Shares of The Walt Disney Co. jumped about 8% following Sunday’s surprise announcement that Bob Iger was returning as CEO.
Disney’s stock has been pummeled along with other media stocks lately, falling from a 52-week high of 160.32.
In early trading Monday, Disney shares were at $98.67. Disney share closed at $97.58, up 6.3%.
Iger replaced his own hand-picked successor Bob Chapek, who most recently had to report disappointing fourth-quarter earnings that included a $1.5 billion loss on the company’s direct-to-consumer streaming business.
Wall Street and Disney’s board are asking Iger to set the strategic direction for renewed growth and to work closely with the board in developing another successor to lead the company.
The task Iger faces is hardly a slam dunk.
“Bob Iger is easily one of the most well-respected executives across our coverage, and has a lengthy track record of executing on creative excellence, technological innovation, M&A, and international growth,” analyst Kutgun Maral of RBC Capital Markets noted. “That said, the leadership transition creates uncertainty with the strategic shifts ahead. While we certainly have a positive bias over the long-term opportunity, the near- to medium-term implications to shares will depend on what path Iger will take to deliver on his mandate for ‘renewed growth.’ ”
Ben Swinburne of Morgan Stanley noted that Disney’s content is under-earning and under-monetized. “Bob Iger now has two years to sustain and enhance the company’s creative output, aggressively manage the cost base to reflect the reality of today’s media environment and execute a successful succession to a new CEO,” he said.
According to The Wall Street Journal, Trian Fund Management, run by Nelson Peltz, has bought more than $800 million worth of Disney stock after Disney’s fourth-quarter earnings call.
Trian reportedly wants Disney to tighten its operations and cut costs, according to the Journal. It also wants a seat on the board from which it could oversee the CEO’s performance.
Chapek was challenged by another investor/stockholder, Third Point, which wanted Disney to spin off ESPN and cut spending. Chapek managed to come to an agreement with Third Point and added industry veteran Carolyn Everson to the Disney board. ■
