The legacy of Disney’s Bob Iger is hanging in the balance over the Fox deal

Never let them see you sweat.
Never let them see you sweat.
Image: Reuters/Dylan Martinez
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Bob Iger, Disney’s CEO, saw Comcast’s $65 billion bet (paywall) on 21st Century Fox, and raised it.

Disney, which agreed to buy Fox six months ago, upped its bid for Rupert Murdoch’s media empire by more than a third, to $71.3 billion in cash and stock Wednesday (June 20). Comcast offered $35 in cash per share for Fox last week, above the $28 in stock Disney originally planned to pay. The latest offer works out to $38 per share in cash and stock.

“Raising its bid above that of Comcast is a ‘smart strategic poker move,'” wrote Daniel Ives, at GBH Insights, in a note on June 20, “as this remains the golden assets Iger and Disney crave to catalyze its streaming and content ambitions over the coming years.”

But, for Iger, this is much more than a poker game. He’s playing for his legacy.

The 67-year-old stayed beyond his planned retirement age to help Disney navigate its biggest hurdle—the shift from traditional TV to digital video.

A blockbuster deal, the biggest of his career, is a fitting way for Iger to solve the problem. Iger, who began his career at ABC in 1974, survived two big mergers at the company: He oversaw the TV group after it merged with Capital Cities in 1985, and was president of Capital Cities/ABC when it was bought by Disney in 1996. His last 13 years at the helm of the House of Mouse have been defined by big, strategic acquisitions. When Disney’s lifeblood—animation—was floundering in the 2000s, he reinvigorated it by acquiring Pixar. He bought Marvel in 2009 when the comic-book publisher’s movie studio was on the cusp of building its cinematic universe, and leveraged that into a cavalcade of blockbuster films, TV shows, toys, merchandise, and theme park rides. He turned Star Wars into an even bigger force after acquiring Lucasfilm. And he took a controlling stake in streaming technology company BAMTech to shore up Disney’s streaming future.

Iger also took on founder Walt Disney’s penchant for fusing art with technology after taking the top job in 2005. Under his watch, ABC became one of the first US TV networks to put episodes of its biggest shows on iTunes, and later online for free. Disney’s studios, like Lucasfilm, Pixar, and Walt Disney Pictures, were at the forefront of technology in filmmaking. And the company invested heavily in technology in toys and games, and its parks, including RFID-enabled bracelets that serve as customers’ passes, resort keys, and wallets throughout its parks, and in immersive experiences like Pandora, based on the world from Avatar.

But Iger also been criticized for waiting too long to make Disney’s beloved movies and TV series available to audiences online directly from Disney. That would have allowed it to better weather the changes many TV networks are facing as audiences turn to on-demand subscription video services like Netflix and Amazon.

Historically, nearly half of Disney’s operating income has come from media networks and much of that is from the fees pay-TV companies like Comcast and DirecTV pay to carry its channels, especially the coveted sports network ESPN. Iger has been careful not to shake those trees too much. Disney’s sports subscription, ESPN Plus, for example, doesn’t include games and broadcasts that air on ESPN’s TV channels, making it a complement to the TV network rather than a replacement. Analysts including Rich Greenfield at BTIG Research say Iger clung to the TV bundle for too long and needs to go all in on streaming (login required), or its online platforms will never come close to being as profitable as traditional TV has been for the company.

Fox is pivotal here. It gives Disney a diverse slate of content that could be used to build out its three streaming services: ESPN Plus; its family-friendly platform, due out next year; and Hulu, which Disney would gain control over if it acquired Fox’s stake. Hulu would become the home for more general audience content, like series from National Geographic, FX, and Fox TV Productions.

Fox also has more control over global distribution than Disney does, with pay-TV companies like Sky in Europe and Star in India, which carry Disney TV channels.

What’s more, Fox would give Disney a deep executive bench to set it up for a future without Iger, who has delayed his retirement four times already. “Reorganizing our company, which we did a few months back, we did it very specifically with the idea of moving many of those executives into key roles at the Walt Disney Company,” said Iger, on a call with investors today, “and using the combination of our talent to help grow the company as well.”

Iger has agreed to remain at Disney through 2021 to help with the Fox transition. The board has not yet named a successor. If the merger falls through, Iger could make an early exit.

Comcast CEO Brian Roberts, 58, would surely walk away from the Fox bidding war with a bruised ego if he lost. He hasn’t forgotten his failed takeover of Disney in 2004, a year before Iger became boss.

But it’d be an even harder pill for Iger to swallow, after six months of planning for the future of a combined Disney and Fox. The failure of a merger that was meant to correct his biggest misstep in adapting to viewers’ changing behavior could overshadow his entire legacy.