Michael Eisner, the longtime CEO of The Walt Disney Co., will step down a year earlier than expected, handing over the reins to Robert Iger and ending a tumultuous stint atop the entertainment giant.
Iger, 54, the firm’s current president and chief operating officer, on Sunday was named to succeed Eisner as chief executive. He will assume his new role Oct. 1. and will co-lead the company with Eisner during the transition, Disney’s board said.
He inherits the company as it continues an earnings recovery, opens a new theme park in Hong Kong, enjoys a ratings boost at its ailing ABC network and builds on success of its dominant ESPN cable network.
“This is not a broken company. If things go right for Bob, it could be a phenomenal performer in the next few years,” said Larry Haverty, a portfolio manager at Gabelli Asset Management.
Iger will face many challenges, however, including repairing some of the relationships damaged by Eisner, negotiating broadcast rights with the NFL, expanding Disney into China and India, protecting its content from piracy while embracing new technology, and warding off another shareholder challenge from disgruntled ex-directors Roy E. Disney and Stanley Gold.
Eisner, who said he would step down in 2006, will end his tenure at the company after serving 21 years. Iger will become only the sixth leader of Disney in its history.
Iger is seen as less polarizing that Eisner, a trait that might give Disney another chance to cut a new deal with longtime partner Pixar Animation Studios, the makers of such hits as this year’s Oscar-winning “The Incredibles.”
“I think probably Bob has better success doing something that could benefit the Disney shareholders,” Haverty said.
Pixar CEO Steve Jobs has said he would wait before talking to other studios about distributing his films until after Disney choose Eisner’s successor. Pixar has one more film to deliver under its current Disney deal.
Iger, who was named president in 2000, has already won praise from Miramax Films co-chairman Harvey Weinstein.
Eisner has repeatedly clashed with brothers Bob and Harvey Weinstein since Disney bought the independent studio in 1993. Disney is close to ending its 12-year relationship with the Weinsteins in a deal that will see Disney keep the Miramax name and library while the Weinsteins leave to form their own company.
On Sunday, Harvey Weinstein praised Iger’s choice, though it will not change the outcome of the talks. “I’ve had a great working relationship with Bob Iger and think he’s a terrific choice,” Weinstein said.
Iger’s people skills will be tested when it comes to dissident shareholders Roy Disney and Gold. The two criticized Disney’s board Sunday and hinted they might lead another shareholder revolt.
“We find it incomprehensible that the board of directors of Disney failed to find a single external candidate interested in the job and thus handed Bob Iger the job by default,” the two men said in a statement. “The need for the Walt Disney Company to have a clean break from the prior regime and to change the leadership culture has been glaringly obvious to everyone except this board.”
But Disney board chairman George Mitchell said Iger’s choice came after a “lengthy, thorough and professional selection process” that included serious consideration of outside candidates.
He declined to be more specific, but an EBay Inc. spokesman confirmed Sunday that the online auction company’s CEO Meg Whitman had withdrawn her application for the job Friday after being interviewed.
“We believe Bob Iger represents the right blend of continuity, of very successful performance, particularly over the past two years in which Bob had played a major role... and a recognition of needed change” in the areas of new technology and expanding the company’s business in Asia, Mitchell said.
He added that drastic changes in the company are not needed.
“If you are a major investor and the company has produced a 60 percent increase in earnings, has just increased its dividend 14 percent, has record cash flow and a substantial increase in return of invested capital, you don’t encourage major change,” Mitchell said.