Mic Drop #21: Former Disney DTCI Chairman Kevin Mayer Gets Candid
A surprisingly candid interview with CNBC's Alex Sherman confirms some of my then-contrarian May 2020 takes on his surprise exit
If you haven’t read it yet, you should: CNBC’s Alex Sherman accomplished an unusually candid interview with a former legacy media C-suite executive. Not just any former legacy media C-suite executive: it was former Disney Direct-to-Consumer & International Chairman Kevin Mayer.
It’s a must-read, terrific conversation.
It also confirms much of my analysis of Disney since the surprise appointment of Bob Chapek as CEO last February. There were a few different pieces, all available for free (in old-school, pre-Substack Mailchimp format… see the improvement?):
February 2020: “Surprising executive changes at Disney reveal surprising weaknesses”
March 2020: “Reasons to be bearish about the SVOD marketplace emerge with Coronavirus”
May 2020: “A PARQOR lens on Kevin Mayer's exit from Disney+”
Let’s dive into some moments from Sherman’s interview to frame what I got right, and where I got it wrong.
Palace Intrigue at Disney
Last February, there was a lot of “palace intrigue” and speculation about whether Kevin Mayer would stay on at Disney after having “lost” the CEO role to Bob Chapek.
My read, then, was Mayer, by being the chief of the DTC business, was more focused on Disney’s DTC future than he would with a broader CEO-title:
(1) Hollywood media seems to think Mayer wanted CEO title, but he lost it, so he is likely to leave; or, (2) by being the chief of the DTC business, Mayer is more focused on Disney’s DTC future than he would with a broader CEO-title. Occam's Razor of ambition seems to tell most people it is #1, but I lean towards #2.
Mayer tells Sherman he did not expect the job:
I was hoping I would be [CEO of Disney]. I’m not sure hope and expectations are the same. It’s a nice job, CEO of Disney.
He also tells Sherman that he did want it:
Did I want to be CEO? Of course I did. Who wouldn’t want to be CEO of the Walt Disney Company? It’s a great job.
Mayer sounds like someone whose ambition would be satisfied by the title of Disney CEO, but whose expectations were low given that had only been in an operating role at DTCI for a couple of years.
So, did I read him right as being more focused on Disney’s DTC future than wanting the CEO role?
No, I think the Hollywood media read Mayer’s ambition better.
Moreover, I think I misread the politics, or the “kremlinology” of Disney management. There were wins for Mayer if he had stayed, but Mayer was an Iger hire, and Chapek has been appointing more of his team to DTC roles. Kareem Daniel, new Chairman of the Media and Entertainment Distribution division, was originally hired by Chapek as an intern, and in the Chapek org chart would have been Mayer’s boss. Meanwhile other key Iger allies have left for jobs at Condé Nast and elsewhere.
I was right in describing Mayer as a “perfect example of a fiduciary executive to Iger, one who executed Iger’s vision for DTC and was strategically, operationally, and financially constrained within Disney’s legacy business model.
Like any self-interested fiduciary, he served his bosses and shareholders until a better opportunity came along. That’s the story Mayer tells here.
So, I think what Mayer is saying is:
the Disney board “felt that [Bob Chapek] was the safer pair of hands at the moment.”
By implication, Mayer is also saying that the board felt that he was the safer pair of hands to manage the DTCI group in that moment, too.
But Mayer sounds like he likes Chapek personally but didn’t work as closely with him, and was closer personally and politically to Iger
So, he started to listen to offers once Chapek was appointed CEO because even if there were wins to be had at DTCI, Chapek was going to define those wins differently
So, in sum, dropping the mic on my fiduciary vs. visionary lens….
But, I give myself a mixed grade on reading Mayer’s ambition, and a mixed grade on reading the palace intrigue.
The Iger Factor
One more thing on the politics: Mayer raises a fascinating question about Iger. He describes his time as the DTCI Chairman as:
…a bit of a test run to see if I could be CEO. I’m not sure what I could have done there to prove myself more than I did. I think that Bob left earlier than he expected to.
Why? Why did he leave earlier than he expected to?
That’s a question for Bob Iger, not for me.
When Iger stepped down, he told CNBC he was doing so to make sure that the Disney’s creative pipeline “was really rich, that all of our creative engines were working extremely well."
I described this problem as “Kevin Mayer's Disney+ Flywheel is Dead”:
Without the 2020 flywheel, Disney+ could very well become a legacy library, at scale, which “is not the win Disney, or Kevin Mayer, set out to accomplish" with Disney+.
Marvel Chief Kevin Feige recently confirmed to Deadline that the flywheel was the long-term strategy (Mic Drop #12):
Our long lead plan was to have the MCU and the storytelling woven between weekly episodic big swings on Disney+ and into the feature big swings in theaters.
Putting the two-and-two together of Feige’s quote and Iger’s quote, above, Disney’s creative pipeline post-pandemic was implicitly a bigger pain point than Disney was explicitly letting on.
That’s juicy. What makes the quote even juicier is something Mayer adds shortly after:
Look, my interpretation of it is that Bob Iger wanted to focus more on the creative side of things. He has a lot of affinity for that. And it just sort of escalated quickly. And he and the board of directors needed to make a call about who would be the next CEO.
“And it just sort of escalated quickly” is the most fascinating “tell” in the entire interview. I learned in a corporate law class in law school that the best answer in corporate Public Relations is “no comment”.
Mayer’s whole interview is a big overshare on Disney’s inner workings in that moment, so why the hesitation to divulge more on the problems that led to Iger’s stepping down?
It could be as simple as Theme Parks and Media Networks accounted for 95% of Disney’s revenue at the time, the board needed to act fast to staunch the bleeding, and Mayer can’t share much about that. But Iger didn’t allocate responsibilities to address those problems - Chapek and other division heads were capable of navigating the turmoil. Instead, Iger stepped down from the CEO role, and Mayer’s answer suggests there was more to it.
Iger announced to shareholders two weeks ago he is leaving Disney at the end of December 2021. Maybe we will learn more then.
Mayer and Chapek as Fiduciary Executives
Mayer sheds some fascinating light on Disney’s inner workings, and we learn a bit about how a fiduciary executive thinks at a time crisis:
ambitious without expectation
politically loyal,
politically sensitive, and
with an ear to the ground for additional opportunities
We also learn how the board perceived and weighted two fiduciary executives:
Mayer “needed a little bit more seasoning”
Chapek “had worked throughout all of the different areas of Disney. He was in the studio, he was running consumer products, had been running the theme parks.”
Given the timing and “the immediacy" of Iger stepping down, the board “felt that [Chapek] was the safer pair of hands at the moment.”
“Someone wins and someone loses in that situation.” Or to rephrase, in a choice of two fiduciary executives in a highly risky moment, the Disney board went with “the safer pair of hands at the moment”.
In this light, it’s not surprising they did this. The only reason why it is surprising is, as Alex Sherman says, Mayer should have gotten the CEO job:
because it only made sense to put the person who led the development of Disney+ in charge of the company. That was going to be the narrative to Wall Street and it has been.
Maybe that’s what Mayer won’t speak to here: the reasons for why Iger stepped down have to do more with the best fiduciary executive for the role during the pandemic than the best fiduciary executive to tell the streaming story to Wall Street. In the end, with its stock at all time highs, Disney’s board felt as if it didn’t need Mayer to tell that story. It looks like they were right.