Bob Iger rocks Disney (pg. 2)
But what Iger has done, as Andy Mooney, head of Disney's consumer products business, puts it, is "widen the aperture" of one of the world's most valuable brands. A decade ago the Mickey Mouse and Winnie-the-Pooh franchises accounted for 80% of the company's consumer products business; today it's closer to 50%. You can still buy a $1 Disney T-shirt at Wal-Mart (WMT, Fortune 500), but a Mickey Mouse T-shirt from Dolce & Gabbana sells for $1,400. There's even a posh Four Seasons hotel under construction at Disney World.
And when it comes to overseas growth - the perennial holy grail for U.S. media firms - Iger has put creative executives on the ground in Russia, China, India, and elsewhere with the aim of producing, for the first time, original, local-language movies under the Disney name.
So far it's working. Over the past three years Disney, which ranked 67th on the Fortune 500 last year, cruised to the head of the media pack in terms of both its stock performance and its return on invested capital. Even after losing 30% of its value in the past six months amid the financial blowout, Disney has held up better than the S&P 500 and rivals like Time Warner (TWX, Fortune 500) and News Corp (NWS, Fortune 500). Under Iger, who turns 58 in February, Disney has become the world's largest media conglomerate by market value, worth around $40 billion.
There is so much of what Iger calls the "Disney difference" in the company's stock price that some wonder if its premium is sustainable. Analyst Michael Nathanson at Sanford Bernstein noted that by late December, Disney's trading multiple, based on forecast 2009 earnings, had "ballooned" to 9% above the S&P's and more than 70% above those of its media-conglomerate peers, "the widest margin in recent history." He thinks either Disney needs to start trading down or the rest need to start trading up.
And even at these levels, Disney stock is now slightly below where it was when Iger took over (he has two million options likely to expire worthless in February). As he put it to his European management team in a strategy meeting hours before joining the Jonas Brothers: "Unfortunately, all this success creates the ever-greater demand for more success."
Between the impact of the economic crisis on tourism and the digital upheaval in the media business, the headwinds now are no less intimidating than those young Walt Disney faced when his first Mickey Mouse cartoon, "Steamboat Willie," debuted in 1928. Even so, Iger says, "We felt like we were the last to feel the pain, and we think we could be the first to heal."
It 's hard to overstate what a surprise Iger's early impact as Disney's CEO has been. A hard-working and likable hand who had been in the media business for more than three decades, Iger had no big claim to fame when he took the top job, having dwelled largely in the shadow of his boss, Michael Eisner.
Eisner's run as Disney CEO is an oft-told tale: In the 1980s and early '90s he was credited with reviving an American icon, and in the mid-'90s he smartly acquired Capital Cities/ABC, tacking ESPN and a broadcast TV network onto the company's film and theme park businesses. But his later years saw a feud with board members, management chaos, and an unwanted takeover bid from Comcast.
Eisner ran hot and cold on his top people, so it was unclear to anyone - even to Iger - what the succession plan would be. But when Eisner resigned, he did recommend Iger and the board eventually agreed - news that was received coolly by some investors. "There were many naysayers," recalls one. "People would call him 'mini-Eisner,' his yes man."
Iger says the criticism didn't get to him. "I don't know that I was necessarily on a mission to prove people wrong," he says. "But I wanted very much to exceed expectations."
Iger grew up middle-class in a housing development on Long Island, N.Y., where his father, a jazz trumpeter, worked in advertising and publishing, and his mother tended to Bob and a younger sister. He remembers watching the "Mickey Mouse Club" and wearing his coonskin cap from Disney's "Davy Crockett"show. "A couple of years ago I downloaded the Davy Crockett theme song onto my iPod and thought, 'Wow, have I come a long way,' " he says.
Graduating from Ithaca College, he aspired to be a news anchor and worked briefly as a weatherman, but in 1974 he joined ABC as a low-level production supervisor. He earned his stripes working under ABC Sports legend Roone Arledge and rose quickly through the company's ranks. As its entertainment chief, he greenlighted the longest-running program on ABC to this day - "America's Funniest Home Videos."
In 1994, Iger's career took a turn that might shed light on his quiet readiness for his current job: He was named president of Cap Cities/ABC by its longtime leader, Thomas Murphy. Warren Buffett, whose Berkshire Hathaway was the largest investor in the company, once called Murphy "the top manager in the U.S.," and Iger was his protégé.
In naming him president, Murphy informed Iger that he planned to retire, and that Iger, then 44, would succeed him. "That would have been the plan," recalls Murphy. But before that could happen, Eisner made a $19 billion offer for the company that it could not resist. Iger says he was philosophical about the sale to Disney and is grateful for the decade he worked under Eisner, but he adds, "It's a lot more fun being CEO."
Unlike his predecessor, Iger doesn't host Disney TV shows. He pens no florid letters to shareholders. He uses an alias for his e-mail account - one that plays on his wife's name. "Personally I would prefer staying completely invisible or anonymous," he says, "but I don't think it would be good for the company."
Iger made an early decision that most of his time as CEO would be spent "managing inside the walls" of the Magic Kingdom. He says hello to everyone on the Disney campus in Burbank and leads the Disney team that raises money by competing in the Malibu Triathalon.
Iger is devoutly, if not obsessively, fit and disciplined, working out at his Brentwood home at 4:30 each morning, then taking a break to read the papers and download music before driving his BMW to the office, often making the first pot of coffee when he gets there. This fall he put himself on a diet, dropping more than 13 pounds from his already buff frame because he "didn't feel comfortable." He jokes that his wife, Willow Bay, a journalist who is a former model and TV anchor, "has a diet that mainly consists of arugula." He and Bay have two young sons, and Iger has two grown daughters - and a granddaughter - from a first marriage.
At work Iger is fixated on quality and the ways that it can be measured and studied in everything from consumers' attitudes toward the Disney brand to waiting times for theme park rides. When Kevin Jonas had lunch with Iger one day last year in Disney's dining room, he was struck by how much Iger knew about the rotation his boys' songs were getting on the radio that morning.
John Pepper, the retired Procter & Gamble CEO who is now Disney's chairman, says the company's approach to measuring data is very similar to P&G's, and that Iger's push to organize the company around franchises echoes the way consumer products giants like P&G manage their top-selling brands. "Disney," Pepper says, "is a zealot for data."
Jeff Bewkes , CEO of Time Warner (which owns Fortune, among many other things), says Iger's easy manner and good nature should not be confused with a lack of ego or competitiveness, but rather signifies his lack of pretense. "Part of management is just getting everybody to see that we're not changing the rules every day," says Bewkes. "I deal with Bob a lot, and he's a very straightforward, easy-to-understand guy."
When Iger articulated his big new strategy for Disney after taking over, it sounded pretty much like every other major media company's: Growth would come from an emphasis on creativity, technology, and international markets. But the first indication that Iger was going to shake things up came on his very first day as CEO, Oct. 1, 2005. Meeting with the board, he said his top priority was to fix Disney's slumping animation business.
At the time, the company's deal to distribute releases from Pixar was coming to an end because of clashes between Jobs and Eisner. But in the six months since he had been designated incoming CEO, Iger had formulated another idea that he now shared with the board: Buy Pixar. (The initial reaction, he recalls, was "stunned silence.")
Iger was given the go-ahead, and his first move had tongues wagging - not just because Disney paid an outsized $7 billion for Pixar, but because the deal made the brilliant but mercurial Steve Jobs Disney's largest individual shareholder with a 7% stake.
Iger had been working behind the scenes to mend the relationship with Jobs, and had also put in time with top Pixar executives Ed Catmull and John Lasseter, who initially balked. Iger noted that he too had been acquired, twice: when Cap Cities bought ABC in the mid-1980s and then when Disney bought ABC. Plus, Catmull and Lasseter would have a bigger canvas because Disney animation would now report to them.
Jobs told Fortune that Iger won him over when he said that as soon as he found out he was going to be CEO, he spent a day at Disneyland going on every ride and watching every show - and observed that all the new ones were based on Pixar characters. Today, Jobs gives Iger and the board input on everything from store design and videogaming to China. "I consider Bob Iger a friend," says Jobs. "I don't have a lot of friends. I just really like him, and he's a really solid guy." (Try to put a dollar value on that.)