Who lands the Disney (DIS) CEO gig after Bob Iger remains a hot-button issue with institutional investors.
"When I talk to investors, succession planning is incredibly important because it dictates the strategy of the company. And I think over the last few years prior to Mr. Iger coming back into his current role, we've seen a few missteps perhaps on the film and TV studio side in particular, where there has been some market share loss," Goldman Sachs analyst Michael Ng told Yahoo Finance at the Goldman Sachs Communacopia and Technology Conference on Tuesday.
Ng rates Disney's stock at a Buy rating.
Added Ng, "One observation that I'll make is that they have an incredibly deep, deep bench of talented executives across each of their business lines, theme parks, film and TV studios, and obviously at ESPN."
There are reportedly four internal candidates being considered for the coveted position, which Iger held from 2005 to 2020 before returning in November 2022: entertainment division co-chiefs Dana Walden and Alan Bergman, parks division head Josh D'Amaro, and ESPN chairman Jimmy Pitaro. Walden is seen as having a slight edge, but it's far from certain.
The company could also choose to go with an outside candidate.
"I think we may know this year, but [Bob Iger] has two and a half more years. So it wouldn't surprise me if it is extended a little bit beyond this calendar year into next calendar year," close adviser and Candle Media co-founder Kevin Mayer told Yahoo Finance at the Cannes Lions Festival in mid-June.
The CEO search is set against a backdrop of more challenging operating conditions for Disney.
Disney (DIS) reported better-than-expected second quarter earnings in early August, but called out a late quarter slowdown in its theme park business. The company thinks the slowdown will persist for the next few quarters.
"We certainly see consumers behaving in a way — I wouldn't call it recessionary necessarily — they're watching their pennies a little bit more," Disney CFO Hugh Johnston told me on Yahoo Finance's Morning Brief.
Sales in its experiences segment — which houses the global theme park business — rose 2% year over year. Operating income fell 3%. Attendance was relatively unchanged year over year.
For the current quarter, Disney forecasts that operating profit for the segment will fall by a mid-single-digit percentage.
Shares of Disney are down about 14% in the last three months.
Despite the stock slide, Ng is staying upbeat with several longer-term positives for the company.
"There's going to be a short list of media companies that can have large-scale streaming video businesses. I think Disney probably sits there among a few other companies, namely Netflix (NFLX) and Amazon (AMZN) Prime," Ng said.
"One other thing that I think puts Disney in a very good position over the long term is its marquee sports rights portfolio, many of which are locked up through the end of the decade."
Three times each week, I field insight-filled conversations with the biggest names in business and markets on Yahoo Finance's Opening Bid podcast. Find more episodes on our video hub. Watch on your preferred streaming service. Or listen and subscribe on Apple Podcasts, Spotify, or wherever you find your favorite podcasts.
In the Opening Bid episode below, Raymond James chief investment officer Larry Adam shares his economic outlook for the balance of the year.
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on X @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations, or anything else? Email [email protected].
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