Disney CEO Bob Iger stepped down from his CEO post effective immediately and will remain Executive Chairman through December 2021. Bob Chapek has been named Chief Executive Officer. Our expectation was that Kevin Mayer – Chairman Direct-to-Consumer & International – would be named Mr. Iger’s successor. Does this abrupt CEO change foreshadow a larger transaction?
Our guess is “Yes”. Our guess is that Disney Executive Chairman Bob Iger is negotiating a sale of Disney’s Direct-to-Consumer (Disney+ ESPN+) and related content businesses – most likely to Apple. How did we arrive at this conclusion?
- The abrupt CEO change. Our expectation would have been for a formal announcement where the CEO change would take effect after a specified period of time. Perhaps an announcement on Disney’s February 4th earnings call or on the March quarter call to take effect on January 1st 2021. Hypothetically, if Apple CEO Tim Cook called Mr. Iger and said: “Hey Bob, let’s figure out how to get a deal done in the next 12 months”, it would throw a wrench into Disney’s smooth CEO succession plan. Negotiating a sale of Disney’s Direct-to-Consumer (“DTC”) and related content businesses would be complicated. This task would be significantly easier if Mr. Iger did not have day-to-day responsibility for Disney’s portfolio of businesses.
- Mr. Iger’s successor is not the person we expected. Disney named Bob Chapek as its CEO effectively immediately. Mr. Chapek most recently served as Chairman of Disney Parks, Experiences and Products. Our guess as to who would succeed Bob Iger was Kevin Mayer. Mr. Mayer serves as Chairman, Direct-to-Consumer & International. It is the DTC business that is Disney’s future and what Iger & Company have staked their reputations on over the past several years. DTC was the big strategic bet, not Disney Parks. Further, it stands to reason that if Apple (or perhaps Amazon) wishes to double-down on content by acquiring Disney’s content businesses, it would want Mr. Mayer to lead the acquired operations post-transaction close.
- Why Apple? Apple is one of a handful of companies that is large enough to acquire Disney’s content portfolio. Apple is investing in its Apple TV+ business and perhaps would rather move now to acquire Disney’s content business rather than wait a year or two and risk the asset becoming appreciably more expensive. In addition, Disney and Apple have a history. Mr. Iger negotiated the acquisition of Pixer in January 2006 (Steve Jobs was Pixer’s CEO and largest equity holder). It is significantly easier to execute an M&A transaction with a known party as compared to an unknown entity. Further, Disney and Apple have a similar approach to producing “consumer friendly”, non-controversial content.