Two years after Iger returned as chief executive officer (CEO) to save the company, Disney last week reported stellar results that exceeded analyst expectations and sent the stock up more than 6%—its biggest daily increase since February.
Disney’s closely watched streaming business swung to a $321 million profit from a nearly $400 million loss a year ago, and the film unit had what Iger said was one of the best quarters in its history thanks to Inside Out 2 and Deadpool & Wolverine.
There are still big problems, such as the plummeting legacy cable TV business and weakness in the cruise and parks division. But the company feels confident enough in its comeback that it put out three-year guidance—a level of visibility Disney rarely provides.
It said adjusted earnings-per-share (EPS) growth will increase in the high single-digits its next fiscal year, and double-digits in 2026 and 2027.
Iger, however, won’t be the one who has to deliver on some of these promises. His contract is set to expire at the end of 2026, and Disney has said it will finally name his replacement early that year.
Close watchers of the company have also noted that one of the reasons the film division’s numbers look so rosy is that the company pushed three troubled movies—Elio, Snow White and Captain America: Brave New World—to next year.
“Disney blamed the strikes, which definitely played a role, but those movies could have come out later in ’24, underperformed, and derailed the Iger comeback narrative,” writes Puck’s Matthew Belloni. Instead, “they’ll deal with the ’25 slate later.”
Belloni also notes that if Moana 2 and Mufasa: The Lion King both perform as expected, the company will have four billion-dollar movies this year—only the third time the company has achieved that feat. And it will happen during the first full year that Iger’s back in charge.
It nicely sets up Iger as the conquering hero. But his triumph may leave his successor looking like a dud. That’s pretty much what happened the last time Iger stepped down.
He gave up the job in early 2020, just as the world entered the pandemic, leaving his handpicked replacement, Bob Chapek, to navigate the crisis as a new CEO.
Chapek was a poor choice, but was not helped by the timing of the transition or Iger’s persistent meddling.
The botched hand-off tainted Iger’s otherwise stellar legacy, highlighting how he and the board failed in their most important job.
If Iger really wants to get things right this time around, he’ll stop with the can-kicking and bar-raising and do whatever he can to set up the company’s next CEO for success—rather than focusing on near-term moves to burnish his reputation and juice the stock price.
We have seen this movie before. At Starbucks, Howard Schultz—like Iger, an iconic CEO who boomeranged back into the job to save his company—set expectations too high on his way out the door.
Between the time Starbucks announced Laxman Narasimhan as Schultz’s successor and his first day on the job, Schultz sold shareholders on an aggressive growth plan.
As a result, Narasimhan had to lower guidance multiple times, generating bad headlines and bad feelings among investors that played a non-trivial role in his eventual ouster as the coffee-shop chain’s chief.
Adding insult to injury, Schultz openly criticized Narasimhan and the board and was reportedly looped into the boardroom coup that was underway.
Narasimhan was replaced by then-Chipotle Mexican Grill CEO Brian Niccol, who has had to do what my Bloomberg Opinion colleague Andrea Felsted aptly labelled a “kitchen-sinking,” in which a company gets all of the bad news out of the way at once in order to rebuild from a low base.
After sales plummeted in the last quarter, as Starbucks’ new CEO Niccol suspended guidance for 2025.
Over at Nike Inc, Elliott Hill did his own kitchen-sinking when he took over from John Donahoe earlier this year.
In both those cases, the new CEOs were taking over from an ousted predecessor. But at Disney, there’s supposed to be an orderly transition of power.
The media and movie company’s new three-year guidance could be perfectly reasonable and attainable. But a more generous welcome to the next CEO would be dropping the new leader into a scenario where the appointed person can comfortably over-deliver, with no lingering messes to clean up.
It’s time to let someone else play Walt Disney Company’s knight in shining armour. ©Bloomberg
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