The Next Big Cheese

It's been barely a week since Disney (NYSE: DIS  ) CEO Michael Eisner announced that he would be stepping down when his contract runs out in two years. However, even though he has seemingly tapped his successor, a lot can happen between now and September 2006.

For starters, in recent years we have seen great companies like Coca-Cola (NYSE: KO  ) and General Electric (NYSE: GE  ) with seemingly solid contingency plans stumble under the best intentions of in-house successorship. And those companies had popular CEOs. Most of the ballots that were physically cast during this year's annual shareholder meeting for Disney voted against Eisner's retention on the board.

So who will ultimately be tapped for the helm? Even before Eisner announced his retirement plans, there were a few names thrown around to potentially fill the heavily scrutinized shoes Since I can't find a Vegas bookmaker willing to dish out the odds, I'll handicap this myself.

So, place your bets. I can't imagine this being just an ordinary changing of the guard.

Bob Iger -- Odds: 2-to-1
As Eisner's choice, we might as well start with him. While Iger has been elevated to the role of president and chief operating officer, the high rank and Eisner's personal blessing can't overcome a sloppy resume. There is more air apparent in this heir apparent as ABC has gone from first to an inconceivable fourth in key demographic groups under his watch. A lot can -- and will -- happen between now and 2006. His chances may improve. His chances may deteriorate. He is clearly the front-runner as internal promotions are the conservative path, but a sure thing he is not.

Steve Jobs -- Odds 3-to-1
There are more than a few Disney purists -- I among them -- who would like to see Apple Computer's (Nasdaq: AAPL  ) Steve Jobs get a crack at running Disney. As a charismatic visionary with a knack for quality, he may very well be this generation's response to Walter Elias Disney. Thanks to Apple's dominance in digital music and his majority stake in the world's new animation leader -- Stock Advisor recommendation Pixar (Nasdaq: PIXR  ) -- Jobs is already in deep when it comes to entertainment. While awkward, this would also open the door for Disney and Pixar to find some form of working relationship beyond 2005. Whether it's a simple distribution agreement or a total buyout, all roads to Pixar lead through Jobs, who may fall to the persuasion of running the world's leading family entertainment powerhouse with a bent for the future.

Mel Karmazin -- Odds 5-to-1
When the mercurial COO left Viacom (NYSE: VIA  ) back in June, speculation ran high that he would wind up at Disney. The timing of those whispers could have been better as Eisner was already working toward winning back faith in its investors. But what would the Disney board do if it had a clear choice between Iger and Karmazin? Unlike Iger, this COO has seen his CBS network climb to the top, passing ships with ABC going downwind. Viacom's empire is a close match to Disney's, with a popular network for kids (Nickelodeon vs. Disney Channel), a movie studio (Paramount), and theme parks (Paramount's amusement parks), and it even has its own struggling, overgrown retail chain in Blockbuster (NYSE: BBI  ) to pit against the troubled Disney Store franchise. As Iger's more successful corporate twin, assuming that he is still available and attainable come 2006 -- even though he will be 62 years old at the time -- he has to be another favorite to consider. Given that Disney's meatiest acquisitions over the past decade have been broadcasting-related (and that Iger himself is at the top of the list despite the flaws at ABC), this is one name that may climb quickly on the board's wish list.

Jeffrey Katzenberg -- Odds 10-to-1
As the K in the middle of Spielberg and Geffen in the DreamWorks SKG moniker, one would think that Katzenberg has it all. He is about to take DreamWorks Animation public. Shrek 2 is the country's highest grossing animated feature of all time, and the studio's pipeline is flowing. So why would he want Eisner's office? Because old flames die hard. After sparking Disney's revival in theatrical animation with the likes of The Little Mermaid, Beauty & the Beast, and The Lion King, he figured he would be a shoo-in to become Disney's next president after the tragic death of Frank Wells. When he was passed over, a battle of words broke out between Eisner and Katzenberg, and one would have to think that there is nothing that Katzenberg would love more than to take over Disney in 2006 for a chance to guide the company that he once figured would be his by birthright.

Paul Pressler -- Odds 12-to-1
He rose up the ranks quickly while at Disney. He helped grow the Disney Store concept, then earned the wrath of the theme park regulars after overseeing a series of cost-shaving moves that sacrificed long-term loyalty for short-term income statement gains while heading up the company's resort business. Yet that didn't seem to dissuade Gap (NYSE: GPS  ) from tapping Pressler as the specialty retailer's new leader. The speculation would end there if not for the fact that Gap's dramatic turnaround in same-store sales coincided with his arrival. Yet before we anoint Pressler as the next great lifesaver, let's point out that Gap's gains were illusory. After three straight years of falling comps before his arrival at the island of stacked khaki and denim, even a trickle of an improvement would have made a significant impact. Unfortunately, no sooner had Gap started to crawl its way out, then it slipped back into the hole. So while Pressler's star has started to fade, where everyone stands in two years, especially with someone that is already intimately familiar with the company, remains to be seen.

Steve Burke -- Odds 18-to-1
Lost, or at least forgotten, in the whole Comcast (Nasdaq: CMCSA  ) failed buyout bid was the potential of Comcast's president of cable operations and the role he could have played if the deal had gone through. He would have been the likely choice to lead Disney given his intimate knowledge. It's not just that his father led Capital Cities/ABC until just before Disney acquired it in 1996. No, Burke spent a dozen years at Disney and he sampled it all. From helping run ABC to launching the Disney Store chain to flying out to Disneyland Paris to turn the troubled park around, Burke was everywhere. He is a qualified outsider.

Peter Chernin -- Odds 20-to-1
While he made heads turn earlier this year when the News Corp. (NYSE: NWS  ) COO implied that he would rather work under Rupert Murdoch than lead at Disney if he were offered the gig, it was almost a rhetorical suggestion at the time. It's all real now. Eisner will step down in two years -- if not sooner -- and if the talented broadcasting executive wants to make a move (and, like Karmazin, his recent track record is more impressive than Iger's handiwork), he will have to speak up before Karmazin yells out "Mine" and the suggestion becomes rhetorical again.

John Lasseter -- Odds 25-to-1
The chances of Lasseter, the genius mastermind behind Pixar's streak of box-office gold, would be much higher if Disney wasn't bent on growing its network business over its own animation prospects. And, yes, he has a long-term contract with Pixar, and if he was ever a viable candidate, it would be under terms in which Jobs and Disney were on good terms -- which would make Jobs the more likely helmsman.

Meg Whitman -- Odds 30-to-1
The question isn't so much if Whitman, who led eBay (Nasdaq: EBAY  ) to ubiquity, is qualified to lead Disney, but rather, why would she even bother to try? Back in September 2000 she made bold financial predictions for what the young trading site would become. Her goals for 2005 that called for $3 billion in revenues along with gross margins of better than 80% and 30% to 35% in operating margins seemed so lofty then, but those marks may prove to be conservative by the time 2005 comes to a close. Perhaps Whitman is due for a real challenge. I would hate to say that eBay's upside is limited -- because it has proven time and again that that is simply not the case -- but running the leader in family entertainment may prove awfully tempting if proposed.

Matt Ouimet -- Odds 40-to-1
Disney has always been cruel to the shooting star. Eisner and his micromanaging ways always seemed to trip up born leaders like Katzenberg, Burke, and Pressler to the point where they left the company given a chance to truly lead elsewhere. Now, with a lame duck CEO, it's quite possible that Iger won't be the only insider given a shot at the reins. Ouimet is doing what Pressler was doing before he moved on -- running the theme parks. Yet unlike Pressler, Ouimet is winning over the skeptics who longed for the finely manicured park grounds and innovative spirit in the ride creation process. While Disney is unlikely to elevate someone to the top with just theme park experience, with the Disneyland anniversary celebration next year looking to shine the company's spotlight on its flagship resort business, Ouimet may be a rising alternative if Iger and ABC continue to struggle.

Ten names for a spot that won't open up for more than another 700 days may seem meaningless. A lot can happen between now and then, and we may be looking at a completely different shortlist in two years. This list also isn't all-inclusive, as naturally there are more than two insiders -- and eight outsiders -- worthy of leading Disney.

Running Disney isn't easy. You have fans, special interest groups, and investors pulling at the company in different directions, and one may have to concede that it's a thankless job if you ultimately can't make everybody happy. Yet isn't that the kind of challenge -- the type that seems as if it can't be winnable -- that many of these born leaders crave? You can wear a lot of hats in corporate life, but the chance to don the mouse ears comes around once in a lifetime.

Have your own odds on who will replace Eisner at the helm? All this and more in the Disney discussion board. Only on Fool.com.

Longtime Fool contributorRick Munarriz realizes that he never even got around to pitching the chances of folks like Harvey Weinstein, Mel Gibson, Bill Gates, or George Mitchell. He owns shares in Disney, Viacom, and Pixar. The Motley Fool is investors writingfor investors.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 493499, ~/Articles/ArticleHandler.aspx, 4/18/2014 9:44:26 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement