A day after announcing poorly received financial results, Walt Disney (DIS 0.99%) is introducing its next CEO. The media giant announced on Tuesday morning that Josh D'Amaro will replace Bob Iger as its chief executive. Currently serving as the chair of Disney Experiences, D'Amaro will officially take the helm at the company's shareholder meeting next month.
It's the right choice for Disney. D'Amaro has been the front-runner since Iger announced he would step down by the time his current contract extension ends later this year.
It's also great that the House of Mouse will keep co-chair of Disney Entertainment Dana Walden around. She is being promoted to president and chief creative officer.
Disney has an unfortunate history of seeing potential CEOs leave the castle after getting passed up for the top post. It's not happening this time. Disney is due for a female CEO, but D'Amaro is the right call at the right time.
Image source: Disney.
Eye of the Iger
The stock chart may not show it, but Iger has accomplished a lot since returning to the company in late 2022. He said he would turn Disney's streaming business profitable by the end of fiscal 2024, a Herculean task for a digital offering that was losing billions annually at the time. Iger was able to "go the distance," achieving break-even results two quarters early.
He also came back as CEO after his replacement, Bob Chapek, got into a political spat with Florida Governor Ron DeSantis. As the world's largest entertainment company, Disney couldn't afford to be politically polarizing. Despite his own political leanings and potential aspirations down the line, Iger was able to calm those stormy waters.
The market failed to reward Disney investors the way it did during Iger's initial 15-year run as CEO, which ended weeks before the pandemic shuttered its domestic theme parks and studio productions in early 2020. Since his return in late 2022, the stock is up a mere 16% through Monday's close. The S&P 500 (^GSPC 1.11%) soared 76% in the same time.
NYSE: DIS
Key Data Points
Iger's first term as CEO was iconic. He was a dealmaker. Pixar, Marvel, Lucasfilm, and Twenty-First Century Fox were all signed under his watch. It redefined Disney as the worldwide leader of all media entertainment, not just sports and family-friendly fare.
History will hopefully reward him in retrospect for his second term at the top. Disney stock may be badly lagging the market, but Iger made the right moves. He steadied a rocking ship, and not just by dramatically ramping up its fleet of cruise ships. Revenue has risen only 14% over the three fiscal years since his arrival, but operating profit has more than doubled, and net income has nearly quadrupled.
A whole new world
It's fitting that Disney would choose a head of its theme parks division over its content side. It's been Disney's gated attractions and cruise ships that have consistently been winning since the COVID-19 crisis. Disney's experiences segment -- which also includes its consumer products business -- accounted for just 22% of Disney's revenue in its latest quarter, but also 66% of its segment operating profit.
D'Amaro is also generally well-liked by theme park enthusiasts. As one of them, I can assure you that we're collectively a fickle lot who do a lot more headshaking than mouse-ear donning.
It takes a lot to impress Disneyland and Disney World regulars, and D'Amaro has done that. He's visible and accessible to parkgoers. He is also spearheading one of Disney's most ambitious expansion efforts across its global chain of theme parks.
Disney stock didn't jump on the news. After initially opening slightly higher, the shares were trading lower a couple of hours into Tuesday's trading day. That's fine. Disney's biggest customers are happy, and this is one time when they know what's better for the media stock than investors do.
