Disney's (Presumed) Next CEO Continues a Trend of Money Men Running Media Companies
The appointment of Tom Staggs as COO Thursday is the latest in a long line of business executives being tapped to run publicly-traded entertainment companies.
In the final assessment, Tom Staggs' commitment to emerging technologies and oversight of the Shanghai Disney Resort, expected to open early next year, outweighed his lack of hands-on creative experience in the eyes of Disney's board and, most importantly, current Chairman and CEO Bob Iger.
It is Iger, after all, who has the biggest say in picking his successor to run Disney, and after a years-long bake-off between Staggs, 54, and fellow well-respected longtime Disney executive Jay Rasulo, 57, it appears Staggs finally won out on Thursday when Iger officially appointed him COO, presumably making Staggs the heir apparent to run Disney when Iger, who turns 64 next week, leaves in 2018.
If it seems at all odd that a former Morgan Stanley investment banker who made his bones producing annual reports and profit and loss statements instead of movies or TV shows is next in line to run Disney, it shouldn't. Staggs' appointment actually continues a trend among publicly-traded media companies in recent years of placing business executives instead of creative ones in leadership roles. Viacom CEO Philippe Dauman, for instance, is a lawyer by trade who no one would mistake for a Hollywood kingpin. Same goes for Time Warner CEO Jeff Bewkes, who started at the company as HBO's CFO. In fact, Time Warner under Bewkes is a model for what the executive suite of a modern-day media company looks like: since assuming leadership of Time Warner, Bewkes has installed leaders of the Warner Bros. film unit and Turner Broadcasting company who hail from the financial rather than creative side of the business. (HBO boss Richard Plepler came up through the company's communications ranks.) Taking it a step further, neither Brian Roberts at Comcast or his top lieutenant, Steve Burke, at NBC Universal are known for their ability to develop and steer film and TV content. And one step beyond that lies Chase Carey, COO of 21st Century Fox who, like Staggs, is more known for his financial acumen than creative chops.
Indeed, as it currently stands, Les Moonves at CBS ranks as the sole CEO of a major entertainment conglomerate with the majority of his background in the creative side of the business.
Against the backdrop of a media industry riddled by digital transformation, collapsing release windows and new financial models, placing Staggs as the almost certain successor to Iger is more prudent than perplexing. And Wall Street itself seems to love the move: news of his promotion early Thursday prompted Disney shares to move higher on nearly twice the normal volume. By the end of the trading day, Disney stock had closed at $102.64, an all-time high. Its market capitalization is a dizzying $174.5 billion, making it more valuable than Time Warner, 21st Century Fox and Viacom – combined.
“He is well known and respected on the Street,” Janney Montgomery Scott analyst Tony Wible said of Staggs. “He has been ideally positioned to make this move with his experience broadening over the past few years.”
Disney had been without a COO since 2005 when Iger was promoted from that spot to CEO, replacing Michael Eisner. Since then, Disney’s stock has soared more than 320 percent, more than four times the gain made by the broader markets. Wall Street is hoping for the same from Staggs, presuming he doesn’t do anything to make Iger and Disney’s board rethink their assumptions about him.
Upon extending his contract again last year, Iger had signaled that he would appoint a COO probably in the spring and the presumption was it would be either Staggs or Rasulo; whichever one it was would be groomed for the CEO slot. The promotion of Staggs came earlier than expected because, as one observer put it, "It allows Iger to have a crown prince in place ahead of Disney’s annual shareholder meeting,” which is scheduled March 12 in San Francisco. Also, observers say, Iger wanted Staggs to have as much time as COO as possible before his assumed ascension to the top post. Iger, after all, had spent nearly six years as COO before he was named CEO.
Now that Rasulo has been passed over, some observers speculate his days with Disney are numbered. In fact, his employment contract expired on Jan. 31 so he is already working “at will” at Disney. Staggs, on the other hand, has a brand new contract as COO that expires at the same moment Iger retires – perfect timing should he be promoted to CEO.
Staggs and Rasulo have similar educational backgrounds and experience at Disney and the industry at large. Observers say that what may have tipped the scales in the direction of Staggs is his oversight of Shanghai Disney, which opens next year and is arguably the company’s No. 1 priority, given it represents a massive investment in China, the world’s most populous nation, with 1.3 billion people. When finished, the $5.5 billion joint venture with the Chinese government’s Shanghai Shendi Group will cover 963 acres and be about three times larger than Hong Kong Disneyland Resort.
Staggs has been very tech-savvy during his five years as head of parks and resorts, just as Iger has been with Disney overall, and this has impressed the CEO. Staggs, for example, oversaw the creation of MyMagic+, which features a digital wristband that visitors use to make purchases, open hotel-room doors and access the FastPass service to avoid long lines. Just this week, Disney released some photos of Pirates of the Caribbean: Battle for the Sunken Treasure, an upcoming attraction at Shanghai Disney that uses the latest technology to recreate a battle between two ships while park-goers drift down a boat between them. Moreover, Staggs has also been overseeing the tech-heavy Imagineering unit and shepherding creation of the state-of-the art Avatar Land that is expected to open in 2017 at Disney’s Animal Kingdom in Florida.
Staggs also has been seen, according to some, as more charismatic and polished than is Rasulo, at least in certain important social interactions. Disney boasts on its corporate website that Staggs “has been praised by Wall Street for his financial and communications skills and was consistently voted the entertainment industry’s No. 1 CFO by Institutional Investor magazine.”
“Tom is an exceptional executive and his new role fits his skillset very well,” said Mike Speck of Heidrick & Struggles, an executive search firm not involved with the promotion of Staggs. “As CFO, he gained a knowledge and perspective on all of the divisions of the company. Now he has led the parks and resorts division to strong top- and bottom-line results and gained global operating experience on a complex, $4 billion business. This looks like a win-win for Tom and for Disney.”