Iger's Agenda: Softer Culture, Overseas Growth
By MERISSA MARR
Staff Reporter of THE WALL STREET JOURNAL
March 15, 2005; Page B1
OF ALL the congratulations that deluged the future chief executive of Walt Disney Co., Robert Iger, on Sunday, one stuck out as particularly significant: an e-mail from the chief of Pixar Animation Studios, Steve Jobs. With Mr. Jobs barely on speaking terms these days with Disney's incumbent chief, Michael Eisner, Mr. Iger's smoother personality could help him patch up Disney's ruptured relationship with a partner that has provided Disney with some of its biggest film hits.
The note from Mr. Jobs was a quick reminder that Mr. Iger must get right to work setting his own path as Disney's CEO. After six months on succession tenterhooks, a nervous Mr. Iger was at home in Los Angeles on Saturday afternoon when Disney Chairman George Mitchell phoned him with the news he had been dying to hear. In an interview yesterday, Mr. Iger, who will take over on Sept. 30, said, "This was something I wanted very much."
Now Mr. Iger must step up with a strategy to continue Disney's financial turnaround and repair the damage left by years of turmoil at the company and his predecessor's bruising management style. Mr. Iger suggested in the interview that he would soften the internal culture at Disney. He would like to instill the workplace with qualities reminiscent of his former home, Capital Cities/ABC Inc., where under managers Tom Murphy and Dan Burke, family values and employee empowerment flourished.
"I really believe that large, diverse media companies that operate extremely competitive businesses on a global basis need to empower their people and also create accountability for them," he said in his office at the Team Disney headquarters on the Burbank, Calif., lot. "You can only do that when you have the right people in place, which is what Dan Burke and Tom Murphy used to talk about a lot," he added.
Mr. Iger's management style couldn't be more different than Mr. Eisner's. While the CEO created a battle-like mentality at Disney, Mr. Iger has a more conciliatory approach. The 54-year-old native New Yorker is considered to be more of a consensus-builder than Mr. Eisner, who is well known for his autocratic style.
Articulating his plans for the first time since being named Disney's next chief executive, Mr. Iger described a steady-as-she-goes approach, as opposed to a radical sea change. "This is not about extraordinary difference the day Bob Iger gets the job," he said. "It's about work that's already going on, progress that's already being made."
Mr. Iger said he and Mr. Eisner have spent the past year making significant changes already. Faced with a prolonged period of underperformance, culminating in a shareholder revolt at the 2004 annual meeting and Mr. Eisner's surrender of his chairmanship, the pair has turned around Disney's fortunes. Net income for the fiscal year ended September 2004 bounced 85% higher, driven by the company's cable television operations and theme parks.
Mr. Iger is careful not to portray himself as a radical transformer. Indeed, a big part of his popularity with the board and investors has been a sense of continuity he brings in extending Disney's recent financial revival. For now, he said, his focus is on "a really smooth transition" over the next six months.
However, Mr. Iger suggested that, once in charge, he may consider changes to the structure of the company. "If you look at companies today, no two are alike, but there are many different types of structures," he said.
"A lot of it depends on the people in place and what works best at the time and what the alternatives are in terms of people." It's not clear, for example, that Mr. Iger will fill his own current president's slot.
Sketching out his future for Disney, Mr. Iger said creative content, rather than distribution, would remain the "heart and soul" of the company. "My goal is to make more great content, deliver it to more people, in more places, more often," he said.
With a largely mature domestic market, Disney has highlighted international business as a key growth area. It is one Mr. Iger has a particular affinity for; his first promotion out of the television business was to head Disney's international operations, an important stepping stone to becoming Disney's president in 2000.
Mr. Iger said the more-great-content strategy was being implemented across all Disney's core businesses: television, movies, theme parks and consumer products. But he will have to navigate big changes, especially in the television business.
The days of viewer loyalty to a particular network will one day be gone, as viewers increasingly seek out individual shows, Mr. Iger said. "The biggest challenge will be with a set of media assets that are largely network based, how do we successfully navigate those waters," he said. But if your product is right, like "Desperate Housewives" or "Lost," it doesn't matter how it's delivered, he said. "It's always going to be about great shows."
Mr. Iger feels the Disney brand exists in its "most sublime form" in the theme-park business, though. That business has been hit hard in recent years, but he is confident margins will return to the 20% range within three to four years. "We're pleased with trends there," he said.
A big part of the future growth in theme parks will come from international expansion. Disney is opening a Disneyland in Hong Kong in September and is trying to seal a deal to open another park in Shanghai. Among other potential markets Disney has its eye on: South Korea.
Over his past five years as president, the area Mr. Iger has least experience in is movies. The most immediate issue: What to do about Pixar? "Of course, I'd like nothing more than for that relationship to continue, but it has to be the right one for the company from a business perspective," he said. "If there is an opportunity to have dialogue about extending our relationship, then I certainly want to take advantage of it." Mr. Iger said he has yet to speak to Mr. Jobs.
In terms of acquisitions, Mr. Iger said Disney doesn't have any glaring strategic holes. But it may try to take advantage of opportunities in areas like videogames. "We will get more aggressive in that business in the years ahead," he said.
While Wall Street applauded Mr. Iger's appointment, the new CEO still has some convincing to do. Disney's selection of an insider as its next chief indicates "that Michael Eisner has diminished the value of the brand and the franchise," asserted Christy Wood, senior investment officer for global equities at California Public Employees' Retirement System. "No shareowner can feel happy about the handpicked successor to the guy who ran the business poorly and mismanaged all of these personnel issues."
Mr. Iger, though, is feeling pretty good about it. The one-time weatherman said he never expected to reach this pinnacle. He said Disney has a "great team" in place that he has a "tremendous amount of confidence in."
"I was not one that ever established a career calendar for myself," he said. "As I look back, it's pretty remarkable to me."
--Joann S. Lublin contributed to this article.
Write to Merissa Marr at merissa.marr@wsj.com
By MERISSA MARR
Staff Reporter of THE WALL STREET JOURNAL
March 15, 2005; Page B1
OF ALL the congratulations that deluged the future chief executive of Walt Disney Co., Robert Iger, on Sunday, one stuck out as particularly significant: an e-mail from the chief of Pixar Animation Studios, Steve Jobs. With Mr. Jobs barely on speaking terms these days with Disney's incumbent chief, Michael Eisner, Mr. Iger's smoother personality could help him patch up Disney's ruptured relationship with a partner that has provided Disney with some of its biggest film hits.
The note from Mr. Jobs was a quick reminder that Mr. Iger must get right to work setting his own path as Disney's CEO. After six months on succession tenterhooks, a nervous Mr. Iger was at home in Los Angeles on Saturday afternoon when Disney Chairman George Mitchell phoned him with the news he had been dying to hear. In an interview yesterday, Mr. Iger, who will take over on Sept. 30, said, "This was something I wanted very much."
Now Mr. Iger must step up with a strategy to continue Disney's financial turnaround and repair the damage left by years of turmoil at the company and his predecessor's bruising management style. Mr. Iger suggested in the interview that he would soften the internal culture at Disney. He would like to instill the workplace with qualities reminiscent of his former home, Capital Cities/ABC Inc., where under managers Tom Murphy and Dan Burke, family values and employee empowerment flourished.
"I really believe that large, diverse media companies that operate extremely competitive businesses on a global basis need to empower their people and also create accountability for them," he said in his office at the Team Disney headquarters on the Burbank, Calif., lot. "You can only do that when you have the right people in place, which is what Dan Burke and Tom Murphy used to talk about a lot," he added.
Mr. Iger's management style couldn't be more different than Mr. Eisner's. While the CEO created a battle-like mentality at Disney, Mr. Iger has a more conciliatory approach. The 54-year-old native New Yorker is considered to be more of a consensus-builder than Mr. Eisner, who is well known for his autocratic style.
Articulating his plans for the first time since being named Disney's next chief executive, Mr. Iger described a steady-as-she-goes approach, as opposed to a radical sea change. "This is not about extraordinary difference the day Bob Iger gets the job," he said. "It's about work that's already going on, progress that's already being made."
Mr. Iger said he and Mr. Eisner have spent the past year making significant changes already. Faced with a prolonged period of underperformance, culminating in a shareholder revolt at the 2004 annual meeting and Mr. Eisner's surrender of his chairmanship, the pair has turned around Disney's fortunes. Net income for the fiscal year ended September 2004 bounced 85% higher, driven by the company's cable television operations and theme parks.
Mr. Iger is careful not to portray himself as a radical transformer. Indeed, a big part of his popularity with the board and investors has been a sense of continuity he brings in extending Disney's recent financial revival. For now, he said, his focus is on "a really smooth transition" over the next six months.
However, Mr. Iger suggested that, once in charge, he may consider changes to the structure of the company. "If you look at companies today, no two are alike, but there are many different types of structures," he said.
"A lot of it depends on the people in place and what works best at the time and what the alternatives are in terms of people." It's not clear, for example, that Mr. Iger will fill his own current president's slot.
Sketching out his future for Disney, Mr. Iger said creative content, rather than distribution, would remain the "heart and soul" of the company. "My goal is to make more great content, deliver it to more people, in more places, more often," he said.
With a largely mature domestic market, Disney has highlighted international business as a key growth area. It is one Mr. Iger has a particular affinity for; his first promotion out of the television business was to head Disney's international operations, an important stepping stone to becoming Disney's president in 2000.
Mr. Iger said the more-great-content strategy was being implemented across all Disney's core businesses: television, movies, theme parks and consumer products. But he will have to navigate big changes, especially in the television business.
The days of viewer loyalty to a particular network will one day be gone, as viewers increasingly seek out individual shows, Mr. Iger said. "The biggest challenge will be with a set of media assets that are largely network based, how do we successfully navigate those waters," he said. But if your product is right, like "Desperate Housewives" or "Lost," it doesn't matter how it's delivered, he said. "It's always going to be about great shows."
Mr. Iger feels the Disney brand exists in its "most sublime form" in the theme-park business, though. That business has been hit hard in recent years, but he is confident margins will return to the 20% range within three to four years. "We're pleased with trends there," he said.
A big part of the future growth in theme parks will come from international expansion. Disney is opening a Disneyland in Hong Kong in September and is trying to seal a deal to open another park in Shanghai. Among other potential markets Disney has its eye on: South Korea.
Over his past five years as president, the area Mr. Iger has least experience in is movies. The most immediate issue: What to do about Pixar? "Of course, I'd like nothing more than for that relationship to continue, but it has to be the right one for the company from a business perspective," he said. "If there is an opportunity to have dialogue about extending our relationship, then I certainly want to take advantage of it." Mr. Iger said he has yet to speak to Mr. Jobs.
In terms of acquisitions, Mr. Iger said Disney doesn't have any glaring strategic holes. But it may try to take advantage of opportunities in areas like videogames. "We will get more aggressive in that business in the years ahead," he said.
While Wall Street applauded Mr. Iger's appointment, the new CEO still has some convincing to do. Disney's selection of an insider as its next chief indicates "that Michael Eisner has diminished the value of the brand and the franchise," asserted Christy Wood, senior investment officer for global equities at California Public Employees' Retirement System. "No shareowner can feel happy about the handpicked successor to the guy who ran the business poorly and mismanaged all of these personnel issues."
Mr. Iger, though, is feeling pretty good about it. The one-time weatherman said he never expected to reach this pinnacle. He said Disney has a "great team" in place that he has a "tremendous amount of confidence in."
"I was not one that ever established a career calendar for myself," he said. "As I look back, it's pretty remarkable to me."
--Joann S. Lublin contributed to this article.
Write to Merissa Marr at merissa.marr@wsj.com