The Disney Hero Who Should Control This $300 Billion Empire

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Over the past 50 years, Warren Buffett's Berkshire Hathaway has grown into a massive $300 billion conglomerate with operations spanning from railroads to energy. However, one of the biggest questions about the company going forward is, "What happens to the company after its mastermind, Warren Buffett, is no longer running the show and who should replace him?"

To find some answers, Motley Fool analyst David Hanson recently sat down with Larry Cunningham, the author of The Essays of Warren Buffett: Lessons for Corporate AmericaWarren Buffett himself said of the book, "Larry Cunningham has done a great job at collating our philosophy." Cunningham also has a new book coming out this fall, titled Berkshire Beyond Buffett: The Enduring Value of ValuesThe book explores Berkshire's ability to live on after Buffett. In the following video, Cunningham explains why he'd pick Bob Iger of Disney to replace Buffett if he had to choose someone outside of the Berkshire-universe.

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A full transcript follows.

Hanson: If you had to pick one person completely unrelated to Berkshire Hathaway today, to step into Buffett's shoes, who are you going with?

Cunningham: David, that's a great question. Bob Iger.

Hanson: Really?

Cunningham: The Chairman and CEO of Walt Disney. He embraces the Berkshire values, almost straight down the line. The thing about Bob is that he grew up as an executive at ABC, working for Tom Murphy and (Dan) Burke, so he's molded in the managerial cloth of Tom Murphy, and as I said, Warren says that his role model on the managerial side is Tom.

It's no surprise; if you look at what Bob has done at Walt Disney, he is a great believer in managerial autonomy, in decentralization, a high degree of integrity. He's very entrepreneurial, and has been superb at acquisitions; Pixar, Marvel Entertainment, Lucasfilm.

Look, Warren has said that their succession plan contemplates an executive currently working at one of the Berkshire subsidiaries, but if I had to go outside, that's where I'd go.

Hanson: You never know. Buffet's got the elephant gun out. You never know what he could acquire! Disney may be bigger than an elephant. That may be a blue whale ... but hey, you never know!

Cunningham: You never know. When Disney acquired ABC, Berkshire continued to own Disney for a while. But Mike Eisner was CEO at the time, and he has a very different managerial model. It was not the Berkshire model; it was very hands-on. He brought all authority up, and it was a very different culture, and Berkshire sold the stock.

Warren never drew that connection explicitly in any of the letters or anything, but that's my own sense of it, that even as an investee, it wasn't a Berkshire kind of position. But now it's definitely ... there was a huge saga over Disney when Mike was running it, and Roy Disney was very upset and helped engineer the transition to Bob.

But Bob has had a huge impact on reviving some of the great traditional corporate culture at Disney, so now it really is a Berkshire kind of company.

Hanson: I think I'm remembering correctly; Bob Iger has announced his intention to retire in the near future, is that right?

Cunningham: Yes, I heard that too. He's 63, and I met him recently in New York. He's fit as a fiddle. He's just in perfect physical shape, he looks great. I think he loves his job and he's very good at it. But some people would prefer -- I think he's been CEO for 10 or so years, so maybe he's had enough. But I wouldn't mind seeing him continue.

Hanson: Hey, 63. That's nothing to Charlie and Warren. They're laughing at that.

Cunningham: Yes, these days longevity is increasing, and we're all able to do things much longer than our forefathers were able to do them.

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  • Report this Comment On August 31, 2014, at 2:09 PM, esxokm wrote:

    Iger would be an interesting choice for Berkshire Hathaway, since he definitely favors the acquisition path to growth.

    But I'm not sure Iger possesses the same sharp instincts for the numbers of boring businesses as Buffett does.

    Iger probably overpaid for his purchases, but that was based on strategy and the unique properties of each concern -- the uniqueness coming out of brand equity.

    Obviously Buffett looks for the same thing -- one could argue that Marvel has as much of a competitive moat as any of Berkshire Hathaway's assets -- but somehow, it is still different in my mind. Buying a candy company at a good price isn't the same thing as buying Pixar at a premium.

    And I suppose Marvel et al. could easily see its films flop as fast as succeed. When Buffett models a company, I presume he has a little more surety on the stability of its products. Marvel is just a collection of characters and stories, while Jordan's Furniture sells furniture.

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David Hanson

David has been with The Motley Fool since 2013. He is a graduate of the University of Miami. Follow David on Twitter for all things finance, marketing, and investing.

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