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Disney's CEO replacement edged out of contention as speculation mounts

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Disney's CEO replacement edged out of contention as speculation mounts

Finding a good CEO is kind of like finding a good life partner:If you play it too coy, you risk losing all of your suitors.

That is what WaltDisney Co. seems to be learning as it attempts to tee up a replacementfor its iconic leader Bob Iger. The company had CFO Jay Rasulo in line, but thenit elevated parks andresorts head Thomas Staggs to contention, appointing him COO, the second-in-commandpost. Reports indicate that after running a kind of bake-off between Staggs andRasulo, which led to the CFO's resignation,Iger and the board of directors had considered Staggs a viable CEO replacement asIger planned to step down in 2018.

Then Disney began casting glances in other directions. Now, Staggstoo is stepping down,burnt by the Mouse's capricious expectations. Sources told TheWall Street Journal and TheLos Angeles Times that in recent weeks Disney's directors decided Staggswas no longer a shoe-in for CEO based on the executive's COO performance to date.Sources told the Journal that Staggs lackedchops in the creative operations like film and TV. Staggs "read the tea leaves,"as one source told the Times, and packedhis bindle for more hospitable pastures.

The move shocked everyone watching Disney, both internally andexternally. "Whatever happened sure happened quietly," one long-time Disneydirector and consultant told the Times.Investors did not take kindly to the sudden uncertainty, and bid down Disney sharesby 1.7% on April 5. One analyst said in a note that the situation "leaves Disneywith an unusual blemish," Forbesreported.

With much of the company's seniorleadership still relatively green, Disney will now look externally for a replacement,an atypical move for the Mouse House historically, with the obvious exception ofthe appointment of former Chairman and CEO Michael Eisner. One analyst told Varietythat Disney's "unique culture" typically leads to internal appointmentsfor leadership.

Filling Iger's shoes will be no simple task, considering thebreadth of Disney's businesses. The company operates a theme park and resort business,Hollywood movie studios, television and digital networks, a merchandise empire andseveral other properties.

As one media analyst summed up, "No one is an expert ineverything, but the next leader has to have experience in a lot of different typesof businesses."

At the top of Variety'slist of possible contenders, if only for the thrill of the prospect rather thanthe actual probability, was FacebookInc. COO Sheryl Sandberg, already a Disney board member. At 46, Sandbergis still young enough to execute a long-term vision, but old enough to have compiledan extensive resume in corporate leadership. Also, leading the operations of Facebook'smultifaceted media empire demonstrates the kind of Swiss-Army-knife talent Disneyis likely hunting for.

Also on Variety's listwas 21st Century Fox Inc.'sexecutive vice chairman Chase Carey, who helped Fox during a massive Murdochianleadership overhaul that saw Carey step down from his COO position to make roomfor Rupert's sons. Carey has experience in film, broadcast and cable, as well assome digital savvy, and he has indicated that he may be positioned to leave Foxas soon as May. Variety also mentionedformer Fox executive Peter Chernin, who has "run herd across a sprawling entertainmentconglomerate in the past." Investors could be quite warm to Chernin, who launchedhis own media investment house after being replaced at News Corp. by Carey.

CBS Corp.'siconic leader Les Moonves could fit the bill if there is a Redstone-related shakeupat the network — though at 66, Moonves is not the spriteliest candidate.

As an outside draw, Varietyoffered up the prospect of a merger between Disney and DreamWorks Animation SKG Inc., with Disney as the buyer.That would put DreamWorks founder Jeffrey Katzenberg at the helm, which would markan interesting twist in a long and complex relationship between Katz and Mouse.

Whoever steps up will have big — one could say cartoonishly large— shoes to fill, Forbes pointed out. Iger has driven Disney stock up almost 250%since taking over, dominating the SNL Kagan Media & Entertainment index forthat period. During Iger's tenure, Disney bought Pixar, Marvel Entertainment andLucasfilm, driving iconic blockbusters like "Toy Story 3," "The Avengers"and "Star Wars: The Force Awakens."

With more and more traditional media companies going digital,the speculation surrounding the succession seems to indicate that Disney will belooking for someone with some Internet savvy, which makes Silicon Valley candidateslike Sandberg particularly attractive. But whatever the case, finding a leader thatcan juggle the myriad batons Disney keeps aloft will not be easy, and many believethat Iger will extend his retirement date to deal with the challenge.