Media behemoth, The Walt Disney Company’s (DIS Quick QuoteDIS - Free Report) board of directors kept faith on the company’s chairman and CEO, Robert A. Iger and extended his contract through Jul 2, 2019. Notably, this marks the third contract extension for Iger. But the question of Iger’s successor still lingers with no proper candidate vying for the coveted spot. This has been a hot topic of discussion in the media industry in the last few years.

Ever since Iger’s appointment as CEO in 2005, Disney has scaled new heights and emerged as the world leader in the entertainment industry. Since 2005, Iger has created huge value for stockholders, with total shareholder return of 448%, in comparison with 144% for the S&P 500. The company’s market capitalization has increased to $176 billion from $46 billion in 2005. Further, the company’s shares have gained more than 290%, comfortably outperforming the Zacks categorized Media Conglomerates industry’s advance of 81%. During the same time frame, the S&P 500 has witnessed an increase of 108%.

In the past ten years, Disney’s shares have gained nearly 226%. On the contrary, shares of Comcast Corporation (CMCSA Quick QuoteCMCSA - Free Report) , Time Warner Inc. and Twenty-First Century Fox, Inc. (FOXA Quick QuoteFOXA - Free Report) have increased 187%, 64% and 36%, respectively, in the same period.

Mr. Iger has been quoted as saying “Even with the incredible success the company has achieved, I am confident that Disney’s best days are still ahead, and I look forward to continuing to build on our proven strategy for growth while working with the Board to identify a successor as CEO and ensure a successful transition.”

Achievement of Disney’s Under Iger

Let’s find out the company’s achievement under Iger ever since his appointment as CEO in 2005.

From the above table, it is clear that Disney has done extremely well under Iger. The company’s movies have been doing tremendous business. Ever since the acquisitions of Pixar, Marvel and Lucasfilm, Disney has been releasing blockbusters under the respective banners along with its own Disney Animation. This is evident from the grand success of “Star Wars Episode VII: The Force Awakens” which garnered $2 billion at the box office becoming the third highest grossing movie of all time. Further, animated movies like “Zootopia” added to that success fueling growth. In fact, fiscal 2016 has been a magnificent year for the company’s movie business. The company released four movies which surpassed $1 billion at the box office namely “Star Wars Episode VII: The Force Awakens”, “Captain America: Civil War”, “Finding Dory” and “Zootopia”.

Disney’s strategy of rehashing old animated movies into live-action remakes are paying off well. The company’s live-action remakes like “The Jungle Book”, “Cinderella”, “Maleficent” and “Alice in Wonderland” had garnered $967 million, $544 million, $759 million and more than $1 billion, respectively, worldwide. Moreover, the recent success of “Beauty and the Beast” just reaffirms the success of this strategy. Further, we believe Disney’s live-action remakes will continue to taste success beyond “Beauty and the Beast” as the company is already working on remakes of “Dumbo" as well as “Mulan”.

Disney’s Parks & Resorts divisions have also done reasonably under Iger. The company is focused on deploying capital toward expansion of the Parks and Resorts business, consequently, increasing market share and creating long-term growth opportunities. In this regard, Disney opened Shanghai theme park in 2016.

ESPN Remains A Major Challenge for Iger

In the past few quarters, ESPN has been a hot topic in the media industry and investors are closely monitoring its performance. Identical to performances in the past few quarters, ESPN has disappointed investors in first-quarter fiscal 2017 again. Falling subscriber base and higher programming costs at ESPN dragged down the company’s results in this quarter too.

Moreover, Disney’s primary cash cow, ESPN has been under immense pressure as the Pay-TV landscape continues to change owing to migration of subscribers to online TV. Falling subscriptions will have a telling effect on the network’s ad revenues.

ESPN has been losing subscribers on a regular basis. It lost nearly 3 million subscribers in the past one year as the number of cord cutters continues to increase. At the end of the fourth quarter of fiscal 2016, ESPN had a subscriber base of nearly 89 million in comparison with 92 million at the end of the prior-year quarter and more than 100 million in 2010.

However, the Zacks Rank #3 (Hold) company is striving to bring back ESPN’s golden days. In an effort to attract online viewers, the company has inked a deal with video streaming, data analytics as well as commerce management company BAMTech. Further, the company has the option to acquire majority of the stake in BAMTech, in future.  Disney stated that it will use BAMTech to create an ESPN-branded, over-the-top (OTT) video streaming service that will cover a variety of sports. Further, it is putting a lot of effort to make content accessible to more customers. The company also stated that AT&T’s DirecTV will feature channels like ESPN, ESPN2, ABC, Freeform, Disney Channel, Disney XD as well as Disney Junior in their subscription packages in the upcoming DirecTV Now OTT service.

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