Walt Disney's appointment of ABC television chief Robert Iger as president could bring happier days for a company struggling with low investor confidence and a parade of high-level executive departures.
|ABC executive Robert Iger has been named president of Walt Disney in a broad restructuring of the company's management
Iger, who had overseen Disney's overseas
operations, also took the title of chief operating officer. He
now becomes the company's No. 2 executive under Chairman and
Chief Executive Michael Eisner.
Eisner on Monday also promoted two other top executives in moves
expected to revive the Burbank, Calif.-based conglomerate. Chief strategic officer Peter Murphy and chief financial officer Thomas O. Staggs were promoted to senior executive vice presidents.
They will become members of a new executive management committee
that will include Eisner, Iger, Disney vice chairman Sanford M.
Litvack and heads of individual business units.
The management changes, plus the announcement of a 7 percent jump in first-quarter earnings, won the applause of Wall Street analysts, who said the company showed signs of a long-awaited rebound.
"This is the beginning of a turnaround," said Jessica Reif
Cohen, an analyst with Merrill Lynch. "We expect modest
improvements for the rest of the year."
Iger, 48, fills a vacancy that had been left open since Michael Ovitz left the job in 1996.
"Disney for some time has needed a strong No. 2 person to make
sure the trains are running on time," said Tom Wolzien, analyst
for Sanford C. Bernstein & Co. in New York.
Said Jill Krutick, a Solomon Smith Barney analyst: "There definitely are some major signs that things are working Disney's way. It was a very savvy move by Michael Eisner solidify his
management team. Clearly the demands of shaping a major media
company in today's world had become an increasingly challenging
task, although we think Eisner's really a well-rounded,
She noted, however, that the company still has problems,
including weak sales in its merchandising unit.
Earnings Meet Analysts' Expectations
Coinciding with the staff announcements, Disney released a preview of first quarter results that
showed net income rose 7 percent to $515 million, or 25 cents per
share, excluding its Go.com Internet business.
Disney expects to post a full earnings report in February
when it completes accounting for the purchase of Go.com.
The earnings increase exceeded Wall Street expectations and
reflected the strong performance of ABC, which benefited from
better ad sales and the popularity of the game show "Who Wants to
be a Millionaire." Ad sales rose to a record $1 billion during the
Shares of Disney rose 31 1/4 cents to $33.12 1/2 in trading on the New York Stock Exchange before the news. That compares to a high of
$41.50 1/64 hit in April of 1998.
Iger Has Long Tenure at ABC
Iger previously was chairman of Disney's ABC Group, which
included ABC, ESPN and other properties, and president of Walt
He joined Disney when the company acquired Capital Cities/ABC in
1996. He went to work for ABC in 1974 and spent 12 years with ABC
sports. Iger had been named to become Capital Cities/ABC's chief
executive officer when Disney purchased the company.
Eisner credited Iger with supervising ABC's recent success.
"He has overseen the ABC Television Network's turnaround,"
Eisner said. "At the same time, Bob has spearheaded the
reorganization of our company's international efforts. ... As a
result, our entire company is now poised for growth in the
opportunity-laden overseas markets."
The announcement follows the departure last week of Disney
studio chief Joe Roth, who quit to start his own film company.
Roth was the latest in a string of top executives to leave the
company. Others to leave in recent years include chief financial
officers Steve Bollenbach and Richard Nanula, ABC TV and radio
station chief Steve Burke, and cable programming boss Geraldine
Finding someone to fill the president's job has been an issue
since the 1994 death of Eisner's longtime friend and trusted
second-in-command, Frank Wells. Wells, who died in a helicopter
accident, was widely credited with handling the day-to-day details
of running Disney, freeing Eisner to focus on creative development
and long-range plans.
As Disney's share price has lagged, board members reportedly
have pressed Eisner to get help.
"They have great conceptual management at the top, but a
company as vast as Disney needs somebody to make sure everybody's
talking on a day-to-day basis," said analyst Wolzien.
Despite enthusiasm over Iger's appointment, Eisner cautioned investors against believing too strongly that Disney had turned the corner toward regaining the 20 percent annual earnings growth it once enjoyed.
The company also did not change its projection, made in
November last year, that earnings for fiscal 2000 ending Sept.
30 would be roughly equal with fiscal 1999.
"We would tend to be conservative. Let's not count our
chickens before they are hatched," Eisner said in the
conference call. "Let's not get carried away with this."
The Associated Press and Reuters contributed to this report