With the unexpected return of Bob Iger last month for a new role as Disney CEO, Christine McCarthy, the entertainment giant’s veteran chief financial officer, has emerged as a leading contender for the top job.
“Christine has always been a force to be reckoned with, but she has to be put on a top 5 opportunity list over the past few weeks,” a Disney insider said of the now-prominent CFO. If McCarthy were to hand over the keys to the magical kingdom over the next 23 months, the executive would hold a historic position as the first female CEO in Disney’s soon to surpass 100-year history.
CFOs are key executives, but mostly inconspicuous, working behind the scenes, making appearances during earnings season and the occasional investor conference. Rarely are they the center of attention, especially in the heat of the moment, which leads the troops into a chaotic overthrow of their boss — and even more rarely do they become kingslayers.
However, that’s exactly what happened with McCarthy, the longtime Disney treasurer, who became CFO in 2015.
A steady hand in the previous Iger regime and when Chapek was in power, McCarthy was instrumental in successfully orchestrating a number of important mergers and was adept at raising and managing money during the depths of Covid.
But on November 20, the CFO became the public face of the Disney coup. McCarthy is the executive whose name is now in the history books for going to the board and its chair, Susan Arnold, to orchestrate a boardroom revolt that brought Iger back after less than a year of official retirement.
McCarthy, one of the most senior women in entertainment, went to Arnold in mid-November and threatened to resign unless Chapek was fired immediately.
“In the 35 years that I’ve been doing this, I’ve never seen a CFO bypass a CEO,” a longtime Wall Street analyst said with a hint of astonishment in his voice weeks after McCarthy took the knees Chapek and his had excised Reign of Error.
Now Iger, who handpicked Chapek in late 2019 before quickly getting mad at the former head of parks and resorts, has just under two years to select and position a viable successor. In this respect, it is not surprising that the name of the CFO appears in the top 5 candidates for the future CEO job. With Iger’s track record in mind, that list, which some have also put Disney General Entertainment Content chair Dana Walden on, needs to be shortened to one name.
The reality is that there aren’t many seasoned executives inside or outside the Disney pipeline who have the institutional memory, board relationships, and leadership skills to avoid on-the-job training and repeating the Chapek experiment.
In fact, Tom Staggs’ stunning departure as chief operating officer in 2016, and the subsequent departure of streaming queen Kevin Mayer in 2020, thinned out Disney’s upper echelons — before Iger’s Chapek was named CEO. Even with little talent and creative credentials, this circumcision leaves McCarthy in a strong position, a media banker recently noted. To varying degrees, anointed Staggs and golden boy Mayer had both been considered Iger’s successors and both left after being passed over and iced over. However, it’s unlikely either of them could return to the company and top job unless Disney agrees to buy out Candle Media, a lucrative company the friends and former colleagues launched with Blackstone’s backing.
Analysts and fund managers were very fond of Staggs, who was also CFO for years, and are fans of the current chief financial officer, calling McCarthy “very honest,” “very competent,” and “a straight shooter.”
“She really shone when the pandemic hit. She did exactly what the CFO should do. She’s lined up enough money for a year or two with no earnings. She very quickly assembled a huge wad of cash at reasonable rates to protect the company,” one said.
Disney’s latest financial results were shocking, however, as the company has spent and spent on streaming, with losses in the division soaring to nearly $1.5 billion — more than doubling — in the fiscal fourth quarter that ended in September as much as last year and much steeper than expected. Disney’s forecast for next year also looked bleak. Analysts wish the company had managed expectations better — which could have prevented Disney stock from crashing.
In an earnings call with analysts after the numbers, Chapek let the nimble McCarthy do most of the talking. “She took care of all those questions,” said one analyst about the biology student and botanist, who worked at banks for two decades before joining Disney in 2000. and “incredibly smart” and a great mentor to women at Disney.
For all of McCarthy’s strengths and her recent major flexing, time could keep her from being in the final CEO mix, one Wall Streeter suggests. McCarthy is 67 years old. “Bob Iger was originally scheduled to retire at 65 about six years ago. So I don’t see them hiring anyone [that age] to be CEO” in the long term. “You just went through… how many transitions?”
Regardless of the final verdict on a new CEO replacing 71-year-old Iger for a second time, McCarthy sure looks like a key figure at a tricky time for Disney and the broader media landscape. “Investors are awaiting Iger’s direction on DTC investments on how to propel subscribers, but not on any price. This is currently a market focused on the cost of that growth, Bob hopes [Iger] gets in there and reviews what his plans are and how spending will drive future profitability.”
Iger has already said he will restructure DMED, or Disney Media & Entertainment Distribution, an unpopular division that Chapek created and has brought the company’s creative decision makers to their knees. McCarthy will work alongside Walden, Alan Bergman and Jimmy Pitaro to “design a new structure that puts more decisions in the hands of our creative teams and streamlines costs.”
Which means, to quote Iger’s beloved Hamilton, she’ll be right in the middle of the room where it happens, one way or another.