Wall Street values smaller workforce, but some wonder if the Disney brand is losing the creativity that makes it special
Bob Iger (pictured above right) won’t be given the nickname “Neutron Bob” anytime soon. But as the Walt Disney Co. chief initiates yet another round of layoffs and a forthcoming reorganization before stepping down as CEO in two years, he is emulating Jack Welch (pictured above left) in more ways than one.
(From the pages of the April 16 issue of Variety.)
During his run as chairman and CEO of General Electric from 1981 to 2001, Welch slashed the company’s head count by 120,000, with many of those cuts coming shortly before his retirement. Welch wound up leaving GE with a new nickname (“Neutron Jack,” named after the nuclear bomb) and bragging rights as managing the most valuable company in the world.
As Iger nears the end of his decadelong run as the head of the Mouse House, the exec also is eager to leave Disney in a better state financially than when he took over from Michael Eisner in 2005.
Already, Disney’s stock is trading at record levels, and continues to show strength. It rose right after Disney recently handed out more than 300 pinkslips at LucasArts, Lucasfilm and across Walt Disney Studios. It also was up after Disney’s interactive group cut more than 100 jobs last fall. The company is now worth $109.19 billion — another record — and up from around $60 billion when Iger began as CEO. The acquisitions of Pixar Animation Studios, Marvel Entertainment and Lucasfilm certainly helped put more coin in Disney’s coffers.
Iger’s plan is to spend the rest of the year focusing on restructuring Disney’s divisions — by taking advantage of new digital tools and distribution methods — that will likely lead to more layoffs.
Again, those moves will keep Wall Street happy, especially as the economy shows more signs of growth and Disney is poised to boost profits further.
The potential for record revenue will come in 2015 — the same year Iger is set to hand over the CEO title to a successor — as a fifth “Pirates of the Caribbean,” Marvel’s “The Avengers 2” and “Ant-Man,” and Pixar’s “Finding Nemo” sequel “Finding Dory” are released in theaters, and Disney opens its massive theme park in Shanghai.
Many expect theme park and resorts chief Thomas Staggs to land the CEO role. While there have been rumblings outside of the company that Lucasfilm’s Kathleen Kennedy also may be in the running for the post, those inside the company say she isn’t being considered, and is too valuable as a producer and brand manager of the “Star Wars” franchise for the company.
While Iger’s latest moves will look good in a quarterly or annual report, his replacement will have to deal with the fallout.
What looks good on a financial spreadsheet won’t sit well with Hollywood’s creative community. The cuts come with a price.
Merging the Pixar, Marvel and Lucasfilm operations under the Disney umbrella makes sense, and eliminating individuals that do the same jobs under the consolidation is also understandable. But studio execs bemoan the fact that Iger has stripped away much of the inherent creative magic from what once defined a Disney movie and the overall Disney brand.
The corporate-mandated focus is now on the bottom line and pumping out games, toys and theme park attractions, and less about taking risks on Disney-originated properties that could launch new franchises.
But the spotlight will ultimately be on Iger’s business acumen, just the way Welch’s legacy is tied to his turnaround of GE. And history should be kinder, given the power of Disney’s family brand.
Iger has been mum on what he’ll do after running the Happiest Place on Earth. But there’s speculation that he will pursue a new career in politics. That’s when the fun should really begin.