Get all your news in one place.
100’s of premium titles.
One app.
Start reading
The Street
The Street
Daniel Kline

Walt Disney Seems Set to Repeat Its Biggest Mistake

Walt Disney has enormous advantages due to its massive library of premium intellectual property. 

The huge library of characters and shows, which everyone not only knows but remains interested in, makes it relatively easy (at least compared to Disney rivals) for the company to put out hit movies, television shows, and theme park attractions.

Just having top-tier content, however, does not guarantee success. You need the right leadership in place to guide the entire company. That's more difficult at a company like Walt Disney (DIS), where creativity drives the business, than it would be at a bank or some other traditional operation.

DON'T MISS: Disney CEO Fires Back at Florida's DeSantis, Makes Clear Threat

Bob Iger, much like Michael Eisner before him, knows how to nurture creative talents. That's a special skill that few executives have shown they possess on the level that two of Disney's last three CEOs clearly do. 

Being CEO of Disney isn't like running most companies -- yet the Walt Disney board seems to love running off successful CEOs who don't actually want to leave.

That's what happened to Eisner, and you can argue that that move worked because Iger, in his first tenure in the big chair, arguably exceeded the man he succeeded. When Iger was forced out and succeeded by Bob Chapek, that clearly wasn't the case.     

Now, Disney looks to repeat its past mistake by holding Iger to an arbitrary two-year tenure even though he's clearly the best person to be running the company.

Bob Iger signed a two-year contract when he returned as Disney CEO.

Image source: Shutterstock/TheStreet Illustration

Disney Has a Succession Problem

Forcing Eisner out sort of made sense because Iger was in the wings, but replacing Iger with Chapek was never a good idea. Now, Disney seems intent on replacing Iger after two years even though there's no obvious replacement.  

“Succession is pretty much at the top of the list,” Iger told a Morgan Stanley investor conference, Deadline reported. But “[it's] between me and the board.”

Disney Chairman Mark Parker also commented on the issue.

“We all know that not only is it an important decision but that we don’t have endless amount of time to make it, and we are mindful of that,” he said. “Conversations have been great. I am confident that we will identify the right successor at the right time.”

It makes sense to identify potential successors to Iger, but given that nobody who might get poached to go elsewhere is pushing him for the job, the timetable seems arbitrary. Ideally, Disney would hire or identify multiple candidates to serve below Iger and learn the job.

Think of it in sports terms. The New England Patriots had multiple quarterbacks behind Tom Brady, who went on to successfully start for other teams. The team, however, did not push Brady out and turn to Jimmy Garoppolo. Even though Garoppolo was much younger, Brady was still better.

Disney wants to push out one of the best CEOs in the entire business world because when he came back, the company said it was only for two years. That's the same move it made when it installed Chapek, and it's pretty likely that its next CEO will face the same fate.

You don't get rid of a strong CEO because he hits a certain age or because you put a timetable on his tenure when you brought him back. 

Iger should remain Disney CEO as long as he wants the job and remains the best person to serve in the position.

Get investment guidance from trusted portfolio managers without the management fees. Sign up for Action Alerts PLUS now.

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.