Is Disney's No. 2 an unsung leader or a dutiful lackey? The Mouse House board will soon decide just that.
By Patricia Sellers

(FORTUNE Magazine) – AFTER A YEAR CHARACTERIZED BY malicious gossip and rampant speculation, the final stretch of the succession race at Disney is finally underway. In February the board of directors convened to review the headhunters' report on the sole inside candidate--and front-runner up to now--Disney president Bob Iger. The next day a more devastating report hit the streets: DisneyWar, the buzzed-about new book in which Pulitzer Prize--winning journalist James Stewart details Iger's poor judgment and tendency to kowtow to CEO Michael Eisner. The fallout? As recruiters at Heidrick & Struggles, who are vetting the CEO candidates, start interviewing the board's outside contenders--known to include CEOs such as eBay's Meg Whitman, Yahoo's Terry Semel, and the Gap's Paul Pressler--Iger has an awful lot to prove. Here is a guy who has spent his career working under legendary bosses--Roone Arledge at ABC, Tom Murphy at Capital Cities/ABC, and Eisner. But many wonder: Can he be a great CEO in his own right? "Do you ever know?" Iger replies, instantly riled by the question. "I have much more authority than people believe."

Though famously reserved and polite (even detractors who call him "Michael's concierge" say he's nice), Iger, 54, in wide-ranging interviews with FORTUNE, is letting down his guard to persuade the world--well, actually, the 11 fellow Disney directors who intend to choose Eisner's successor by June--that he measures up against bona fide heavyweights. A weatherman early in his career, Iger has never found it easy to break from the pack. He spent his first 20 years quietly scaling ABC's sports and entertainment divisions. In 1995 he was the new president and heir at parent Capital Cities/ABC when Murphy sold the company to Disney for $19 billion. Some believe Murphy made the deal partly because Iger wasn't ready to be CEO. But Murphy tells FORTUNE, "That's baloney, absolute baloney."

Murphy says Iger has "unbelievable energy and discipline." Married to TV journalist Willow Bay and the father of four children, he is up at 4:30 A.M., even on weekends, and usually at his desk by 6:45. The deal with Disney ushered in "my worst year in 30 years in business," Iger says. Charged with merging ABC and ESPN into Disney and reporting to new Disney president Michael Ovitz, he says, "I fell into a big black hole of oblivion." Eisner was so consumed with top-tier dysfunction, he practically ignored Iger. When he did take notice, it wasn't with a ringing endorsement. Early on in Iger's tenure, Eisner wrote the board about Iger's prospects for becoming CEO someday: "He is not an enlighten [sic] or brilliantly creative man, but with a strong board, he absolutely could do the job." Eisner claims he has overcome his doubts: "I bought into the cliché of Bob--that because he didn't get on top of the table and rant and rave and act like a fool, he wasn't a creative, passionate person."

Iger eventually got plenty of attention--the wrong kind--at ABC, which had fallen from No. 1 to No. 4 in prime time by 2002. Iger admits that he managed the crisis, brought on by a drought of new hits, poorly: "I think for the first time in my career, I let myself get sucked into the vortex of thinking, 'Oh, my God, we're in third place ... fourth place ... we need action, action, action!' " Instead of delegating as he usually did, he micromanaged programming (shades of Eisner) and made shortsighted personnel changes. "It sounds like a cliché, but I'm a sailor. When you start overreacting to storm conditions, you're in peril," says Iger, who owns a 52-foot Hinckley. The question is whether ABC, which has made strides this season with hot shows like Desperate Housewives and Lost, can rightly be called a turnaround, since the network is still likely to finish in third place this year--or even fourth, if NBC rebounds.

The Disney board is giving Iger credit for his significant role in the recent profit turnaround at the company. He directs its international efforts--critical to growth. It's Iger, not Eisner (or Mickey), who is the face of Disney to the Chinese, and he has overseen Hong Kong Disneyland, due to open in September. A self-proclaimed "gadget guy," Iger has also led Disney's charge to expand its content via technology--like ESPN in high-definition, ESPN phones, and in the works, Disney phones customized for families. (For the second year in a row, Disney topped FORTUNE's list of Most Admired media companies.) Like Eisner, Iger sees the company as a developer of content--"Disney's heart and soul," he says--rather than an owner of distribution platforms like cable systems and satellites. If Iger wins the CEO job, he will probably change Disney's centralized-management style. "We've got to find our entrepreneurial spirit again," he says. Unlike Eisner, the creative guru who tosses movie and theme-park ideas like bombs, Iger convenes executives from across the company and quietly urges them to trade ideas.

Iger's advantages in the CEO race are his knowledge of Disney and his clean-cut, low-key image--the anti-Eisner. His other edge is that key rivals may not want the job. The board is known to be interested in Whitman, 48, but she insists she will stay at eBay. She doesn't want to move from Silicon Valley until her youngest son, now 16, goes off to college. Pressler, 48, who once ran Disney's theme parks, has told friends he'll stay at Gap, where he's under a lot of pressure to keep the turnaround on track. Iger's toughest rivals in this contest may be two media guys. One, Semel, says he would rather stay in Silicon Valley than go back to Hollywood (where he once ran Warner Bros.). "I'm flattered but not interested," he tells FORTUNE. But some say that's just talk. Semel, 61, still lives in Los Angeles and commutes to Yahoo weekly via private plane; plus he has a qualified CEO-in-waiting in Yahoo COO Dan Rosensweig. The other prime contender is News Corp. president Peter Chernin, 53. Blocked from the top job by Rupert Murdoch's children, Chernin is known to be interested in going to Disney. But he has a pay package that potentially awards him more than three times what Iger or Eisner made last year. That could be an issue for the Disney board, which is already under scrutiny for outrageous pay packages.

At this point, here's how the contest stacks up: Three directors, including Eisner, support Iger. The other eight, to varying degrees, are open to the idea of an outsider infusing long- dysfunctional Disney with fresh blood. But keep in mind one thing this board agrees on: In a tossup--two candidates being equal--the insider beats the outsider. That would be Iger.