Iger takes Disney to dizzying heights

Iger takes Disney to dizzying heights

Late February at the world’s largest media conglomerate was a particularly challenging time for Robert A Iger: Problems were sprouting all around him.
On a Friday, staffers gave Iger, the chief executive of the Walt Disney Company, a 30-minute rundown of final plans for a new multimillion-dollar attraction at the Disneyland Resort. He hated it.

By Monday, a British theatre chain had stepped up threats to boycott ‘Alice in Wonderland’ over Iger’s decision to fast-track the film’s DVD release. And then, at about 1 am on Wednesday, he got an e-mail message: “Urgent: Dancing Mickey”. A new electronic toy, a boogie-woogie Mickey Mouse, had encountered a hiccup, threatening its availability for Christmas.

In each case, Iger found a solution, sometimes cajoling his people to do more and sometimes intervening more directly. “I like our people to solve problems on their own, and they usually do,” he says later. “But I will do a deep dive if there is a lot at stake or if there are creative challenges.”

Deep is not a word that most people used to describe Iger when he took control of Disney five years ago. In fact, he was widely dismissed as little more than a stuffed suit who might have had the skills to fix a highly dysfunctional company but lacked creative sizzle or big-picture brilliance to raise its game. His predecessor Michael D Eisner endorsed him, but faintly — at least according to ‘DisneyWar,’ the 2005 book that chronicled Eisner’s fall from power.

The new take on Iger? Let us count the ways: One of the most aggressive dealmakers in media (the $7 billion purchase of Pixar, the animation studio, and the $4 billion acquisition of Marvel, the comic book publisher and movie studio); a risk-taker who isn’t afraid to make decisions that rankle Disney’s own troops; and a guy who, more than any of his big-media counterparts, is retooling antiquated industry practice, particularly when it comes to movie-making. In short: blockbuster CEO.

“The spectrum of points of view this job requires is incredible, and Bob is great at it,” says Steven P Jobs, Apple’s chief executive, who became Disney’s largest shareholder — and a board member — after the Pixar acquisition. He said that the quality of Disney’s products had improved, adding: “The amount of energy and passion at Disney has increased dramatically. The business lines were really in boxes before Bob empowered them.”

Iger, 58, has wasted little time enacting major changes at Disney. In a reorganisation of the company’s movie studio last fall, he got rid of over a dozen top managers — including the unit’s popular chairman, Dick Cook — and installed a replacement who shocked Hollywood: a television executive.
Shortly after that, when recession-battered retailers were still cutting back, Iger went the other way, unveiling an aggressive plan to overhaul the 340 Disney Stores at a cost of about $1 million each. A month later, Iger had his CFO and the head of Disney’s $12 billion theme park division swap their jobs.

Wall Street, that never-satisfied beast, seems newly pleased at Disney’s direction. Net income for Disney’s fiscal 2009 fell 25 per cent, to $3.3 billion, as a result of the recession and problems at the movie studio. But after several notable upgrades from analysts and a nascent recovery at the studio — ‘Alice in Wonderland’ has earned about $675 million at the global box office — Disney’s stock price has perked up in recent weeks. It now trades at $36.22, an 81 per cent increase from a year earlier.

Difficult start
Iger, of course, hasn’t had a perfect reign, and Disney faces some particularly tough challenges ahead. Some senior executives at the company contend that their precise and deliberate chief waited far too long to put changes into effect at the movie studio, which had hewed to old-fashioned marketing strategies and suffered a string of flops like ‘Surrogates’ and ‘Confessions of a Shopaholic.’
Disney has big video-game ambitions, spending at least $180 million developing the segment last year alone. But Iger has at times appeared indecisive about the company’s approach.

The consumer products division argued that it should run video games; the internet division, already managing online role-playing worlds like Club Penguin (which Iger bought for about $700 million in 2007), felt that gaming was its turf. First, Iger ruled in favour of consumer products. Then he reversed his decision, ultimately moving video games to the internet group.

The Marvel acquisition has posed its own challenges. Betting that the brooding Marvel characters would deepen its hold on boys — long an area of weakness for Disney — Iger paid about $50 a share for the company, a 29 per cent premium. Some analysts were notably cool to the news. “Over the long run, we suspect this will be viewed as Iger’s first major mistake as CEO,” wrote a Citigroup analyst, Jason Bazinet, at the time of the acquisition.

Since then, there has been friction between Isaac Perlmutter, the Marvel chief executive who is staying on, and Disney’s consumer products division over how best to integrate two very different approaches. Perlmutter declined to be interviewed.
Disney is a huge company, with more than 1,40,000 employees spread over businesses as disparate as ESPN and time-share condos. All of this brings the company $36 billion in annual revenue and a market capitalisation of about $70 billion. Iger constantly has to contend with the big-picture questions, like how people will consume media in the future and how a mature, enormous company grows. But it’s the middle-tier stuff that can become time-consuming.

Corporate courtship, it turns out, is one of Iger’s specialties. He used the same skills to win over Perlmutter in striking the Marvel deal. In November, Iger secured the Chinese government’s approval to build a Disney World-style theme park in Shanghai, realising one of Disney’s longtime goals. And, last year, Iger played a star role in luring Steven Spielberg to the Magic Kingdom. Spielberg’s company, DreamWorks Studios, will release its films through Disney starting early next year.
Stacey Snider, the chief executive of DreamWorks and a partner in it with Spielberg, says Iger’s likability had little to do with her boutique studio’s decision to align itself with Disney. Stacey says that what really mattered was Iger’s enthusiastic embrace of the changes washing across the film industry: Pushing for shifts in how DVDs are released, recalibrating marketing spending from old media to new, building movies around brands and franchises.

“In a very competitive landscape, you need to be with the sharpest, most forward-thinking, most risk-taking people you can,” says Stacey. “Bob’s approach is, ‘How do we make the 22nd-century version of a media company?’”
Quite a few people in Hollywood think that Iger’s all-or-nothing approach at Walt Disney Studios may be too much too quickly. But Stacey disagrees. “This is a legacy business,” she says, “and whenever someone challenges that legacy, you have pushback.”
The New York Times

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