Peter Bart: Surviving Eisner & Ovitz Snubs, Disney’s Bob Iger Dazzles Wall Street Again With Bold Streaming Plans
Stars like to boast that they never read their reviews, but does Bob Iger? The Disney czar received a litany of raves for his three-hour performance last week aimed at demonstrating his company’s intention to conquer Netflix. The upshot: Disney shares hit record highs and famously skeptical analysts bubbled that Iger’s presentation was “impressive” and “compelling.” Analyst Todd Juenger even lauded Iger’s insistent repetition of the word “aggressive.”
The bottom line is that Wall Street believes Disney has the resources, momentum and, definitely, the aggression to achieve its objectives. Iger is thus “king of the world,” at least within the entertainment ecosystem; he even owns the James Cameron franchises to prove it (Cameron was the original self-anointed king).
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So does Iger relish his reviews? He has a right to; those of us with long memories recall his bumpy ride to the top, replete with its ego-bashing backroom intrigues. If Iger was destined to emerge as king of the Magic Kingdom, he ably played the quiet Clark Kent persona.
Iger was the youthful president of ABC in 1996 when Disney, then ruled by Michael Eisner, set its sights on acquiring his network. With negotiations closing, Iger’s bosses at Cap Cities, ABC’s parent company, put out the word that Iger “wasn’t ready” for broader responsibilities at Disney. In fact, it was decreed that Iger would report, not to Eisner, but to newly appointed Michael Ovitz, the CAA agent who had yet proved that he himself was prepared for his role as Disney president.
During his first months at Disney, Iger was baffled by Ovitz’s behavior. Five minutes into a carefully planned, two-hour presentation on ESPN, for example, Ovitz suddenly stood up, ended the meeting and announced, “I prefer to take a call from Tom Cruise.”
While Eisner soon grew to like Iger, he nonetheless informed the Disney board of directors that Iger “lacked the creative skills” needed for leadership. This view was later reinforced by Ovitz, who told board members that Iger didn’t have “the toughness” to rise in the Disney hierarchy (these assessment became known through subsequent litigation).
The No. 2 job at Disney already had become a corporate death trap. Jeffrey Katzenberg had earlier felt that he, not Ovitz, should have assumed the presidency under Eisner, and finally won a $250 million arbitration on his claim. He ultimately marched off to form DreamWorks with David Geffen and Steven Spielberg.
In due course, Eisner himself caught the whiplash from the Disney board as a result of the unending corporate intrigues. Disney veterans at the time felt that old Walt would turn over in his grave if he knew about the back-stabbing. Walt’s older brother, Roy Disney, himself became an Eisner adversary at a decisive moment.
Through all this, Iger, in his Clark Kent-like guise, was playing his hand cautiously. Upon finally winning the big job, he soon proved that he not only was tough enough to re-energize the troubled Magic Kingdom but also possessed the negotiating cool to pull off his succession of “miracle deals” — Pixar, Lucasfilm, Marvel and, of course, his $71.3 billion Fox annexation.
Having surmounted the corporate wars, can Iger coalesce these unique assets into a juggernaut to challenge the brave new world of streaming? The magnitude of the bet makes even the analysts shudder. Not only must a landscape of new shows be created for Disney’s streaming entities, but also for Hulu, of which Disney now owns about 60%.
According to Iger’s presentation, Disney+ alone will offer 10 original films and 25 original series, including three Avengers spinoffs and all 30 seasons of The Simpsons. The price to consumers will be $7 a month, while Netflix’s cheapest plan is $9. Recent presentations from Apple, a major Disney rival, have been uniquely unspecific about its shows and costs, but Iger’s forecasts were numbingly specific. Indeed, they prompted Michael Nathanson of MoffettNathanson to estimate that Disney+ could lose as much as $1.8 billion a year though 2013. Netflix shares took a hit last week after predicting strong earnings but a less than expected gain in U.S. subscribers.
The numbers notwithstanding, Wall Street has come away believing that, in one analyst’s words, “the key to success will not be money, but quality.” He added: “The company that just gave us Dumbo is now assuring us that it will overwhelm viewers with the creativity of its shows, its theme parks, its cruise ships — with all of it.”
In the face of this challenge, Iger deserves the right to savor his rave reviews as the king goes about inventing his new scenario for the Magic Kingdom.
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