By Jack Hough

To the surprise of no one, Walt Disney this past week announced Rockjaw Zipadee-Doodah as its next chief executive. OK, his name is Josh D'Amaro. He looks cast for the part, has deep theme park experience, and is as enthusiastic for the brand as a Magic Kingdom rope-drop Olympian giving first-timers tips on hitting seven rides before 8:45 a.m. Who could be grumpy with the choice?

Jilted corporate activist Nelson Peltz has thoughts. D'Amaro's limited showbiz experience gives re-retiring CEO Bob Iger reason to stick around and meddle, Peltz said at The Wall Street Journal's Invest Live event, predicting another botched succession. As a fan of public sniping by billionaires, it pains me to have to disagree.

No one is an expert on both roller coaster throughput and Moana story arcs, and if you have to pick one for Disney today, you pick roller coasters. This might be the age of screen addiction, but we're still up for being gouged for doing stuff. Operating profit dollars from Disney's Experiences division, which includes parks and cruise ships, outnumber those from Entertainment, with television, movies, and streaming, by about 2-to-1. Plus, D'Amaro will have help from the new position of chief creative officer, filled by Hollywood lifer and small-screen hit maker Dana Walden.

Iger the Sequel hasn't been received nearly as well on Wall Street as the original, so I wouldn't count on a third installment. Plus, the glide path for growth at Disney should be smoother than under the doomed tenure of Bob Chapek -- his 33 months in charge would make him the company Scaramucci, if not for one of Walt's sons-in-law running things for a year in the 1980s.

Here's some succession background, and why D'Amaro might be set up for success:

Iger was a television guy, which made him the ideal Disney leader during the golden age of cable. For young readers, that's a thing where a wire brings TV to your screens, and it used to be popular. Disney's ESPN was a huge moneymaker then, because it had sports, and sports have fans, and "fan" literally comes from a word for obsessive devotees, so all the wires had to have it. Less than a decade ago, Disney got nearly half its operating profit from TV.

The other thing that made Iger successful was a knack for bite-size content dealmaking. His acquisitions of Pixar in 2006, Marvel Entertainment in 2009, and Lucasfilm in 2012 sparked the biggest Hollywood win streak in history, right up until Thanos put on a glove with all five infinity stones and snapped his fingers in 2019's Avengers: Endgame, saying, "I am inevitable," in a possible reference to Netflix. Or was it YouTube?

Last fiscal year, Disney made $10 billion in operating profit from Experiences, compared with $2.9 billion from Sports and $4.7 billion from Entertainment. This Splash Mountain takeover of Disney's income statement has been visible for years. (See Dec. 16, 2019, "Everyone Is Talking About Frozen and Baby Yoda. But Disney's Big Draw Is Its Parks.") So it made sense that, when Iger stepped down the first time in 2020, parks chief Bob Chapek took over.

But Chapek stepped into a hot pile of "go woke, go broke" backlash, rankled Disney creatives by putting money people in charge of where and how content was released, and angered park visitors by charging for line-jumping and hotel parking and getting rid of free buses from the airport. Least forgivable on Wall Street, shares that had returned 14% a year under Iger lost 12% a year under the new guy.

The stock decline probably had little to do with Chapek's choices. Investors had decided that they liked shares of companies that burn cash to grow streaming, so Disney went all in, but then investors changed their minds about losses, and Disney was already in too deep. Plus, Covid shut theme parks and movie theaters.

As for the woke stuff, I'm no expert, but both Chapek and Iger are registered Independents, and I've never heard anyone put Chapek to the political left of the two. I think he might have been an easy target because relative to Iger, he had the pizazz of a taxi dispatcher. For young readers, there used to be cars that...forget it. Anyhow, I only met Chapek in person once, and it was 190 degrees in central Florida that day.

Years ago, when D'Amaro was in charge of Disneyland in California, he took me for a morning tour, stopping to pick up the rare bit of litter, and exchanging chipper greetings with every line attendant and churro seller. I half expected the place to break into a choreographed "When You Wish Upon a Josh." That stuff matters in the pixie-dust business. But profits will matter more. They're poised to grow.

Experiences can reliably raise operating profits by high-single-digit percentages in the years ahead, thanks in part to new cruise ships. Entertainment can grow faster, maybe, due to the math of streaming starting from a small profit base. For Sports, the inevitable fall from cable profit paradise has largely played out. Even movies are coming around. Zootopia 2, a rabbit-fox buddy-cop romp, has done $1.8 billion worldwide. The Avengers return this Christmas and next.

In hindsight, Chapek served as a damage sponge while Disney pulled off its costly transition from cable to streaming and jacked up park prices to meet frantic demand. He collected around $70 million for his efforts. Iger can leave with his reputation intact, even though his $85 billion buyout of 21st Century Fox assets in 2019 to feed streaming still looks pricey, and Disney stock's 5% annualized return since Iger returned in November 2022 is about 15 points behind the S&P 500.

D'Amaro takes over next month, and shares that once sold for well over 20 times earnings have been repriced at 16 times, so decent performance from here isn't out of the question. Honestly, it depends partly on what you folks are into next. Is it still just artificial intelligence? I'm guessing not, but then, I wouldn't have guessed rabbit-fox cop buddies.

Write to Jack Hough at jack.hough@barrons.com. Follow him on X and subscribe to his Barron's Streetwise podcast.

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(END) Dow Jones Newswires

February 06, 2026 21:30 ET (02:30 GMT)

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