In another surprise executive shakeup, Disney (DIS) CFO Christine McCarthy will step down from her longstanding role due to a family medical leave of absence, the company announced in a statement late Thursday.
The departure will likely lead to further headwinds for CEO Bob Iger as he attempts to restructure the media giant before his exit in less than two years.
“Christine McCarthy is one of the most admired financial executives in America, and her impact on The Walt Disney Company during 23 years of dedicated service cannot be overstated,” Iger said in the release.
McCarthy, a close confidant of Iger who had served as Disney’s financial chief for eight years, will be replaced by Kevin Lansberry, executive vice president and CFO of Disney Parks, Experiences and Products, effective July 1.
Lansberry will serve as interim CFO until a full-time replacement is found. McCarthy will stay on the leadership team as a strategic advisor and will assist with the process of identifying and onboarding a long-term successor “to ensure a smooth and successful transition,” Disney said.
“I look forward to helping with the transition and will always be rooting for the success of my extended Disney family, who have shown time and again that determination, teamwork and the pursuit of excellence are an unstoppable combination,” McCarthy said.
Wells Fargo analyst Steve Cahall said Lansberry will face a slew of uphill battles heading into the back half of 2023, including a softening of parks growth due to inflation, a murky timeline for direct-to-consumer (DTC) margin improvements — the biggest issue, in Cahall’s view — in addition to the purchase of Hulu’s minority stake and the impact of taking ESPN fully over-the-top.
“Separately these are speed bumps to the stock. Together they’re obstacles,” he wrote in a new note to clients on Friday.
Disney will report third quarter earnings in August. Cahall anticipates limited long-term guidance and expects both McCarthy and Lansberry to speak on the earnings call.
Overall, the analyst, who has a $147 price target on the stock, said Disney is an above-average opportunity but also boasts above average risk compared to Netflix’s “more straightforward story.”
“The CFO transition adds yet another wrinkle,” he said. “It will be followed by a CEO transition within another 1-2 years, while ESPN and DTC present discrete operational challenges. We think it’s an opportunity for this kind of upside on such a large-cap stock, but no doubt it will take time for the pieces to come together.”
Disney shares were down about 1% on Friday following the news.
Iger, who stepped back into the CEO position in November, has remained hyper-focused on profitability as investors shift focus away from subscriber growth and put more emphasis on margins.
The executive has worked to establish new revenue streams like Disney’s recently launched ad-supported tier, in addition to various price increases to help pare losses and lift metrics like average revenue per user, or ARPU. He reaffirmed the company’s outlook of reaching streaming profitability by 2024.
Disney, which has reiterated plans to slash $5.5 billion in costs, including $3 billion in content costs, announced an effort to cut 7,000 jobs in February. Disney went through its first round of layoffs at the end of March. Its second and largest round occurred in late April with a third round taking place last month.
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