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Disney Extends CEO Iger’s Tenure Amid Analyst Skepticism

Stock remains neutral as uncertainty looms over succession and challenges facing the entertainment giant.

Walt Disney Co. (NYSE:DIS) disclosed in a regulatory filing late Wednesday that CEO Bob Iger has been given an extension to his tenure until Dec. 31, 2026. The news has not exactly enthused some analysts on Wall Street.

Iger’s contract extension that gives him two additional years is neutral to the stock, said KeyBanc Capital Markets analyst Brandon Nispel. He said the move suggests the company hasn’t zeroed in on a clear permanent successor for the CEO position and found someone eligible for the CFO post.

The analyst is of the view it will likely be a complex process to fill both positions for a company of this size.

Additionally, the decision to give Iger additional time may have to do with providing more time to fully realize the significant restructuring and cost-savings initiatives throughout the business segments, Nispel said. The analyst also said the incumbent may need more time to reset content creative direction and put processes in place for the transition of ESPN from linear to streaming.

CNBC Mad Money host Jim Cramer reacted to the development with a cautious comment. “Iger.. amazing.,, but now he had to undo some of what was done, and he has to do it fast,” he said.

(L-R) CEO of Starbucks Howard Schultz speaks to Jim Cramer during the taping of the Mad Money with Jim Cramer during Investor Day at Starbucks Headquarters in Seattle, Washington Tuesday, September 13, 2022. (Melina Mara/The Washington Post via Getty Images) 

Iger was first appointed as Disney’s CEO in Oct. 2005 and was elected as its chairman in 2012. He transitioned to the role of executive chairman in Feb. 2020, leaving the CEO role to his handpicked successor Bob Chapek. The long-time Disney executive retired in Dec. 2021.

Iger returned as CEO in November 2022 and was initially given a two-year term, as Disney ousted Chapek to give the company a strategic direction for renewed growth. Under Chapek, the company faced multiple challenges, including theater and park closures during the COVID-19 pandemic and a feud with Florida Governor Ron DeSantis over its stance on the reputed “Don’t say gay” law. The company’s financials were also under pressure.

The entertainment giant is not out of the woods yet. Analysts are cautious of the near term. KeyBanc’s Nispel recently downgraded the stock from Overweight to Sector Weight. The analyst attributed his skepticism to soft park attendance, margin pressure, and stalled growth in the direct-to-consumer business.  He also sees a rocky ride for ESPN as it moves to streaming and warned of the inability of the Disney content sales segment business to make money for the foreseeable future.


Produced in association with Benzinga

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