Flops, streaming and succession: Bob Iger’s challenges at Disney

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Bob Iger has form when it comes to extending his time as the chief executive of Walt Disney. 

During his original 15-year tenure as chief, Iger delayed his retirement multiple times, boosting his pay as he extended his term. Now, just seven months after he returned to Disney for what was supposed to be a two-year mission to stabilise the company, he has been granted yet more time. Under a new arrangement announced on Wednesday, he will step down in 2026 at the age of 75. 

Iger’s commitment to stay longer at Disney comes at a difficult time for the company, which is still losing money on its streaming services even as its traditional TV business is in decline. Adding two more years means he will own any lingering problems, putting his reputation as one of the entertainment industry’s most successful leaders on the line. 

“It’s not ideal [that Iger is extending his tenure] but in a time of wrenching change it’s sometimes necessary,” said Jeffrey Sonnenfeld, a Yale School of Management professor who has known Iger for years. 

By the end of his new contract, Iger will have run the world’s largest entertainment group for a total of 19 years. If he hits performance targets, he will earn five times his base salary in annual bonuses, up from one times salary previously. The board voted unanimously to extend his term, the company said. 

The extension will give Disney’s board more time to find a successor — a task that Iger himself said was his “top priority” when he returned to the company in November. But it will also allow Iger greater scope to tackle a widening array of problems at Disney, including a lack of sizzle at its movie studios. 

“The reality is, once he got back, he realised how many challenges Disney was facing,” said Rich Greenfield, an analyst at LightShed Partners. “Some of these problems were Iger’s own doing, but I think he wants to figure out how to fix them. You can’t turn these things around in 24 months.”

Iger returned to Disney last autumn to replace his handpicked successor, Bob Chapek, whose rocky tenure ended with his dismissal after less than three years. Since then Iger has launched a $5.5bn cost-cutting plan that will eliminate about 7,000 jobs. He has also led a reorganisation intended to hand more control back to creative executives, reversing one of Chapek’s initiatives.

In a statement on Wednesday, Iger said he had to make “difficult decisions to address some existing structural and efficiency issues”, adding that Disney’s “long-term future is incredibly bright”.

He has also faced some unexpected challenges this year, including expanding legal battles with Florida governor Ron DeSantis over control of the property around Disney’s Orlando theme parks. Last month, longtime chief financial officer Christine McCarthy announced she would step down, creating another senior role to fill.

And after some lacklustre box-office returns this summer, concerns have intensified about Disney’s movie studios, including three powerhouses that Iger acquired during his first tenure: Pixar, Marvel and Lucasfilm. 

“He’s walked into a company where the content engines need some fixing,” said Michael Nathanson, an analyst at research group MoffettNathanson. “Pixar has misfired, Marvel has misfired.” 

In an interview with CNBC on Thursday, Iger acknowledged that the company had “some work to do in terms of improving our creative output”. At Pixar, where its recent film Elemental has underperformed at the box office, there have been some “creative misses,” he said.

The company’s drive to cut costs will result in fewer instalments of its Marvel and Star Wars franchises, which some analysts say have lost some lustre due to overexposure. Disney will “pull back not just to focus [on better content] but also as part of cost containment,” he said. “We will be spending less on what we make and making less.”

Some analysts and former employees blamed the difficulties of the Chapek era on what they said was Iger’s failure to cultivate and retain a crop of potential successors. Well-regarded executives including Tom Staggs and Kevin Mayer left the company as Iger’s tenure continued, these people said.

“It’s a shame that the bench was thinner than it should’ve been,” said Nathanson. “Over the next three years they’re going to have to get people in place to take over the leadership of this company.” 

In January, the board created a succession planning committee to find Iger’s replacement. The four-person group is led by Mark Parker, the former Nike chief who took over as chair of the Disney board in April. The other members are Mary Barra, chief executive of General Motors, former Illumina chief Francis deSouza and Calvin McDonald, chief executive of Lululemon. 

Extending Iger’s contract would give potential internal successors time to learn about the group’s diverse assets, said Sonnenfeld. 

This week Iger appeared to signal that he was cultivating possible internal replacements. He travelled to Sun Valley to the annual Allen & Co conference in Idaho accompanied by executives who are seen as potential successors: Dana Walden, co-chair of Disney Entertainment, film chief Alan Bergman and theme parks head Josh D’Amaro.

“It’s good [Iger] has a voice in the succession but the selection of a successor should never be laid at the feet of the CEO because that’s the board’s job,” Sonnenfeld added. “This is the board’s duty, not the CEO’s.”