Why co-CEOs could also be a nasty thought

As 2025 enters its remaining months, Disney inches nearer to the announcement your entire leisure business has been ready for — who will take over for Bob Iger as the corporate’s subsequent CEO.

Disney has publicly acknowledged it’s going to identify Iger’s successor in early 2026. Two inner candidates stand out because the most certainly contenders: Disney Leisure co-chairman Dana Walden and Disney Experiences chairman Josh D’Amaro. Walden brings many years of Hollywood experience; D’Amaro labored in shopper merchandise earlier than his elevation within the theme parks division all the way in which as much as working the unit when its earlier chief, Bob Chapek, was named Disney CEO in 2020.

Given Walden’s and D’Amaro’s complementary talent units — and given current momentum behind co-CEO appointments each in media and past — the Disney board might decide to pick out each to collectively exchange Iger.

It is a technique rival Netflix has equally — and successfully — used since 2020, when Reed Hastings named Ted Sarandos his co-CEO. Three years later, Hastings relinquished that publish and moved on to change into the corporate’s government chairman, elevating Greg Peters into his spot as co-CEO.

Netflix’s success has contributed to a current co-CEO wave. Final month, Spotify named Alex Norstrom and Gustav Soderstrom as co-CEOs to exchange founder Daniel Ek; Oracle named Clay Magouyrk and Mike Sicilia to collectively lead the corporate; and Comcast tapped president Mike Cavanagh to affix longtime CEO Brian Roberts within the chief position.

However whereas a duel CEO construction might superficially make sense for Disney, firm insiders and company governance specialists warn there are concerns particular to the Mouse Home that may make such a dynamic unwise.

Final yr, Iger known as Sarandos and requested him about Netflix’s co-CEO mannequin. That decision was first reported by the Wall Avenue Journal in November, and CNBC can affirm it befell, in keeping with individuals aware of the matter.

Sarandos and co-CEO Peters have completely different areas of ardour, in keeping with individuals aware of Netflix’s management kinds, who requested to stay unnamed as a result of the small print are non-public. That is allowed the 2 leaders to make choices with out stepping on one another’s toes. If Sarandos and Peters disagree on one thing, they work it out by deferring to the chief who’s extra passionate in regards to the reply. That usually means Sarandos wins out if it is a content material or artistic determination, and Peters triumphs if the choice is extra product- or technology-based. A Netflix spokesperson declined to remark.

If there is a gray space, the co-CEOs can all the time fall again on Hastings, the corporate’s co-founder and CEO of 25 years. Peters and Sarandos labored collectively below Hastings for a few years. That consolation degree — and Netflix’s famously un-hierarchical company tradition — have helped keep a twin CEO construction with out turf wars and whereas serving shareholders, Sarandos advised Iger, in keeping with the individuals acquainted.

Since Peters stepped in as co-CEO in January 2023, Netflix shares have gained about 275%.

Whereas Hastings has turned his consideration to hobbies like snowboarding since giving up his CEO position, Iger has developed a fame for wanting to hold round as Disney’s head honcho. He is 5 instances pushed backed retirement to stay on the helm, and he got here again to exchange Chapek in 2022 after hand-picking him as his substitute.

Second, throughout Chapek’s tenure, Iger did not totally quit his operational obligations instantly, selecting to direct the corporate’s “artistic endeavors” for greater than a yr. That led to an unsightly power-sharing state of affairs between Iger and Chapek, as CNBC detailed in 2023. Even when Walden and D’Amaro have completely different area strengths, selecting a co-CEO mannequin after struggling by means of a current time interval the place management traces have been blurred could also be a case of failing to study from one’s errors.

Third, Walden and D’Amaro have not labored collectively so long as Peters and Sarandos (or different co-leader preparations with long-term success, equivalent to CAA’s co-chairman association with Bryan Lourd, Richard Lovett and Kevin Huvane). Walden did work in a co-chair association with Gary Newman at Fox for a few years working Fox TV, proving she’s able to succeeding in such an association, nevertheless it’s unclear if she’d relish the chance to return to a pairing.

Fourth, Disney’s company tradition is famously political. The corporate has had a number of tortured succession processes with Iger and Disney’s former CEO Michael Eisner. Whereas Netflix is basically untouched by M&A, Disney is an amalgam of many acquisitions and items over time, together with ABC, ESPN, Fox, Pixar, Marvel and Lucasfilm. That is introduced staff from many alternative cultures collectively, reasonably than breeding a unified company mindset from its founding.

“It would not work for Disney,” a senior media government advised CNBC privately. “There can be a lot backbiting. That is the way it’s all the time been there.”

A Disney spokesperson declined to remark.

About 1.2% of firms within the Russell 3000 index have employed a co-CEO construction at any given time in recent times, The Wall Avenue Journal reported final month, citing information from Equilar.

“While you create two sources of authority in a corporation, that is by no means good,” stated Charles Elson, founding director of the Weinberg Heart for Company Governance on the College of Delaware, in an interview. “Two in cost means nobody is in cost.”

Nonetheless, there are mitigating elements that may make a co-CEO association extra palatable, Elson stated. Having Hastings as government chairman is probably going essential for Netflix as a result of he can act as a de-facto tiebreaker in a co-CEO association.

Equally, a co-CEO construction can work if it is clearly completed for more-drawn-out succession planning, equivalent to Comcast’s determination to raise Cavanagh to co-CEO alongside Roberts, stated Elson.

When push involves shove, Hastings and Roberts could make the deciding calls on the largest choices, Elson stated. Roberts is Comcast’s controlling shareholder. Oracle equally has a controlling shareholder in co-founder Larry Ellison.

Whereas Iger might play a tie-breaking position for Disney as government chairman, he is not a founding father of the corporate and owns lower than 1% of shares excellent. That offers him much less pores and skin within the sport for the Disney’s future than somebody like Roberts or Ellison, famous Elson.

Choosing only one CEO could also be a leap of religion for the Disney board, nevertheless it’s higher than organising instability, stated Elson.

“Inevitably, one CEO dominates and the opposite one goes away,” he stated. “That is the character of humanity.”

Disclosure: Comcast is the father or mother firm of NBCUniversal, which owns CNBC. Versant would change into the brand new father or mother firm of CNBC upon Comcast’s deliberate spinoff of Versant.