December 25, 2024
Disney's ( DIS ) search for its next CEO will reach a fever pitch next year, with the media and entertainment giant set to announce a new chief in early 2026.
If that time frame holds, investors will know the successor of current CEO Bob Iger about a year ahead of his expected departure at the end of that year. And this time, the executive says he is leaving for good.
With James Gorman set to succeed former Nike CEO Mark Parker as chairman of Disney's board effective Jan. 2, the succession process has been routinely branded a "critical priority" for the new year.
Gorman, who oversaw his own succession process at Morgan Stanley, first joined Disney's board in February — just two months before the company successfully fended off activist investor Nelson Peltz. He has led Disney's succession planning committee since August.
Rumors had previously swirled that internal names, including Dana Walden and Alan Bergman , co-chairs of Disney Entertainment; Josh D'Amaro, head of Disney's parks and experiences division; and Jimmy Pitaro , chairman of ESPN, could be next in line to replace Iger.
But more recently, speculation has shifted to outside names.
"I would assume that they are actively looking externally," Macquarie analyst Tim Nollen told Yahoo Finance in an interview. "James Gorman is certainly external. He only joined the board a year ago himself, so I am quite sure they will actively look outside of the company."
A recent report from the Wall Street Journal said Disney is interviewing a pool of external candidates, including Electronic Arts ( EA ) CEO Andrew Wilson. EA did not respond to Yahoo Finance's request for comment on the rumored discussions. At least two other outside candidates are also being considered for the top job, according to the outlet.
Historically, Disney has almost exclusively promoted internally, with the last three CEOs rising through the ranks of the media behemoth.
"That's kind of in their nature to do things that way," Nollen said. "But Disney is a big, sprawling company, and the internal candidates have run their independent, individual divisions, not the broader Disney."
"So, can a person who runs parks also run the networks? Can a person who runs streaming or ESPN also run the parks? I don't know if that's the best move to make," he cautioned. "I'm not saying it isn't. I just don't know what the best move is."
To that point, according to the Journal, Disney discussed a dual-CEO strategy, which has worked well for competitor Netflix ( NFLX ). But that scenario could quickly unravel, as Disney's leadership team hasn't traditionally operated under that structure.
"Netflix was able to do it because they were all brought up that way together," Nollen said. "And I'm not saying Disney is [not capable], but I don't know if the top internal candidates were brought up in the same way."
Finding the next CEO has been one of the company's most important priorities after Bob Chapek's succession disaster nearly five years ago.
"I think it would be safe to assume that I think about [CEO succession] all the time," Iger said on a podcast with Kelly Ripa earlier this summer . "I could say that 'I'm obsessed with it' would be probably an understatement, and actually, the board and I established when I returned that that would be among our biggest, if not our biggest, [priorities]."
Chapek was hand-selected by Iger as CEO in 2020 but was ousted in November 2022 after less than three years on the job, a period marred by political battles , A-list talent problems , and controversial reorganizations .
"It was not my intention to be pulled back in," Iger told Ripa about returning to the chief executive role. "I owed it to the company that meant so much to me and had been so good to me to answer the call."
Since Iger's return, Disney has faced some tough moments , especially as the industry attempts to navigate the shift away from linear television.
Creative challenges at the box office, fundamental changes at ESPN, and antitrust roadblocks for its upcoming sports joint venture, among other difficulties, have pressured the company's long-term outlook for investors.
And although shares have recovered from last year's multiyear lows , the stock has still underperformed the broader market. Shares are up about 25% since the start of the year against a 27% gain for the S&P 500.
Shareholders have also grown concerned over a potential slowdown in Disney's theme parks business as prices rise and demand wanes. In August, the company underperformed expectations at its domestic parks , reporting a 6% year-over-year drop in profits for the three-month period ending June 29.
Those trends reversed in the latest quarter , but pricing at the parks will continue to be a challenge as new competition from Comcast's ( CMCSA ) Universal threatens to dent sales.
Cruise ships, meanwhile, are poised to be a lucrative opportunity over the next five years — and will serve as yet another area of the business the incoming CEO will have to foster.
But overall, the strategy for Disney has already been set thanks to Iger's return.
"The next person just has to come in and carry things along the way Iger has set them up," Nollen said. "It's simple: Don't let the wheels fall off."
Alexandra Canal @allie_canal , LinkedIn,
