As a seasoned industry observer with over two decades of experience under my belt, I must say that the current Disney succession drama is as intriguing as a well-written Disney movie script. The extended tenure of Bob Iger has been nothing short of magical, yet the recent events have left many questioning if there will be another extension to his contract.
The Walt Disney Co. is betting that James Gorman can pull off a succession two-fer.
As a devoted admirer, I’d like to highlight an exemplary succession process I recently witnessed, executed by the former CEO of Morgan Stanley. In May, he unveiled his intent to depart from the investment bank, setting off a seamless transition. He shared that three potential contenders were being considered internally, keeping everyone intrigued. After careful deliberation, he selected Ted Pick as his successor, yet showed remarkable grace by keeping the other candidates within the company post-transition. This process stands out as one of the most elegant in recent corporate history.
In January, Gorman is set to assume the role of chairman at Disney. His main focus will be on identifying a replacement for current CEO Bob Iger, aiming to make a decision around early 2026.
It’s not an simple undertaking; it’s been over two years now since Iger came back to the company, pledging to tackle the succession issue again and extending his contract, which will keep him with Disney until 2026.
According to Henning Piezunka, an associate professor at the Wharton School of Business at the University of Pennsylvania, the CEO role currently being filled is exceptionally powerful. However, anyone who takes over this position in the future will not hold as much informal power. In essence, assuming this role may feel somewhat challenging because while you’ll officially have the same position, your informal influence will be significantly different.
Previously, when Disney selected a new CEO, Iger reportedly made the decision to appoint Bob Chapek as his successor. However, this time around, the board is actively involved and has numerous strategies and potential candidates to consider. According to The Hollywood Reporter, they delve into some of the possible approaches Gorman might take during the search process.
More seasoning required: 5-1 odds
Gorman’s statement that Disney might announce a new CEO in 2026 implies that the board believes the current internal candidates, such as Dana Walden, Josh D’Amaro, Jimmy Pitaro, and Alan Bergman, aren’t quite ready to assume leadership roles just yet. However, the 2026 timeline doesn’t preclude Disney from taking action in 2025.
The organization might shuffle some top-level positions, allowing executives to take on different roles and divisions, thereby providing prospective leaders with diverse experiences within the company. For instance, Disney experimented with this approach about a decade back by exchanging roles between Tom Staggs and Jay Rasulo (with Rasulo becoming CFO and Staggs leading parks), although their partnership didn’t lead to success at that time. However, with several internal contenders, such job swaps could be the key method for identifying candidates capable of managing a complex company like ours and providing them opportunities to demonstrate their abilities beyond their existing areas of expertise.
Promoting an internal solo CEO: 8-1 odds
Perhaps the postponement to 2026 could serve as a chance for internal candidates to demonstrate their capabilities, given that the upcoming year is crucial for the company’s success. Disney’s streaming entertainment sector needs to show profitability; its film division must confirm the authenticity of this year’s turnaround; ESPN plans to introduce a premium streaming service; and Disney’s parks aim to verify whether the slowdown experienced this year is temporary, as they prepare to invest $60 billion into that division. If an executive performs exceptionally well in their role, it could give them the edge they need.
As a gamer, I’m hearing from Piezunka that Gorman and the board are considering the qualities the new CEO should possess. This assessment might tip the scales in favor of one internal contender over another.
He points out that the crucial question is: What specific qualities should the new Disney CEO possess? This question, he explains, is both intriguing and strategic. It centers around determining the future direction of Disney – will it focus on theme parks, streaming services, or managing relationships with celebrities? Ultimately, he suggests that the incoming CEO needs to be someone who can effectively handle these areas thoughtfully.
Bringing in an outsider as CEO: 10-1 odds
Is it plausible for an outsider to effectively lead Disney, given its uniquely identifiable culture? Could someone outside the company truly manage a firm like Disney? At the D23 event in Anaheim last August, Iger was greeted with celebrity-like adoration on the exhibition floor, reflecting the special nature of the position he holds. This incident highlights the unique demands that come with such a role.
The Disney succession team, headed by Gorman, is still considering both potential insiders and outsiders for the position, implying that the opportunity remains open. So far, only NBA commissioner Adam Silver has been publicly linked to the role after meeting with the board last year. However, since Disney’s CEO position doesn’t become vacant until 2026, there could be other suitable candidates from other companies whose contracts are due for renewal. Could NBCUniversal’s Donna Langley or Ted Sarandos be among them? Donna Langley didn’t expressly rule it out at the WSJ Tech conference on October 22nd. While Ted Sarandos said it isn’t currently on his mind, that doesn’t necessarily mean he’s not interested.
The Netflix approach: Co-CEOs: 25-1 odds
Instead of having two CEOs like Netflix, Disney doesn’t do so because the roles of Netflix co-CEOs Ted Sarandos and Greg Peters are specialized and distinct. They both bring unique areas of expertise and focus on different aspects, which enables them to collaborate effectively at the CEO level due to the mutual respect they have for each other. This arrangement allows them to make informed decisions that best serve Netflix as a company.
Sarandos mentioned it’s challenging for him to endorse the program to a company whose operations he doesn’t fully grasp, and consequently, their corporate environment.
Even though Disney, with its complex and varied nature, might find such an approach unconventional, it’s not entirely implausible. One CEO could oversee the creative aspects of the film and television studio (that’s you, Dana), while another manages the operations of the parks and experiences (Hello, Josh). Various sectors like ESPN, marketing, finance, and so on, could be distributed among them. This setup might have its merits… if potential leaders are willing to accept a position that involves less comprehensive control compared to Iger’s role. However, as Professor Piezunka from Wharton points out, a co-CEO structure “almost goes against Disney’s traditional business philosophy of always aiming for integration.
Bob Iger extends his contract: 200-1 odds
Iger’s shadow falls over the entire Disney succession drama. He assumed the top job in a dramatic, public process 20 years ago, despite not having experience in all aspects of the business. But the Chapek decision looms large. Iger himself says that he has been conducting a postmortem on what went wrong. Iger has extended his contract so many times over the years that it is tempting to assume that the board would be quickly willing to do so again. But Gorman’s ascension is reason to think otherwise. “Does [Iger] get a second chance to get it right? I think that’s going to be an interesting question, to what degree will James Gorman say ‘You know what? I own this process,’ ” Piezunka says. The company has two years to get succession right, and despite Iger’s past extensions, there is ample reason to believe that there won’t be another one. Iger, for his part, says he “definitely” plans to step aside when his current contract is up.
Screw it, let’s sell or merge: 500-1 odds
If Gorman fails to discover an appropriate successor for Iger, would it be possible for the company, historically known as a buyer, to consider a sale? While it might seem unconventional, it’s not entirely implausible. In fact, in his 2019 autobiography titled “The Ride of a Lifetime”, Iger himself hinted at potential deals with tech giants like Apple as something he had contemplated.
I think that, had Steve [Jobs] not passed away, we might have considered merging our companies or at least holding serious discussions about it. However, times have changed and Apple and Disney are more like friendly rivals now (collaborating on Vision Pro, but Disney no longer offers in-app subscriptions to Disney+ on iOS devices). Additionally, there aren’t many potential buyers outside of big tech who could afford a company like Disney. So, while the idea of selling may be appealing, it seems extremely rare, unless we’re talking about the Marvel multiverse.
THR’s Disney Oddsmaker: From Likely to Long Shot
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This tale was initially published in the October 30th edition of The Hollywood Reporter’s magazine. If you want to get the magazine, simply click here to subscribe.
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2024-10-30 15:55