Disney’s Iger Opens Door to Remaining CEO Beyond Contractby
It’s the first time he’s said he might delay 2018 retirement
ESPN is struggling; two ‘Star Wars’ lands will open in 2019
Walt Disney Co. Chief Executive Officer Bob Iger said he’d remain with the company beyond his scheduled June 2018 retirement if it’s good for the company, the first time he’s said he might extend his tenure beyond his current contract.
Iger, who turns 66 Friday, made the comment on a call with investors after Disney reported lower sales and earnings for the fiscal first quarter ended Dec. 31. If he extends his contract, it would be the third time he has postponed retirement.
By opening the door to staying, Iger potentially buys time to turn around the struggling ESPN sports network, which has lost viewers and advertising sales as audiences embrace alternatives to traditional pay TV, like Netflix. Those struggles took center stage again Tuesday as the entertainment giant blamed the sports network for lower quarterly sales and profit.
“While I’m confident that my successor is going to be chosen on a timely basis and chosen well, if it’s in the best interest of the company for me to extend my term, I’m open to that, but there’s nothing specific to announce at this point,” Iger said on conference call with analysts Tuesday.
Iger holds the most powerful job in entertainment, overseeing world famous theme parks, Hollywood’s most profitable film studio and the most valuable cable network in ESPN. Brands he’s acquired over his 12 years as CEO, including Pixar, Marvel and Star Wars, generate billions of dollars a year in movie ticket sales, park admissions and merchandise revenue.
The company has been unable to find a potential successor to its long-serving CEO. The most recent heir apparent, Chief Operating Officer Tom Staggs, abruptly stepped down in April of last year.
Tony Scherrer, a Disney shareholder at Smead Capital Management in Seattle, said he trusted that the board would make the right decision either way.
“We don’t own this for the jockey that’s running it,” Scherrer said. “We own if for the assets they manage.”
Revenue at the Burbank, California-based company shrank 3 percent to $14.8 billion in the first quarter ended Dec. 31, Disney said in a statement. That missed the $15.3 billion average of analysts’ estimates compiled by Bloomberg.
A decline in profit at ESPN, which had fewer college bowl games and lower viewership, dragged down results in cable TV -- which is by far Disney’s largest business. With the highest subscriber rates in pay TV, Disney’s sports network is especially at risk of losing revenue as cable audiences cancel subscriptions for online services or sign up for so-called skinny bundles that don’t play up sports programming.
Disney also cited higher programming costs at ESPN, including rising expenses for both NFL and NBA games. Profit at other cable channels, such as the flagship Disney Channel, was essentially flat, the company said.
“Media networks were a bit of a disappointment, especially on the costs side,” said Robin Diedrich, an analyst with Edward Jones. “That was a little worse than expected.”
- First-quarter profit excluding some items fell to $1.55 a share, beating the $1.49 average of estimates.
- Earnings at the company’s cable TV unit, home to ESPN and the Disney Channel, slumped 11 percent to $864 million. Revenue decreased 2 percent.
- Film profit fell 17 percent to $842 million, as “Rogue One: A Star Wars” story failed to match “Star Wars: The Force Awakens” from a year earlier even while grossing more than $1 billion worldwide.
- Consumer products profit declined 25 percent to $642 million, reflecting the same tough comparisons for “Star Wars” merchandise.
- Theme-park profit rose 13 percent to $1.11 billion, buoyed by higher spending at the domestic and international parks. Results include the company’s Shanghai resort, which opened in June.
If he stays beyond 2018, Iger will be around to see the opening of “Star Wars” lands at the company’s resorts in Orlando, Florida, and Southern California. The company is also on schedule to open an “Avatar” attraction at its Animal Kingdom park in Florida on May 27. Iger said Tuesday the company’s new Shanghai resort had welcomed 7 million guests and would likely top 10 million in its first year.
Shares of Disney were little changed in extended trading after financial results were announced. The stock lost 0.5 percent to $109 at the close in New York and has risen 16 percent in the past 12 months.
Disney executives had signaled fiscal 2017, which began in October, would see modest earnings growth due to fewer films, hard-to-top sales of “Star Wars” merchandise in the prior year and a $600 million increase in broadcast fees for National Basketball Association games. Chief Financial Officer Christine McCarthy also said in November the company would air half as many college football bowl games in the quarter, compared with the same period a year earlier.
Even with a big new Christmas movie, “Rogue One: A Star Wars Story,” Disney struggled to match the stellar results that “The Force Awakens” delivered in late 2015 to the company’s motion-picture and consumer-products divisions.
Disney led media stocks in a meltdown in 2015 after acknowledging that its flagship ESPN sports network was losing subscribers as viewers traded down to lower-priced TV options. Since then the shares have almost returned to their August 2015 closing high of $121.69.