NEW YORK — The Walt Disney Co. on Monday named Robert Iger to the post of president and chief operating officer — the No. 2 position to chairman and CEO Michael Eisner.
Disney also released its first-quarter earnings results, which showed a booming TV business offsetting dismal results in studio entertainment.
Iger, who has been Disney’s international head, is the first real No. 2 exec in the company since Frank Wells died in a plane crash in 1994. Michael Ovitz, brought in some time later, never achieved Wells’ status within the company during a short-lived reign that ended with a large cash settlement from Disney in 1996.
In another exec shuffle, Disney lost Robert Moore, who said Monday he’s stepping down as Walt Disney Studios’ exec VP of operations and finance after 13 years at the company. The highly regarded Moore said he went off contract when his ended last September in anticipation of leaving Disney for more entrepreneurial pursuits in media, entertainment or the Internet.
In an interview with Daily Variety, Eisner welcomed Iger as “a strong new executive.” The Disney topper, who has been criticized in the industry and on Wall Street as a perfectionist and micro-manager guided solely by his own counsel, said he’s glad to have some help running the company and that he and Iger had been discussing the possibility of such an arrangement for several years.
Iger’s appointment caps a steady rise for the exec, who worked his way up the ranks at ABC, which was purchased by Disney in 1996. He ran the network for a number of years and continued as its chairman even as his responsibilities at Disney broadened last year into overseeing the giant conglom’s international operations. Eisner cited Iger’s ABC sports background, with sports now a very important piece of Disney, and said he turned ABC around twice, crediting him with the latest upswing.
“I come to this job with a vast familiarity with the company, although I realize I have a lot to learn,” Iger told Daily Variety.
Eisner began his career at ABC as well. The execs joked that they were both 24 when they started. “I was just happy to get to 25,” Eisner said.
To back up the two top guys, Disney also announced the formation of a new executive management committee comprising Eisner, Iger, vice chairman Sanford Litvack, chief strategic officer Peter Murphy, chief financial officer Thomas Staggs and the heads of Disney’s various business units.
Wall Streeters applauded the deepening of Disney’s management pool and were even more impressed by the company’s quarterly earnings, which jumped 7% to $515 million. Revenue rose 5% to $6.8 billion and operating income grew 8% to $1.1 billion. The company’s previous few quarters showed sharp drops in net income due mainly to ills in consumer products and homevideo.
The numbers were released unexpectedly in preliminary form late in the day. They exclude the results of Disney’s 72%-owned online venture Go.com, which are still being worked over. A revised set of figures combining the two businesses will be issued in two weeks.
During a conference call, Disney execs said overall results were so upbeat they wanted to get them out sooner rather than later. They also revealed Disney had spent $75 million over the past quarter to buy back 2.6 million of its own shares — a move that indicates faith in the company’s prospects and belief that its stock is undervalued.
TV, radio soars
Driving profits was the division called Media Networks — all TV and radio — where operating income soared 73% to $642 million and revenue grew 19% to $2.7 billion. A strong advertising climate and the powerhouse gameshow “Who Wants to Be a Millionaire” fired up broadcasting results at the ABC network and owned stations. In news, ratings were up for “Good Morning America.” Copious ad revenues also flowed to the company’s radio network and station group.
ABC execs noted recently that the December quarter was the first time the net hit the $1 billion mark in ad revenues.
Operating income from cable rose 31% to $316 million, reflecting increases at ESPN, E! Entertainment Television, Lifetime Television and the History Channel. SoapNet, Disney’s new soap opera cable channel, launched Monday night. The net will feature the ABC daytime soap lineup during primetime.
Studio entertainment, however, was a big downer. Revenue fell 10% to $1.6 billion, and operating income plunged to $23 million from $143 million. A terrific run for “Toy Story 2” was submerged under a pile of write-downs for box office disappointments “The Insider” and “Bicentennial Man” and a tough quarter for homevideo.
The dismal numbers come several weeks after studio head Joe Roth ankled Disney, replaced by animation topper Peter Schneider. Eisner reassured Wall Streeters that Roth’s exit won’t affect the upcoming release of “Dinosaurs” or disrupt the studio’s operations.
While acknowledging Roth’s contribution to Disney’s live-action roster and its top market share position year after year, he pointed out that Schneider, during his tenure, has overseen the studio’s most lucrative offerings. “That bodes well for the company,” Eisner said.
Changes at the studio were one reason Moore is stepping down, something he’s considered for a number of months. He said it seemed better to exit now than to “go halfway” with a new management team and then leave. He’s got no specific plans but said he’s not ruling anything out, including joining Roth, who is setting up a new production company outside of Disney.
As for homevideo, which is part of the Studios division, the unit has been in disarray for some time. The latest quarter was also hit by tough comparisons with the year before when “Lion King II: Simba’s Pride” was released domestically and “The Little Mermaid” internationally.
In consumer products, Disney’s most troubled business but now slowly on the mend, operating income dropped 29% to $207 million on revenue of $903 million — down 6%.
Theme parks and resorts saw revenue rise 9% to $1.6 billion and operating income gain 6% to $363 million. Higher Walt Disney World attendance was driven by the park’s ongoing millennium celebration. Attendance at Disneyland was down, although guest spending was up.
Execs said Disney continues to eat away at overhead, cutting costs, trimming back-office functions and divesting nonstrategic assets. The latest to go was Los Angeles magazine.
Mouse his own man
As consolidation sweeps the media world, Eisner maintains that Disney can and will remain independent, even though it won’t be the biggest player out there. He’s open to strategic alliances more than big acquisitions –“other than buying AOL Time Warner,” he joked — and stressed he was joking.
In fact, he said this week’s deal of bringing together Time Warner’s Warner Music and EMI bothers him more than the AOL/Time Warner combo since the new Warner EMI will dominate the world of music publishing.
“I liked it when there were five (big music) players. I liked it even better when there were six,” said Eisner, referring to the time before Universal Music merged with Polygram a year ago. Disney needs lots of music for its movies.