Disney's Iger: Talent a priority
By Alex Armitage
Bloomberg News
10/2/2005
Walt Disney Co.'s Robert Iger, who takes over as chief executive officer today, said his top priority is to retain talent and bolster creativity at the No. 2 U.S. media company.
"That's what it's about, more than anything else, more than financials, more than technology, more than growing globally," Iger said in an interview this week.
Iger, 54, succeeds Michael Eisner, who in his 21 years at the helm hired and fired creative executives such as Jeffrey Katzenberg, alienated shareholder Roy Disney and business partners such as Pixar's Steven Jobs. As well as fostering talent and patching relations, Iger should be focused on the prospect of slowing earnings growth in the company's biggest units next year, analysts said.
"It's a creative business but people have to be held accountable," said Scott Black, president at Wellesley Hills, Mass.-based Delphi Management Inc., which owns 391,000 Disney shares. "The problem with the company is that not all the units are always firing on all cylinders."
Shares of Burbank, California-based Disney have fallen 14 percent this year on concerns about slowing profit growth in films, theme parks and at ESPN, the most-watched sports network.
Iger effectively took control of Disney when he was named in March. Eisner, who had been CEO since 1984, told analysts soon after the announcement that Iger was the "boss."
"There's really nothing special that I either planned or expect" for the first day on the job, Iger said in the Sept. 27 interview at a Hollywood Radio & Television Society luncheon in Beverly Hills. It will "in a way be no different."
Eisner, 63, leaves the company after growing sales almost 19- fold to $30.8 billion. He also lost talent to competitors.
Katzenberg, a former studio head at Disney, left to form DreamWorks Animation SKG Inc., which created the "Shrek" movies. John Lasseter, a former Disney animator, is now an executive vice president at "Finding Nemo" creator Pixar. Chris McGurk, a former Disney studios head, went on to be COO of Metro-Goldwyn-Mayer Inc. Gap Inc. Chief Executive Paul Pressler is a former head of Disney parks.
Net income under Eisner grew 85 percent last year and growth averaged 25 percent in the first three quarters of this year.
That growth may be hard to emulate, said J.P. Morgan Securities analyst Spencer Wang.
He cut his estimate for 2006 profit to $1.40 a share from $1.55, 9 cents lower than the average analyst estimate of $1.49, based on a Thomson Financial survey.
The main drag on earnings next year will be lower movie studio profits and higher pension costs at the company's theme parks, Wang said. ESPN also may struggle to convince cable networks to pay more to carry the channel.
Disney will have a $300 million loss in its film unit this quarter because of flops such as "Dark Water." Wang reduced his prediction for 2005 profit to $1.24 from $1.31 a share. Analysts estimate $1.29, or $2.68 billion, according to Thomson Financial.
The ABC broadcast television network will probably counter some of the declines this year and next. The network vaulted to first place last week, the first week of the new season, from third last year on the back of hits such as "Lost" and "Desperate Housewives."
"I'm optimistic about what he can do," given Iger's background at Disney, said Henry Berghoef, head of research at Chicago-based Harris Associates LP, which owned 19.1 million Disney shares as of June 30, making the firm the 16th largest Disney shareholder.
A plan to foster talent and push creativity may help bolster earnings in the company's other units.
"Iger can do a lot by bringing in a lot of new creative talent," said Victor Hawley, a money manager at Los Angeles-based Reed, Conner & Birdwell, which owns 2.6 million Disney shares among its $4 billion under management. "It's taking a risk, a well- calculated risk, on new talent."
By Alex Armitage
Bloomberg News
10/2/2005
Walt Disney Co.'s Robert Iger, who takes over as chief executive officer today, said his top priority is to retain talent and bolster creativity at the No. 2 U.S. media company.
"That's what it's about, more than anything else, more than financials, more than technology, more than growing globally," Iger said in an interview this week.
Iger, 54, succeeds Michael Eisner, who in his 21 years at the helm hired and fired creative executives such as Jeffrey Katzenberg, alienated shareholder Roy Disney and business partners such as Pixar's Steven Jobs. As well as fostering talent and patching relations, Iger should be focused on the prospect of slowing earnings growth in the company's biggest units next year, analysts said.
"It's a creative business but people have to be held accountable," said Scott Black, president at Wellesley Hills, Mass.-based Delphi Management Inc., which owns 391,000 Disney shares. "The problem with the company is that not all the units are always firing on all cylinders."
Shares of Burbank, California-based Disney have fallen 14 percent this year on concerns about slowing profit growth in films, theme parks and at ESPN, the most-watched sports network.
Iger effectively took control of Disney when he was named in March. Eisner, who had been CEO since 1984, told analysts soon after the announcement that Iger was the "boss."
"There's really nothing special that I either planned or expect" for the first day on the job, Iger said in the Sept. 27 interview at a Hollywood Radio & Television Society luncheon in Beverly Hills. It will "in a way be no different."
Eisner, 63, leaves the company after growing sales almost 19- fold to $30.8 billion. He also lost talent to competitors.
Katzenberg, a former studio head at Disney, left to form DreamWorks Animation SKG Inc., which created the "Shrek" movies. John Lasseter, a former Disney animator, is now an executive vice president at "Finding Nemo" creator Pixar. Chris McGurk, a former Disney studios head, went on to be COO of Metro-Goldwyn-Mayer Inc. Gap Inc. Chief Executive Paul Pressler is a former head of Disney parks.
Net income under Eisner grew 85 percent last year and growth averaged 25 percent in the first three quarters of this year.
That growth may be hard to emulate, said J.P. Morgan Securities analyst Spencer Wang.
He cut his estimate for 2006 profit to $1.40 a share from $1.55, 9 cents lower than the average analyst estimate of $1.49, based on a Thomson Financial survey.
The main drag on earnings next year will be lower movie studio profits and higher pension costs at the company's theme parks, Wang said. ESPN also may struggle to convince cable networks to pay more to carry the channel.
Disney will have a $300 million loss in its film unit this quarter because of flops such as "Dark Water." Wang reduced his prediction for 2005 profit to $1.24 from $1.31 a share. Analysts estimate $1.29, or $2.68 billion, according to Thomson Financial.
The ABC broadcast television network will probably counter some of the declines this year and next. The network vaulted to first place last week, the first week of the new season, from third last year on the back of hits such as "Lost" and "Desperate Housewives."
"I'm optimistic about what he can do," given Iger's background at Disney, said Henry Berghoef, head of research at Chicago-based Harris Associates LP, which owned 19.1 million Disney shares as of June 30, making the firm the 16th largest Disney shareholder.
A plan to foster talent and push creativity may help bolster earnings in the company's other units.
"Iger can do a lot by bringing in a lot of new creative talent," said Victor Hawley, a money manager at Los Angeles-based Reed, Conner & Birdwell, which owns 2.6 million Disney shares among its $4 billion under management. "It's taking a risk, a well- calculated risk, on new talent."