On March 4, 2005, the Walt Disney Company’s board of directors announced that Michael Eisner would be stepping down as the company’s Chief Executive Officer on September 30 of that year—one year earlier than Eisner had previously announced—and also be leaving the board of directors at the conclusion of the current term, with Disney President and Chief Operating Officer Robert Iger then taking on the CEO duties.
Now, as we pass the one-year mark in Iger’s tenure as CEO, let’s take a look at how he’s been doing.
Iger quickly differentiated his approach from that of Michael Eisner shortly after his designation of CEO-elect by largely disbanding the Corporate Strategic Planning Division, one of Eisner’s key advisory groups. Instead of forcing all business units to go through the central group (nicknamed by many inside the corporation as the “Business Prevention Department”) for major initiatives, they were empowered to guide their own destinies, using their particular expertise in their fields.
Reconciliation was also a central tenet of Iger’s entry into the role, as he helped to ease the negotiation of the end of the partnership with the Weinstein brothers regarding control of Miramax and Dimension Films. He reached out to ease the embittered relationships with Steve Jobs and the Pixar Animation Studio, with Roy Disney and Stanley Gold, brought Oswald the Lucky Rabbit back into the Disney fold, and even settled the dispute with the heirs of Solomon Linda over the rights to “The Lion Sleeps Tonight” as used in the Disney movie The Lion King. Those efforts resulted, in part, in the dissolution of the Save Disney effort, the return of Roy Disney to the company (although largely in an honorary capacity) and the eventual purchase of Pixar.
Indeed, after Iger took the reins last October, one of the first items of business was to announce that some Disney television shows would be made available via the iTunes Music Store. While the original selection was small, it sent multiple messages: Disney would aggressively move into new media channels; Disney was going to work closely with Steve Jobs to support his new media initiatives; and Iger’s term was going to be different than Eisner’s.
In his letter to shareholders in the company’s annual report, Iger laid out three strategic priorities: creative innovation, global expansion, and application of technology. He reiterated those priorities in his address at the annual shareholder meeting in March. And his (and the company’s) actions have backed that up.
Disney has been firing on all cylinders, from opening new attractions at the parks and returning to traditional animation, expanding the brand into new Asian markets via television, movies and merchandise, and trying new technology in the theme parks, new methods of content distribution, and new areas of technical content development.
In an article following the shareholder meeting, I noted that Iger had declared:
“Being at the forefront of technological change will allow us to stay connected to our consumers, but it may also require a departure from old rules and practices and the development of new business models. The riskiest thing we can do as a company is to maintain the status quo. We have to experiment strategically; we also have to invest wisely. And while we may not always bat 1.000 with these new initiatives, our company’s future depends on them.”
At the time, I noted that it was refreshing to hear such candor and a commitment to risk, as the company was extremely risk-averse for the last few years under Michael Eisner. That has now extended to being willing to admit mistakes made in that attempt, with the abandonment of ESPN Mobile, a service that debuted less than a year ago, and was deemed sufficiently important that a demonstration of it took up several minutes of Iger’s speech at the shareholder meeting and special deals were offered for signing up for the service on the spot.
With the company’s leadership position on delivery of content online, from movies (via the iTunes Music Store) to television shows (through the iTunes Music Store and also with commercials via the ABC Web site) to games and more, Iger seems to be driving a great deal of the industry’s shift toward providing content in whatever format its customers are searching for it to appear in.
But let’s take a look at a measurement that the institutional stockholders are more interested in: the company’s stock price. When Michael Eisner left office at the close of business on September 30, 2005, Disney stock was trading at $24.13 per share. At the close of business last Friday, September 29, 2006, the price was $30.91, an increase of over 28 percent in just one year. (The stock reached $31.46 on September 27, its highest point since the summer of 2001.)
Iger has also been actively promoting diversity. Not only was John E. Pepper, Jr. appointed as non-executive Chairman of the Board of the Walt Disney Company, the first black to hold that position, Ed Grier was appointed President of the Disneyland Resort and James Lewis was appointed President of the Disney Vacation Club, two more high-profile black appointees. In addition, two women were appointed to high-level positions at Walt Disney World, with Meg Crofton taking over from Al Weiss as the resort’s president and Erin Wallace taking on the position of Executive Vice President of Operations after the retirement of Lee Cockerell.
While his first year hasn’t been without its controversies (the 9/11 “dramatization” miniseries on ABC and the “did Disney pay too much for Pixar?” debate come to mind immediately), it appears that Iger has made quite a change at the company, moving it away from the micromanaged fear factory of the final years under Eisner and more toward a fast-moving, competitive, service-oriented company delivering a higher quality product.
I noted in an article taking a look at Iger prior to his taking on the leadership of the company:
“Now, mind you, this doesn’t mean that it is a certainty that … Bob Iger will be the company’s savior and all will be bright, shiny, and perfect under his leadership. There’s no guarantee of anything. But I’m starting to think that maybe he understands what needs to be done, and will let the creative people make the creative decisions. Maybe he’ll just make sure that everyone is working together correctly and nurture an army of mini-Walts.
“It’s too early to tell, but I’m not quite so pessimistic anymore.”
It looks like that prediction was a pretty good one.
