Walt Disney (DIS) -) shares moved lower Thursday after the media and entertainment group extended the contract of interim CEO Bog Iger for another two years.
Iger, who returned to Disney as CEO late last year -- following his surprise departure in 2022 -- following pressure from an activist challenge from billionaire investor Nelson Peltz with plans to remain in the role until 2024, will now stay with the group until 2026. The media veteran said the extension would give him more time to deliver on a series of group restructuring plans while also extending the search for his permanent successor.
Iger, 72, detailed sweeping changes on his return, including a major cost-cutting drive and a new three-part organizational structure focused on Parks, Entertainment and ESPN. He also said Disney would restore its regular dividend, which it suspended during the peak of the pandemic in 2020, by the end of the calendar year.
He also told CNBC Thursday that he would look for strategic partners to either form a joint-venture, or take a stake in, Disney's EPSN sports broadcasting network.
"On my first day back, we began making important and sometimes difficult decisions to address some existing structural and efficiency issues, and despite the challenges, I believe Disney’s long-term future is incredibly bright,” Iger said in a statement. “But there is more to accomplish before this transformative work is complete."
Disney shares were marked 0.4% lower in early Thursday trading to change hands at $89.68 each.
"We view Iger's contract extension as neutral to the stock though necessary as we believe this likely indicates there is no clear permanent successor chosen for CEO and to fill the CFO position," said KeyBanc Capital Markets analyst Brandon Nispel.
"Additionally, Iger has undertaken significant restructuring and cost-savings initiatives throughout the business segments that likely will need more time to be fully realized," he added. "Further, it seems likely Iger needs more time to reset content creative direction as well as putting the process in place for the transition of ESPN from linear to streaming."
Last month, Disney posted second quarter earnings that were largely in-line with Street forecasts, but noted that Disney+ paid subscribers fell by 4 million, thanks in part to the loss of televised cricket rights in India. The group has also moved ahead with plans to eliminate 7,000 jobs as part of a $5.5 billion cost-cutting effort.
