On October 2, Disney’s (DIS, Financial) shareholders’ expressed a sigh of relief after the board decided to extend the stay of CEO Robert A. Iger until at least June 2018. Though the original expiration was expected in 2016, the additional two years should be welcomed by the stockholders who have relied on Iger since 2005, when he took over Disney’s leadership. This second extension reflects the continuing streak of success for Iger at the world’s largest entertainment company. Let’s get directly into numbers and try and assess how Iger’s leadership has added new vigour into the company and why this extension will help in growing the company enlarge.
Under Iger’s reign
The figures have been remarkably on the higher side during Iger’s leadership span – Disney’s market capitalization has risen to $153 billion from $48.4 billion. Disney share price has shot to little less than $90, an increase of almost 40% compared to a year-ago period. Also, the net profit of Disney has grown 8% to $6.14 billion last year, from a year before.
According to a senior media analyst of MoffetNathanson – “I don’t usually like to talk publicly about CEOs, making them feel good about themselves, but he has simply been doing an amazing job, He’s investing for future growth at a time when a lot of CEOs are just buying back stock.”
Almost every department has seen spectacular growth under Iger’s regime. Movies have emerged as a strong spot after the acquisitions of Marvel Entertainment, Lucasfilm and Pixar. The company’s video game division appears to have turned a corner, with the long-lasting hit “Infinity” game, allowing players to combine Pixar, Disney and Marvel characters.
By remaining as CEO till around 2018, Iger will be able to watch to fruition the opening of Shanghai Disneyland – a resort on par with Walt Disney World in Orlando, as well as the continued integration of Lucasfilm which Disney bought for $4 billion in 2012.
The best part is embedded in the financial playbook of Disney which saw an incredible increase in ROI of 300% within the last nine years of Iger’s leadership, while the S&P has seen a 90% jump in the same span.
Solid strategies to boost growth
Iger’s strategy has been fantastic in capturing the hearts and imagination of wide spectrum of audience. The company has built on the franchises tremendously as well, and Disney ensures to work on establishing additional franchises while maintaining a steady stream of existing franchises without adding risk to the brand image. The strategy is to aid in nurturing of brands to ensure that the final product is enjoyable to the consumers.
His firm strategies have been welcomed by the company shareholders at large who are happy with this extension of the tenure. But this does not mean that Iger would not have any successor in queue – in fact this extension allows the board to groom the later candidate for keeping Walt Disney’s banner flying high down the years after Iger’s actual retirement. As Walt Disney presently ranks 17th on the Forbes ranking of the world’s most valuable brands, it’s vital that the immediate successor of Iger holds on to the existing strategies and makes them fully integrated into all aspects of Disney’s Empire.
Final note
The reappointment of Iger as CEO till 2018 is a silver lining to the dark cloud in Disney’s successor story, and analysts are expecting that the company should finalise on the successor and offer him time to understand the strategies of Disney well before he takes the position of CEO before Iger’s extension gets over. There is a lot that waits to be unravelled, and we have to stay tuned to see how Iger’s extension adds to shareholder value in the upcoming quarters and how the company uses this golden opportunity to find a strong suitable replacement for Iger thinking from the investors’ perspective.
