Iger's promotion receives positive investor response
By Richard Burnett | Sentinel Staff Writer
Posted March 15, 2005
Disney shares rose Monday as Wall Street tipped its cap to the news of Robert Iger's promotion.
The positive trading day -- Disney shares gained 43 cents to close at $28.02 -- was a welcome change for the entertainment giant, which has seen its stock lose about $2 a share since early February, when it hit a 52-week high.
Some analysts blamed the recent dip on market nervousness as Disney's board mulled a replacement for longtime Chief Executive Officer Michael Eisner.
Tapping Iger -- Eisner's hand-picked successor -- dispels that cloud, they said. Still, there are those who would have preferred that an outside candidate had gotten the job.
"Uncertainty is always bad for stock prices, and obviously the market is relieved to have this uncertainty removed," said Janna Sampson, portfolio manager of Oakbrook Investments, an institutional investor that owns more than 800,000 Disney shares.
"But I think there were a lot of people in the marketplace who would have liked the board to have brought in someone from the outside," she said.
Analysts said the day-after snapshot matters little compared with the long-term results of Iger's management.
Despite his success at ABC -- in terms of higher ratings and successful new series -- Iger remains a question mark in terms of his overall capacity to run the Disney conglomerate, some analysts said.
The veteran TV executive -- Disney's president and chief operating officer since 1998 -- will be viewed as "Eisner's man" until he proves otherwise, said Greg Taxin, chief executive officer of Glass Lewis & Co., an independent research and advisory firm.
The Glass Lewis firm advised dissident Disney shareholders and institutional investors in a proxy battle last year prior to the company's annual meeting, during which Eisner received a 45 percent no-confidence vote from shareholders.
"The concerns that the institutional investors have are whether Iger will be his own man, with his own strategic vision for Disney," Taxin said, "or whether we're simply getting a sequel to the Michael Eisner show."
While the selection of Iger surprised nobody, some investors had favored outside candidates such as eBay CEO Meg Whitman or News Corp. President Peter Chernin.
In the end, the board chose the familiar over the unfamiliar, safety over risk, said Carl Winston, director of the tourism program at San Diego State University.
"This decision does indicate they're not going to change the course they're on," Winston said, "and some may not like that. But this does avoid a lot of risk for them."
After the past year's turmoil, some experts regarded the Iger selection as a positive step for the future.
"Although the search was certainly not an exhaustive one, and the board could have been more transparent in its selection process, we regard the selection of Bob Iger as a reasonable one," said Cheryl Gustitus, vice president for Institutional Shareholder Services, an investment watchdog and advisory firm.
Richard Burnett can be reached at 407-420-5256 or rburnett@orlandosentinel.com.
By Richard Burnett | Sentinel Staff Writer
Posted March 15, 2005
Disney shares rose Monday as Wall Street tipped its cap to the news of Robert Iger's promotion.
The positive trading day -- Disney shares gained 43 cents to close at $28.02 -- was a welcome change for the entertainment giant, which has seen its stock lose about $2 a share since early February, when it hit a 52-week high.
Some analysts blamed the recent dip on market nervousness as Disney's board mulled a replacement for longtime Chief Executive Officer Michael Eisner.
Tapping Iger -- Eisner's hand-picked successor -- dispels that cloud, they said. Still, there are those who would have preferred that an outside candidate had gotten the job.
"Uncertainty is always bad for stock prices, and obviously the market is relieved to have this uncertainty removed," said Janna Sampson, portfolio manager of Oakbrook Investments, an institutional investor that owns more than 800,000 Disney shares.
"But I think there were a lot of people in the marketplace who would have liked the board to have brought in someone from the outside," she said.
Analysts said the day-after snapshot matters little compared with the long-term results of Iger's management.
Despite his success at ABC -- in terms of higher ratings and successful new series -- Iger remains a question mark in terms of his overall capacity to run the Disney conglomerate, some analysts said.
The veteran TV executive -- Disney's president and chief operating officer since 1998 -- will be viewed as "Eisner's man" until he proves otherwise, said Greg Taxin, chief executive officer of Glass Lewis & Co., an independent research and advisory firm.
The Glass Lewis firm advised dissident Disney shareholders and institutional investors in a proxy battle last year prior to the company's annual meeting, during which Eisner received a 45 percent no-confidence vote from shareholders.
"The concerns that the institutional investors have are whether Iger will be his own man, with his own strategic vision for Disney," Taxin said, "or whether we're simply getting a sequel to the Michael Eisner show."
While the selection of Iger surprised nobody, some investors had favored outside candidates such as eBay CEO Meg Whitman or News Corp. President Peter Chernin.
In the end, the board chose the familiar over the unfamiliar, safety over risk, said Carl Winston, director of the tourism program at San Diego State University.
"This decision does indicate they're not going to change the course they're on," Winston said, "and some may not like that. But this does avoid a lot of risk for them."
After the past year's turmoil, some experts regarded the Iger selection as a positive step for the future.
"Although the search was certainly not an exhaustive one, and the board could have been more transparent in its selection process, we regard the selection of Bob Iger as a reasonable one," said Cheryl Gustitus, vice president for Institutional Shareholder Services, an investment watchdog and advisory firm.
Richard Burnett can be reached at 407-420-5256 or rburnett@orlandosentinel.com.
