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Oct 29, 2019

The prime candidate to succeed Bob Iger is Disney's streaming executive

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Harvard Business School students studying Walt Disney Co. in their first-year strategy class often get a nice perk — a visit by longtime strategy chief and Harvard B-school alum Kevin Mayer.

Mayer, 57, stands in the amphitheater-like classroom inside Aldrich Hall and takes questions from the wannabe CEOs. “The students are always impressed by his honesty,” said David Collis, one of the professors.

The university is understandably eager to get Mayer back next time. After more than a decade overseeing strategy, he is now leading the company’s charge into online TV, with the Nov. 12 launch of Disney+, a US$7-a-month streaming service, just days away.

If Mayer is successful, the nearly century-old Disney could emerge as a significant rival to streaming pioneer Netflix Inc. and become a winner in the digital age. It could also make him the prime candidate to succeed Chief Executive Officer Bob Iger, who’s due to retire in two years.

“He’s a closer, he’s a benevolent killer,” said Michael Burns, a friend of Mayer’s and vice chairman at rival Lions Gate Entertainment Corp. “This could ultimately be the crown jewel at Disney.”

Disney is spending billions of dollars on the streaming effort, putting virtually its entire library of movies and TV shows online and cutting deals with partners like Verizon Communications Inc., whose wireless and internet customers will get a year of the service free.

Mayer grew up in suburban Maryland. His father was a labor lawyer, and his mother served on a county appeals board. His older brother Michael is a successful theater director who won a Tony award in 2007 for Spring Awakening.

While many of his classmates at Charles W. Woodward High School quoted the Beatles or Pink Floyd in their yearbook, Mayer had other thoughts: “You can fool some of the people all of the time, and all of the people some of the time. And that is usually sufficient.”

“Kevin was a happy-go-lucky kid,” recalled classmate Bobby Barse. “Kind of silly, but fun to be with.”

Mayer studied mechanical engineering at the Massachusetts Institute of Technology, where he played tackle on the football team and joined a fraternity. After graduation, he worked as an engineer while earning a second degree, in electrical engineering, at night. He ultimately decided to pursue business and entered Harvard in 1988. He joined Disney in 1993 in corporate development.

“When he sets his sights on something of value, it’s very hard for him to accept my advice to ‘be patient.’”

Seven years later, at the peak of the first internet boom, Mayer left for a job leading Playboy’s web efforts. He was lured in part by options that could give him 5% of the online unit. By then, he’d already met his future wife, Lisa, another engineer-turned-MBA. Seven months later, Mayer took a similar post at radio station owner Clear Channel Communications. The pair wed in 2003.

In 2005, Iger became CEO of Disney. He felt the strategic planning department had taken over decision-making across the company and shrank the unit down to 15 people from 65. On the advice of Chief Financial Officer Tom Staggs, he brought Mayer back to lead it.

When colleagues, past and present, describe Mayer, the word that most often comes up is “smart.” Second is “direct,” or some variation. Six-foot-four and broad-shouldered, Mayer can be an imposing figure. But colleagues say he stuck to his mission — long-term strategic planning — and didn’t tell other managers how to do their jobs.

Among Mayer’s first initiatives on returning to the company was a big strategic review, dubbed Disney 2015 and done with the consulting firm Bain & Co. One conclusion, embraced by Iger, was that Disney needed to focus more on big franchises, and less on one-off movies and characters.

After that, Mayer began working on acquisition candidates, including comic-book publisher Marvel and Lucasfilm, the home of Star Wars. Earlier, Iger had engineered the US$7.4-billion purchase of Pixar.

Those deals, worth US$15 billion in all, turned Disney’s film business into the envy of the industry. Last year, the division earned a record $3 billion profit, the most ever for a Hollywood studio.

“Kevin is as intense and laser-focused as anyone I’ve ever worked with,” Iger wrote in his recent book. “When he sets his sights on something of value, it’s very hard for him to accept my advice to ‘be patient.’”

Not all of Disney’s deals turned out well. Acquisitions that fizzled under Mayer include the US$763-million purchase of social gamemaker Playdom and the $675 million paid for YouTube video creator Maker Studios. Earlier this year, Disney wrote off its investment in Vice Media, the millennial-focused news and entertainment outlet.

Just four years ago, Mayer was celebrating the company’s Vice investment with co-founder Shane Smith at a Las Vegas dinner that cost $300,000. (Smith said he paid for the meal with gambling winnings.)

Disney insiders say Iger encourages risk taking and tolerates bad investments if they were initially based on sound thinking. Mayer is known for obsessive research.

The company is also struggling to digest 21st Century Fox’s film and TV assets, acquired in March. Because of a competing offer for Fox from Comcast Corp., Disney had to raise its bid by more than an third, to US$71 billion, and is now suffering losses on that company’s movie slate.

But the biggest bet now is on streaming.

Three years ago, Iger and Mayer came to a crucial crossroads as more and more consumers began to seek entertainment online. Disney could build a technology platform or buy one. The company was close to acquiring Twitter, but Iger balked at the ugly commentary on social media. Mayer pressed for an investment in BamTech, now called Disney Streaming Services, a platform that has become the launchpad for Disney’s push into online video.

Last year, in a move widely seen as giving his longtime strategy head an operational role, Iger put Mayer in charge of Disney’s new direct-to-consumer division — overseeing streaming services like Hulu, ESPN+ and the new Disney+.

Mayer has continued to show his deal-making fervor in the new role, according to Tom Rogers, who led TiVo for 11 years. In May, he negotiated a $5.8 billion deal with Comcast that gave Disney control of Hulu and kept NBC shows on the service until 2024.

“Comcast had its hands around Disney’s throat, because a lot of the things they wanted to do — take Hulu global, bundle it with other services — Comcast would have to approve,” Rogers said.

In the new role, Mayer is making more public appearances. At a Disney fan event in August, he touted the new Disney video service, as well as the Fox acquisition he helped negotiate.

If you want to watch the last big Avengers movie for the 200th time or just catch up on The Simpsons, Disney+ will be there, according to Mayer.

“Never before has our content been as broadly, conveniently or permanently available as it will be on Disney+,” he said.

©2019 Bloomberg L.P.