The magic kingdom has a new ruler. Bob Iger’s unexpected decision to step down early as chief executive of Disney clears the way for head of theme parks Bob Chapek to take over. The transition from one Bob to the next will probably be smooth but Mr Iger’s exit means Disney’s era of dauntless deal-making may be coming to a close.
Mr Chapek’s near 30 years at the company leaves him well placed to preside over its mix of businesses. Choosing the head of parks over, say, head of direct-to-consumer division Kevin Mayer runs counter to the fuss made about the importance of Disney’s new $7 per month streaming service. But streaming is a long-term bet designed to neutralise the decline in cable. Tourism is what pulls group profits forward.
Plastic castles, rollercoasters and parades attract about 160m visitors a year according to Themed Entertainment Association, making Disney the largest theme park operator in the world. Parks sprawl across thousands of acres in the US, France, Hong Kong, Japan and China. More locations have been hinted at.
Even after a dip in attendance at some parks last year, rising prices kept operating profits up. Single-day peak tickets at Disneyland in California rose $10 in the past year to more than $200. Parks and Resorts is both the biggest division by sales and profit growth. In the past fiscal year, operating income rose 11 per cent to $6.8bn. There was an 11 per cent decline at Studio Entertainment.
Theme parks are vulnerable to economic downturns. The closure of parks in Shanghai and Hong Kong amid the coronavirus outbreak will weigh on growth. But Disney fans are a devoted bunch. Further ticket price rises in US parks in 2020 are not out of the question.
Mr Iger will remain as executive chairman until next year. His exit coincides with news of two other departing bosses: Salesforce co-CEO Keith Block and head of Uber Eats Jason Droege. There is no question who deserves the most plaudits. Mr Iger put Disney’s cash and rising stock value to good use over the years, making successful acquisitions that peaked with the $71bn purchase of Fox’s entertainment assets last year. When he took over in late 2005, Disney’s equity value was less than $50bn. It is now more than $230bn. Mr Iger is leaving Disney a more complex and more successful business than the one he joined.