DIS Walt Disney Co

By Ben Fritz 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (March 15, 2018).

Walt Disney Co. is reorganizing its operations in a move that positions two top executives as potential successors to Chief Executive Robert Iger.

Kevin Mayer, the company's longtime head of strategy who has specialized in acquisitions and digital investments, was named chairman of a new direct-to-consumer and international segment, while parks chief Robert Chapek added consumer products to his portfolio, giving him oversight of what would be the company's biggest business unit by revenue and profit.

Wednesday's moves come a week after Disney made former consumer products head James Pitaro the head of ESPN , further raising the profile of a third fast-rising executive. Disney insiders consider him another possible future CEO, but a longer shot. Messrs. Chapek, 58, and Mayer, 55, have both worked at Disney for more than 20 years, while Mr. Pitaro, 48, joined in 2010.

Mr. Iger recently extended his contract through 2021, contingent upon the company closing its December agreement to acquire most of the assets of 21st Century Fox Inc. for $52.4 billion. Since former Chief Operating Officer Tom Staggs was pushed out two years ago, there hasn't been a clear successor to Mr. Iger.

At a recent investor conference, Mr. Iger said he had been "thinking hard about how best to structure the company" so that once the deal is complete, "we'll be ready...to hit the ground running."

Mr. Mayer was intimately involved in the Fox deal and the purchase of streaming-technology company BamTech. He has also been heavily involved in plans to launch next year a Disney-branded streaming service that would compete with Netflix Inc.

His new business unit would oversee that service and BamTech, as well as an ESPN streaming service set to debut by early April. In addition, should the Fox deal be approved by regulators, it would give Disney and Mr. Mayer's division control of a third streaming service, Hulu. The new segment will also oversee global advertising sales for Disney-owned television channels, sales of content to other distributors, and the international Disney Channels.

Mr. Iger said at the conference that successfully launching streaming services -- which Mr. Mayer will now be responsible for -- was his priority.

Mr. Mayer, who has overseen strategy and business development since 2005, has never previously had an operating role at the company, a significant deficiency in his potential candidacy to succeed Mr. Iger. He now has oversight of nearly all distribution of Disney-produced films and television shows outside of theaters, home video and domestic broadcast and cable-TV networks.

Disney's movie studio, overseen by Alan Horn, and television division, run by Mr. Pitaro and Ben Sherwood, will remain largely intact.

The new theme parks, experiences and consumer products division headed by Mr. Chapek will combine the parks and resorts business he currently oversees with the smaller consumer-products business he used to run. He now has oversight of translations of Disney characters and stories created in film and TV into other forms of media, whether in theme parks, on toy shelves, online or in games.

Combined, consumer products and theme parks would overtake television to become Disney's largest business. They generated a total of $6.6 billion in revenue and $1.97 billion in operating income during Disney's fiscal first quarter, which ended Dec. 30.

With his background in deal-making and digital savvy, Mr. Mayer could be well positioned to lead Disney in the new businesses it will need to conquer to maintain its dominant position in entertainment in the next decade. He has previously maintained a low public profile, however, and some of his prior digital acquisitions have been flops, including the YouTube network Maker Studios.

Mr. Chapek, who also previously ran home video for Disney's movie studio, has less experience in digital media but is a seasoned operational executive who has held senior positions in several of the company's major businesses.

Succession at Disney has been murky since Mr. Staggs left after Mr. Iger informed him he was unlikely to become the next CEO, as had previously been expected. Mr. Iger has since extended his employment contract twice, first through 2019 and then, should the Fox deal close, until the end of 2021.

Mr. Iger last week faced a rare expression of criticism from shareholders when 52% of them voted not to approve of his compensation following the board's decision to grant him lucrative bonuses to stay on to help integrate the Fox assets. The shareholder vote was nonbinding.

--Imani Moise contributed to this article.

Write to Ben Fritz at ben.fritz@wsj.com

(END) Dow Jones Newswires

March 15, 2018 02:47 ET (06:47 GMT)

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