House of Mouse

Fox Deal or Not, Iger Can't Stay at Disney Forever

Fox deal or not, he can't stay at Disney forever.
Photographer: VCG/VCG via Getty Images
At Closing, March 16th
102.87 USD
At Closing, March 16th
37.14 USD

Paging security, a CEO appears to have tied himself up to the Cinderella Castle, says he won't go. Please advise.

Who are we kidding -- if Bob Iger wanted to extend his term running Walt Disney Co. for the rest of his life, shareholders would probably welcome it. The 66-year-old hasn't signed on for a lifetime commitment yet, but according to a Wall Street Journal report Wednesday afternoon, he may extend his contract once more.

Less than nine months ago, Disney announced that Iger would be staying until July 2019, past a previously set retirement of June 2018. But even that wasn't the original date -- we're years and multiple contract extensions past that. Shareholders were nevertheless relieved to know Iger was sticking around, considering ESPN's sudden struggles with cord-cutting, the lack of an obvious successor at the time and how lucrative his studio-dealmaking has been for Disney investors.

The Iger Years

Disney's stock has posted a more than 400% total return since Iger took over as CEO in 2005

Source: Bloomberg

This time, the impetus for a longer stay appears to be his pending takeover of some $40 billion worth of 21st Century Fox Inc. assets, which could be announced next week. It would be by far Disney's largest deal ever and bring the National Geographic and FX networks, as well as Fox's film studio, into the House of Mouse. Disney also reportedly would seek control of Sky Plc, the U.K. pay-TV provider that Fox has a stake in and was seeking to buy outright amid friction from regulators. (Disney, which owns ABC, likely won't be purchasing from the Murdochs their Fox News franchise or the company's sports-programming assets.)

Fox's Value

Last month, Wells Fargo analysts crunched the numbers on what Fox's assets may be worth if separated. Here's what they came up with:

Source: Wells Fargo Securities sum-of-the-parts analysis and Gadfly speculation

Note: Excludes other assets within Fox's cable network programming division that are worth about $3.5 billion as it's unclear where those would go.

Still, I'm confused. We're 19 months away from Iger's scheduled departure. Does he really need more time than that to integrate a few channels and a film business?  

This goes back to an issue I raised in March: Disney has never been better than under Iger's leadership, but the sprawling media-and-entertainment conglomerate may be becoming unwieldy to the point that Iger and the board feel like he alone can manage it. And if that's the case, that's not good. No executive should be so indispensable that without him or her things could fall apart. 

Expanding Kingdom

Bob Iger may be bulking up the media-networks and film divisions with Fox assets as Disney prepares to launch its own streaming service to feature its TV shows and movies

Source: Bloomberg

Succession planning has been a sore spot at Disney, and one would think the board would have a better handle on it now following the dramatic passage from Michael Eisner to Iger in 2005. Nobody wants a repeat of that. Some obvious candidates to replace Iger left the company in recent years, though Bloomberg News has flagged Bob Chapek, the theme parks chief, as a contender. 

There's also speculation that James Murdoch could move over to Disney with the Fox assets and be primed to take over from Iger, though I'm skeptical for many reasons, not least that we're talking about a Murdoch running Disney while his brother and father control a rival media giant. 

Disney shares are up a modest 1 percent this year, and without this Fox deal chatter, they'd be down. It's one of the stock's worst years since the 2008 recession, when theme park visits and resort bookings dropped. Iger has a lot on his hands, and investors may be glad he's the one in charge for now. But he can't stay forever.

Sleeping Beauty?

Once the leader of the pack, Disney's performance has stagnated, though a deal with Fox may reawaken its shares

Source: Bloomberg

Iger and the board may think that by extending his stay to get through this big deal, they'll help ease the transition of power at Disney. But sooner or later, he'll have to turn over management of the Magic Kingdom to someone else who will bring their own ideas about how to navigate the streaming world and further expand Disney. At what point does putting off the inevitable start to do more harm than good?

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

    To contact the author of this story:
    Tara Lachapelle in New York at

    To contact the editor responsible for this story:
    Beth Williams at

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