I didn't want to like Disney (NYSE:DIS) CEO Bob Iger. When Michael Eisner announced that he would be stepping down as chieftain of the family entertainment giant, I had my own opinions about who could best lead the company into the future. Even though I had pegged Iger as the likely successor, I proposed that Sirius Satellite Radio's (NASDAQ:SIRI) Mel Karmazin, Apple's (NASDAQ:AAPL) Steve Jobs, or eBay's (NASDAQ:EBAY) Meg Whitman would have been better fits to run Disney.
After all, if Iger was Eisner's choice, and investors were longing for the anti-Eisner antidote to polish the brand, how good could an insider executive like Iger be? Wasn't a visionary outsider the better call to break Disney out of its rut of producing lackluster direct-to-video animated drivel and watering down the quality of its theme parks with cookie cutter attractions?
I was braced for the worst -- and refreshingly surprised when I got the best, instead.
Iger
to the rescue
The day after Iger officially took to the helm, I wrote a simple Dear Iger column to voice my concerns, along with things that the incoming CEO could do to impress investors. He had already begun to distance himself from the brash micromanaging style that Eisner had embraced during his tenure. Even though Eisner was brilliant in turning the company around through his first dozen years at the helm -- something no one can erase from his legacy -- he had faltered badly in the latter half of his run. He alienated executives with his hands-on approach, leading many to defect and rise up the ranks elsewhere, like Whitman at eBay and Jeffrey Katzenberg at DreamWorks Animation (NYSE:DWA).
Right from the start, Iger sought to end Disney brain drain by delegating his authority. A prouder CEO might have resisted such a humbling move, but Iger realized its importance. If Disney was going to bounce back, it wouldn't be the handiwork of just one person.
Then Iger attempted to repair the relationships that Eisner had frayed along the way. It was too late to win back the Weinsteins at Miramax, but Disney wasn't about to let Pixar walk away.
All roads to Pixar led through the appeasement of Steve Jobs. Rather than land on the Pixar front porch on bended knee to propose Mickey Mouse nuptials, Iger decided to work on getting the father's approval first. In October of last year, Disney announced that it would be the first major studio to provide video content for the iPod. It was a sound business move for Disney in general, but lending support to Jobs' early effort of making digital video downloading work must have played a key role in warming up an alliance that seemed irreparably damaged a few years earlier, when Eisner ripped into Apple for its "Rip. Mix. Burn." ad campaign.
Whether or not the iTunes detente eventually greased Disney's deal to acquire Pixar earlier this year, one thing is certain: None of this would have been possible if Iger hadn't been willing to swallow some pride to help smooth over key Disney relationships.
More than just a warm handshake
In Eisner's defense, a lot of what is working today at Disney was partly his doing. The $19 billion Capital Cities/ABC deal, which seemed so prohibitively pricey 10 years ago, now seems a bargain in retrospect, given the continued success of ESPN and the recent turnaround at ABC. The Pirates of the Caribbean film franchise was also christened under Eisner's watch.
As for ABC's revival, that's where Iger clawed up the ranks, so let's not shortchange his success at the broadcasting network before his ascent to the CEO spot. Even if it's ironic that some of the creative minds behind ABC's hit shows are no longer with the company, Iger seems to have assembled the right staff to make sure that ABC builds on its ratings popularity, instead of squandering it the way it did a few years ago by overexposing its Who Wants to Be a Millionaire? franchise.
As a Disney investor since the 1980s, I have reserved my most scathing remarks on the state of Disney to the key areas of theme parks and feature animation. Those are the two areas where I felt that Disney fans were cheated the most on toward the end of Eisner's tenure. With the Pixar brain trust in its fold, I now have complete confidence in Disney becoming the top dog in full-length animated features again. I have also seen improvements at the park level, with truly original attractions once more on the way.
No one will hand Iger CEO of the Year honors -- Disney wasn't exactly in a colossal funk when he arrived. However, it could have headed that way if he hadn't been bold enough to take chances, shake hands, and proactively dust off a brand that was growing increasingly encrusted with cobwebs and fading memories.
Well done, Iger.
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Longtime Fool contributor Rick Munarriz has been a Disney fan since childbirth, and one of his proudest possessions is a second home just five minutes from the Animal Kingdom parking lot in Kissimmee. He does own shares in Disney. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. T he Fool has a disclosure policy.
