Bob Iger rocks Disney
A bold move
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.)
Aside from Pixar, Iger quietly tried to put out whatever fires remained from Eisner's era. He settled shareholder litigation with dissident former directors Roy Disney and his advisor Stanley Gold and patched things up with Comcast. Internally, in a move treated like D-day, Iger dismantled a corporate strategic-planning department that had to clear most of the company's major decisions.
"When he took that job, Disney was really messed up," recalls Jobs. "Bob looked at the guys running the divisions and said, 'You're in charge of your businesses now.' " Giving more authority to division heads was a page out of Iger's Cap Cities playbook. "People have plenty of room to make decisions, and they should feel amply empowered and trusted. But everybody has got accountability and responsibility," he says.
The problems Iger sought to fix by buying Pixar were linked to another troubling issue. For years, Disney had struggled with "brand fatigue." Also, analysts warned of "age compression," meaning that Disney had become identified mainly with young children, and rivals, particularly Viacom's Nickelodeon, had attracted older kids by exhibiting more edge and attitude.
Iger commissioned an analysis that showed that the most value the company had created over the years stemmed from films done under the Disney banner - everything from "Snow White and the Seven Dwarfs" to "The Lion King." Then he and Disney Studios chief Dick Cook pored over the American Film Institute's list of the 100 greatest movies and found that while very few were Disney releases, a lot of them might have been, if the studio had thought more broadly about its brand.
The decision to refocus on the Disney brand was cemented by the success of the first "Pirates of the Caribbean film," released just a few weeks after he was named CEO. The studio had asked producer Jerry Bruckheimer - known for high-octane romps like "Top Gun" and "Armageddon" - to make the film based on one of Disney's most popular theme park rides, and he had insisted it be the company's first PG-13 film. "I don't think Disney had ever done this before," Bruckheimer recalls.
Another light bulb went off with the growing success and centrality of the Disney Channel. Iger and Anne Sweeney, the head of ABC and Disney's cable networks (apart from ESPN), had shrewdly migrated the channel in the U.S. from premium to basic cable, while launching localized versions around the world. The channel pursued the tween audience with shows like "Lizzie McGuire" while still dedicating time to shows for preschoolers, like "Mickey Mouse Clubhouse."
One consequence of the renewed Disney focus is that the company slashed production of films under the Touchstone and Miramax studio names. And one risk is that Iger has limited growth by becoming over-reliant on family-oriented fare, however broadly defined. Though making non-Disney movies remains part of the plan, Iger says he'd rather do fewer of them. "I don't care if a Touchstone movie does $100 million on $30 million of cost," he says. "Its success doesn't breed any other success in the company."
What does get Iger excited is the idea that global franchises can be drawn from any division of the company. "Hannah Montana" came from the Disney Channel, "Princesses" and "Fairies" out of Disney's publishing arm, the Jonas Brothers out of music, Pirates out of the theme parks, and so on. Also, 70% of most employees' bonuses are based on companywide performance.
It's not a universally welcomed concept: Over a recent dinner, George Bodenheimer, who runs ESPN, asked Iger how best to sell the structure to executives who have little or nothing to do with, say, attendance at Disney World.
