Tom Staggs Stepping Down, Disney CEO Steps Down

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Thomas Staggs, Disney’s Heir Apparent, Is Stepping Down - Thomas O. Staggs, the favored contender to lead Disney after Robert A. Iger’s retirement, unexpectedly announced his departure on Monday, throwing succession at the world’s largest entertainment company into disarray.

Mr. Staggs, who became the Walt Disney Company’s No. 2 executive last year, beating out another candidate, will step down as chief operating officer on May 6. Disney said that Mr. Staggs, 55, would remain an employee until the fall, serving as “special adviser” to Mr. Iger, who is the company’s chief executive and chairman. In a statement, Mr. Iger called Mr. Staggs “a great friend and trusted colleague.”

Disney has a history of bumpy transitions of power. And last year, when Mr. Staggs was elevated to chief operating officer from theme park chairman, Disney insisted that it was not a coronation. Disney acknowledged, however, that the promotion made him Mr. Iger’s handpicked heir, pending the board’s approval. Mr. Iger, 65, said in 2014 that he would step down in June 2018, a two-year extension from a previously announced retirement.

After the promotion, as Mr. Staggs came under intense scrutiny by Disney’s board, it became clear that at least some board members were not convinced he had the skills required to maintain Disney’s creative momentum. While Mr. Staggs has extensive financial experience, his résumé is light when it comes to the successful creation of movies and television shows. (For his part, Mr. Iger ran ABC early in his career.)

An early personnel misstep did not help Mr. Staggs. He pushed for a theme park marketing executive, Leslie Ferraro, to become Disney’s merchandising chairwoman. Ms. Ferraro proved a poor fit and left Disney in February. Mr. Staggs also lacked the support of some Disney shareholders, including Isaac Perlmutter, the strong-willed chief executive of Marvel Entertainment. Mr. Staggs’s exit was first reported by The New York Times.

Disney prefers to promote from within, but Mr. Staggs was the only obvious candidate — the man he beat out for the No. 2 job, James A. Rasulo, has since left the company. The board may now look outside for a successor to Mr. Iger, who has led Disney to record-breaking results.

Left with no guidance from Disney, Hollywood instantly began to guess about potential candidates on Monday, with a member of Disney’s board, the Facebook executive Sheryl Sandberg, frequently mentioned. In a statement, Disney said the board “will broaden the scope of its succession planning process to identify and evaluate a robust slate of candidates for consideration.” So far, Mr. Iger has not indicated a desire to extend his contract again.

“As roughly two years remain before Iger steps down, there is still ample time to find a replacement, and we think Iger could potentially delay his exit (again, for the third time) if need be,” Doug Creutz an analyst at Cowen and Company, wrote in research note on Monday.

Succession turmoil has happened before at Disney. When Michael D. Eisner turned over control to Mr. Iger in 2005, the changeover became an example of what not to do. It got so bad that Roy E. Disney, the nephew of Walt Disney, used the lack of succession planning in a public attack on Mr. Eisner, who was so successful early in his tenure that he began to see himself as omnipotent.

A decade earlier, Disney endured a lesser degree of succession strife with Jeffrey Katzenberg, who resigned as chairman of Walt Disney Studios after Mr. Eisner refused to promote him to president of the broader company. There was also an ill-fated run by Michael S. Ovitz as president of the entertainment conglomerate.

In many ways, choosing a successor for Mr. Iger is a near-impossible task. Under his leadership, Disney has made a number of transformative acquisitions, including buying Marvel Entertainment, Lucasfilm and Pixar Animation Studios. Last year, Disney had $8.4 billion in profit, a 12 percent increase from the year before. Disney shares have recently traded for about $98, up from about $24 when Mr. Iger took over. (Shares fell about 2 percent in after-hours trading on Monday.)

Mr. Iger also has an ability to command attention with his personal style, an attribute that has greatly helped him rule over disparate Disney fiefs.

But the next Disney chief executive will not only need to measure up to Mr. Iger. That person will need to convince the board that he or she has a vision for taking Disney to even greater heights, even as the company faces unprecedented disruption, particularly at ESPN, which has long served as Disney’s financial engine. Subscriber erosion, a wobbly advertising market and soaring sports rights costs have combined to slow ESPN’s growth.

Over the last year, Mr. Staggs devoted a substantial amount of his time to Disney Media Networks, a division that includes ESPN, ABC and Disney Channel.

The end of the road for Ms. Staggs, who has many supporters at Disney, comes as the company prepares to unveil the $5.5 billion Shanghai Disney Resort, a project of crucial importance that Mr. Staggs helped guide as theme park chairman. (His signature, along with Mr. Iger’s, is quite literally on the Shanghai park: The two men signed a castle spire as it was put into place last year.) Despite some rumblings to the contrary, Disney has insisted that the park, set to open in June, has faced no unusual setbacks.

Mr. Staggs, who joined Disney in 1990, has an extensive list of accomplishments. In the 12 years he spent as chief financial officer, he worked on the Pixar and Marvel deals. In the five years he spent as chairman of Disney Parks and Resorts, Mr. Staggs more than doubled theme park operating profit, to $2.66 billion, and fixed the kinks in an important $1 billion Disney World technology project.

In a statement, Mr. Staggs called his tenure at Disney a “privilege,” adding that working with Mr. Iger during a “dynamic era of unprecedented growth and transformation” had been “a great experience.”