In Iger, Disney Taps Insider To Replace Eisner as Chief Executive

Walt Disney, the second-largest American entertainment company, chose President Robert Iger as its next chief executive officer, replacing Michael Eisner, who will step down a year earlier than planned.Mr.Iger, 54, will become CEO on September 30, Burbank, Calif.-based Disney said yesterday in a statement. Mr. Eisner, who had endorsed Mr. Iger, said he won’t seek re-election to the board when his term expires in 2006. Mr. Eisner last year said he would leave amid public criticism from some shareholders and former directors.Disney’s board chose Mr. Iger, a nine-year company veteran, over outside candidates including eBay CEO Meg Whitman. Mr. Iger succeeds a chief executive who alienated some business partners, investors, and directors during his two-decade reign. His task will be to shift investors’ attention to improving results at Disney’s theme parks and the ABC television network.“Iger is a good choice because he’s familiar with operating Disney on the inside,” Peter Jankovskis, director of research at Lisle, Ill.-based Oakbrook Investments LLC said. Oakbrook owns 900,000 Disney shares among its $1.2 billion in investments. “It’s probably going to be good for Disney shareholders that Mr. Eisner will be making a clean break from the company. That will remove some of the negative publicity.”Mr. Iger’s appointment sparked criticism from former directors Roy Disney and Stanley Gold, who said Chairman George Mitchell hadn’t conducted a “bona fide” search and had let Mr. Eisner sit in on candidate interviews. Disney investors should consider replacing the board, they said yesterday in a statement.Disney’s board conducted a “lengthy, thorough and professional selection process,” Mr. Mitchell said in a statement. Mr. Iger recused himself and directors met with Mr. Eisner “as appropriate,” he said. Mr. Eisner took part in a meeting with one external candidate, Mr. Mitchell said on a conference call yesterday.Disney’s board will begin a search for a new chairman “in the near future,” Mr. Mitchell said. The directors didn’t say who would be president at Disney.Ms. Whitman, 48, on March 11 withdrew as a candidate after meeting with the board last week, eBay spokesman Henry Gomez said. Other outsiders on the board’s list included Peter Chernin, 53, chief operating officer of News Corporation; and Viacom co-presidents Tom Freston, 59, and Leslie Moonves, 55, the Wall Street Journal said.Mr. Eisner yesterday again endorsed Mr. Iger, saying in a letter to the board that he “helped steer Disney through a storm of challenges.” Mr. Eisner yesterday said he won’t seek the chairmanship after George Mitchell’s term expires.Mr. Eisner, CEO for more than 20 years, spent the past two years battling Roy Disney, nephew of the late Walt Disney, Gold, and shareholders including the California Public Employees’ Retirement System. Mr. Eisner last March gave up the chairmanship after 45% of shareholders at the annual meeting withheld support from him.In a letter that included the announcement of his son’s engagement and heralded his book “Camp,” Mr. Eisner said he had “a tinge of sadness” that was similar to the “feeling one experiences at the end of a great day at Disneyland.”He defended the company’s earnings record and said Disney will deliver “double-digit” earnings growth this year and will post “record-high earnings.”Shares of Disney, the creator of Mickey Mouse and Donald Duck, fell 41 cents to $27.59 in New York Stock Exchange composite trading Friday, March 11. They’ve risen 5.7% in the past 12 months and are down from a record high of $43.63 in April 2000. Shares of Disney’s larger competitor, Time Warner, have risen 3.9% in the past year.Mr. Iger, president and chief operating officer since 2000, takes over a company that has posted eight consecutive quarters of profit. The improving results bolstered Mr. Eisner’s defenses against Roy Disney and Mr. Gold and helped him fend off a $54.1 billion hostile takeover bid last year by Comcast Corporation.Disney in 2004 almost doubled net income to $2.35 billion on sales of $30.8 billion.Mr. Iger came to Disney in 1996 after the company bought Capital Cities/ABC Incorporated, where he was president. His 30 years of experience in broadcasting and entertainment began in Ithaca, N.Y., where he took a job as a TV weatherman after graduating from Ithaca College in 1973.Mr. Iger’s role as Mr. Eisner’s no. 2 made him a target of Roy Disney and Mr. Gold, who criticized his leadership of ABC. The former directors, who left the board in 2003, said last week Disney’s board should investigate claims in James Stewart’s book “DisneyWar” that executives, possibly including Mr. Iger, hid from the board problems related to the 2001 purchase of Fox Family Worldwide from News Corporation.ABC has been unprofitable for about three years because it failed to air hits. Before this season, the money-losing network suffered declining or stagnant ratings every consecutive season except one since Disney bought the network’s parent.Disney has said ABC will be profitable this fiscal year. Three hits this season, “Desperate Housewives,” “Lost,” and “Extreme Makeover: Home Edition,” have boosted ratings.Mr. Iger was paid $12 million in fiscal 2004, a 73% increase over the previous year. His compensation included a $6.5 million bonus and $3.45 million in incentive pay based on Disney’s performance.Mr. Iger is married to Willow Bay, a former CNN anchor. He has two daughters and two sons. He’s a board member at New York’s Lincoln Center for the Performing Arts and New York City Outward Bound and serves as a trustee of Ithaca College and the Museum of Television and Radio.Before being named to the board, Mr. Iger served as president of Walt Disney International and chairman of Disney’s ABC Group, overseeing the unit that includes ABC and Disney’s cable channels.Mr. Iger joined when Mr. Eisner spent $19 billion for Capital Cities/ABC, adding the broadcast network and ESPN. In his time at Disney, Mr. Iger has avoided high-profile spats with his boss.Mr. Eisner’s term as CEO has been marred by conflicts with other deputies. He hired his friend and Creative Artists Agency co-founder Michael Ovitz, as president in 1995 and fired him 14 months later, handing him a severance package of more than $262 million.The payment is now the subject of shareholder suits and a Delaware judge will rule this year whether current and former directors failed to properly oversee Mr. Ovitz’s hiring and firing.Jeffrey Katzenberg, the company’s studio chief, quit in August 1994 after being passed over for Mr. Ovitz. He sued in 1996, claiming he was owed a $250 million bonus for the films and TV shows he’d overseen.Disney settled in July 1999 for an undisclosed amount. During the court battle, Mr. Eisner produced notes he’d written for his autobiography that said of Mr. Katzenberg, “I think I hate the little midget.”

In Iger, Disney Taps Insider To Replace Eisner as Chief Executive

In Iger, Disney Taps Insider To Replace Eisner as Chief Executive

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