Wall Street Weighs In on Disney's Exec Team Shake-Up

Amy Sussman/Getty Images; Inset: Courtesy Disney
Rebecca Campbell (inset) previously led Disneyland Resort, including the Star Wars: Galaxy's Edge expansion, as president.

Loop Capital's Alan Gould downgrades the company's stock partly due to Kevin Mayer's appointment as CEO of TikTok.

With The Walt Disney Co. naming Rebecca Campbell to succeed newly named TikTok CEO Kevin Mayer as chair of its direct-to-consumer and international business unit, Wall Street analysts on Tuesday chimed in on what his departure and her rise to the key role mean for the Hollywood powerhouse.

Disney's stock was down 1.7 percent as of 11 a.m. ET.

Loop Capital analyst Alan Gould on Tuesday downgraded his Disney rating from "buy" to "hold," saying "we believe the bounce-back from the pandemic will take longer than the Street is currently estimating, the stock is approaching our price target, and the uncertainty is exacerbated by the loss of Kevin Mayer," whom he called "the architect of the Disney+ launch."

Campbell, a 23-year veteran of the company, most recently served as president of Disneyland Resort after previous roles as president of Disney in Europe, Middle East and Africa and president of the firm's ABC Owned Television Stations.

"She joins the business at a moment where the already thin original content pipeline has dwindled to essentially 'nothing,' with the looming anniversary of one-year subscriber lock-ups in the U.S.," Bernstein analyst Todd Juenger outlined her challenges in a report. "There are also vitally important strategic decisions to be made on the future of Hulu, its brand and content and differentiation strategy, the role of Hulu Live, the international roll-out of Hulu SVOD, and what role ESPN+ should play in new sports rights negotiations, to name a few. She will not have the luxury of time to contemplate most of these tough decisions."

In a positive, "within the company, especially given the embattled situation at the moment, we expect she will encounter mostly support, as opposed to resentment," the analyst argued. "This is no time for resentment."

Juenger also addressed key investor questions about the executive shuffle in his report. "Why put somebody from parks in charge of the future of streaming?" was one of them. "Given the crucial and transformative role of streaming to Disney's future, many investors were surprised that Disney didn't name someone from the streaming side as CEO. Now, Disney hasn't even named someone from the streaming side to be in charge of streaming," he wrote. "Purposely or accidentally, Disney's new CEO seems to be sending a clear signal with both of the announced promotions that the path upward at Disney leads through parks. Certainly … executives benefit from their experience having already directly reported to [CEO Bob] Chapek, and vice-versa."

Campbell's role as president for Europe and beyond meant she was also involved, for some time, in the Disney+ launch strategy in those regions. "Her direct involvement with Disney+ was for a short, but we're sure intense, time period," Juenger said. "Her elevation is probably best described as following the 'best available athlete' theory of talent cultivation (as opposed to the 'best specifically suited résumé' theory)."

Juenger argued that Campbell's promotion "also demonstrates the dearth of experienced streaming executives that exist" given how new the space is for Hollywood giants: "If Disney specifically required an executive with streaming credentials for this role, it begs the question — who? The list of 'highly successful streaming executives' is a very, very short list of very expensive individuals, none of whom are looking for work. That is cold comfort for nervous investors who now have a surprise departure and unfamiliar replacement in charge of the division most associated with Disney's future."

So is the executive transition bad news for Disney investors? "Certainly, it introduces a new risk in arguably the most important element of Disney's future profile and repository of value," the analyst wrote. "Because Disney rarely gives shareholders access or visibility to executives beyond the CEO and CFO, Ms. Campbell is an unknown quantity to most of the investment community. We expect the company to orchestrate an opportunity, soon, for investors to get a first impression from Ms. Campbell. The company will carefully craft that environment to give her every chance of making that impression a positive one (COVID-19 restrictions complicate the situation)."