The sudden departure on Monday of Disney COO Tom Staggs, the former theme parks head positioned just last year as heir apparent to CEO Bob Iger, throws the media giant’s succession plan into disarray.
Staggs, who beat out then-CFO Jay Rasulo for the COO title and was elevated to the company’s No. 2 slot 14 months ago, seems to have lost the confidence of the Disney board. After the market closed on Monday, the board issued a statement that they planned to “broaden the scope of its succession planning process to identify and evaluate a robust slate of candidates for consideration.”
A Disney executive told TheWrap that Staggs interpreted the announcement to mean he was not the favored candidate and chose to leave, effective next month.
Disney stock fell 1.49 percent, to $97.18, two hours after the market closed on Monday.
The news came as a surprise to Wall Street analysts, to say the least. “No one had a whiff of this. I will honestly say I’m in shock,” Rich Greenfield, Head of New Media Satellite and Telecom Industries and Co-Head of Research and Media and Technology analyst at BTIG, told TheWrap. “Wall Street loves Staggs. He led the turnaround, a big change at the parks. He knew the company better than anyone.”
Still, Disney has some time to craft a new succession plan. The board bought itself some additional leeway in October 2014 by extending Iger’s contract for another two years, through June 30, 2018.
Iger, who took over as CEO in 2005 from Michael Eisner, has led the company to record growth thanks to key acquisitions of intellectual property treasure houses like Pixar, Marvel Entertainment and Lucasfilm. He integrated those units into the larger company, exploiting their brands across multiple divisions, from movies to TV to theme parks to merchandise.
Disney posted $8.4 billion in profit in 2015, up 12 percent from the year before.
But now the two most qualified internal candidates to take over the media giant are gone; Rasulo exited the company last June.
Despite Iger’s success, Disney is facing many serious challenges, particularly the threat of cord-cutting to its cable TV divisions, that the new CEO will have to address. “The company is really hitting a wall,” Greenfield said. “ESPN business has real issues. Yes, the content is doing amazing, but they’ve got real issues on 50 percent of company, which is cable networks.”