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Will New President Bring Happier Days at Disney?
   Fox Market Wire
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.


Bob D'Amico/AP
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, high-caliber executive."

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 first quarter.

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 Disney International.

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 Laybourne.

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

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