media; and CFO Christine McCarthy has been working closely with Iger but lacks operational experience.

"All of them are potential internal candidates," Moody's analyst Neil Begley tells THR. "But [the] list may change over the next two years."

Facebook COO Sheryl Sandberg, a Disney board member since 2009, has been cited as a candidate, but most insiders believe she already would have been identified if she wanted the job. Outside candidates include the usual suspects — producer Peter Chernin, NBCUniversal CEO Steve Burke and CBS Corp. CEO Leslie Moonves — but none has signaled any passion for the post. All of which leaves Disney in a pickle. And that pickle may turn rancid if Disney's stock doesn't do better. The share price, which rose 0.1 percent after the Iger news broke, has been on the upswing for the past year but was trading at $113.05 on March 28, below its five-year high of $120.07, which it hit Nov. 20, 2015.

Despite an exceptional performance from its film unit, Disney has been hurt by ESPN, where rising programming costs and declining subscribers have dragged down revenue. ESPN ultimately is a much bigger profit center than Disney Studios, which has rebounded since Alan Horn was named chairman in 2012 and hit a record-breaking $7 billion in box office in 2016.

But Horn's long-term future at the company is uncertain. Insiders expect the 74-year-old to step down at the same time as Iger; one source says he is now likely to renew for another year, also until 2019. Like his boss, Horn has not identified his replacement.

Still, all this seems like child's play compared to the executive problems dogging the other major studios. With former Fox chair Jim Gianopulos officially named chairman of Paramount Pictures on March 27, both Legendary Entertainment and Sony Pictures, which had been talking to Gianopulos, are back in the hunt for fresh leadership.

As for Gianopulos, he will soon have to decide whether to keep Paramount's top executives, most notably production chief Marc Evans, whose weak box-office run might be offset by the support of such talent as Tom Cruise and Alexander Payne. Gianopulos is unlikely to hire the one person he might have wanted to bring in — Legendary production chief Mary Parent — say sources, because he doesn't want to rock the boat with her current bosses, Legendary owner Dalian Wanda Group, with whom he came close to signing on. Another possibility for Paramount production chief, producer and former DreamWorks executive Nina Jacobson, has said she has no desire to return to the executive fold.

So who'll come and who'll go? Sources close to Gianopulos point to the precedent of his relationship with now-Fox vice chair Emma Watts; he drew close to the exec, defying insiders' expectations, after he took over the reins as sole movie chief following Tom Rothman's exit as co-chairman in 2012. Gianopulos also might have noted the Horn lesson: When he joined Disney, Horn stuck with such holdovers as production president Sean Bailey and marketing chief Ricky Strauss and was vindicated.

As for Sony, parent company president and CEO Kaz Hirai was at its Culver City lot in March as the search to replace departing U.S. entertainment chief Michael Lynton heated up. With a dearth of top-level execs, he's had to consider the very man Iger turned down: Staggs. But sources say Staggs isn't biting.

This story first appeared in the March 29 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.

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