Disney CFO Christine McCarthy is at the center of Bob Iger’s comeback plan

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As Bob Iger returns to Disney, the company’s longtime CFO Christine McCarthy, who has the ear of the board, will help usher in a strategic restructuring.

Bob Chapek, who succeeded Bob Iger as CEO in 2020, was ousted by Disney’s board. Iger reportedly received a call from Susan Arnold, chairman of the board, on Nov. 18. The company announced on Nov. 20 that Iger would return as CEO for another two years.

Over the summer, senior leaders at the company, including McCarthy, warned boardroom directors that Disney was heading in the wrong direction and campaigned for Chapek to go, according to reports. Disney didn’t respond to my request for a comment.

“Disney’s value is about 40% lower than when Bob Chapek first took it over,” says Sandeep Dahiya, associate professor of finance at Georgetown University’s McDonough School of Business. The tipping point was Disney’s most recent quarterly earnings report on Nov. 8, he says. 

For the quarter ending Oct. 1, Disney missed on both revenue ($20.15 billion versus the $21.26 expected) and adjusted earnings per share ($0.30 vs. $0.51 expected). The company reported a $1.47 billion net operating loss in its streaming business, which includes Disney+, Hulu and ESPN+. “We believe that this quarter that we’re reporting is the low point, and it will improve from here,” McCarthy said on the earnings call. 

This week, Iger’s first move was to announce a complete overhaul of Chapek’s Disney Media & Entertainment Distribution, a hub that controlled profit and loss for all divisions. “It’s so clear that Bob Chapek’s strategy was to take some of the power of decision making out of the hands of studio heads and content creators, and move it to ‘the nickel and dimers or coin counters,’ so to speak,” Dahiya says. 

CFOs’ relationship with the board and transformation

In a memo to employees on Monday about structural changes, Iger wrote, in part:

“I’ve asked Dana Walden [chair of Disney General Entertainment Content], Alan Bergman [chair of Disney Studios Content], Jimmy Pitaro [chair of ESPN and Sports Content], and Christine McCarthy to work together on the design of a new structure that puts more decision-making back in the hands of our creative teams and rationalizes costs.”

McCarthy joined Disney in 2000 and was appointed CFO in 2015. “Usually, the CFO is one of the candidates to succeed the CEO, and if they don’t get the job, many times they move on,” Dahiya says. “It’s difficult to know if she was in the mix of potential CEOs.”

Arnold said in a statement in 2020 about Chapek’s appointment that “the board has been actively engaged in succession planning for the past several years, and after consideration of internal and external candidates, we unanimously elected Bob Chapek.” 

“McCarthy did not become the new CEO when Iger stepped down, but she continued to be a big power center,” Dahiya says. Iger, with Disney for more than four decades, served as chief executive from 2005 to 2020, then was executive chairman until December 2021. So, communication between McCarthy and Iger continued, he says.

“CFOs are unique compared to some of the other C-suite executives, in the sense that they are much more likely to spend time with the board members because of the financials and quarterly results,” Dahiya says.

Jaimee Eddington, a partner at Heidrick & Struggles and regional leader of the Americas, shared insight on the CFO role, in general. “I think this just highlights overall the strategic and multi-faceted nature of CFOs today,” Eddington says. “Typically, all public company CFOs meet with the Audit Committee chair in their interview process, but more and more they are meeting other board members as well to establish an even deeper connection with their boards.”

Now, McCarthy’s role will include building Disney’s next chapter. “I think CFOs are involved in a lot more of the transformational initiatives that are undertaken,” Dahiya says. “A lot of this has to do with the fact that corporate America has to manage investor expectations more rigorously and frequently, then say 20-25 years ago. We have hedge funds, activist shareholders, and a very diverse investor base.” So frequently, CFOs are taking the lead in terms of “crafting the strategy and communicating it,” he says.

Regarding the restructuring set to take place, “There can be a very interesting debate about whether this strategy is going to work in the next 10 years as it worked under Iger’s last reign,” Dahiya says. “The jury is still out on that.” I think it’s safe to say that the stakes are high for strategic partners McCarthy and Iger, and the board will be watching. 

Quick note: Fortune newsletters will not publish on Thursday and Friday in recognition of the Thanksgiving holiday. The next CFO Daily will be in your inbox on Monday, Nov. 28. I’m thankful for your readership. Take care.

Sheryl Estrada
sheryl.estrada@fortune.com

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Big deal

The metaverse real estate market share is expected to increase by $5.37 billion through 2026, at a compound annual growth rate of 61.74%, according to Technavio. Forty-one percent of the growth will originate from North America, and the market will be concentrated with a few key players, including Decentraland Foundation and Axie Infinity, according to the report. 

Going deeper

Here are a few weekend reads:

Inside Sam Bankman-Fried’s extravagant penthouse lifestyle in the Bahamas, where the T-shirt-clad FTX founder lived like royalty by Leo Schwartz

Where home prices are headed in 2023—this map shows CoreLogic’s revised outlook for 392 housing markets by Lance Lambert

‘Stealth workers’ lying to their bosses about where they work are costing companies tons of money by Chloe Berger

‘No place for guilt’: Michael Pollan talks intentional eating and the power of a shared meal in a new class on MasterClass by Alexa Mikhail

Leaderboard

Here’s a list of some notable moves this week:

Juli Musch was named SVP and CFO at Oatey Co., a manufacturer in the plumbing industry since 1916. Musch has more than 30 years of experience in financial management. She comes to Oatey from Arden Companies, where she served as CFO for the past decade. Previously, she served in leadership positions at Besser Company and Kmart.

Chris Newman was named CFO of Collective Health, a company that offers a health care technology platform. Newman comes to the company from Rodan + Fields, where he served as CFO and chief operating officer for over five years. Before that, Newman served as COO and CFO at organizations such as Orchard Supply Hardware, Restoration Hardware, and Serena & Lily.

Andrew Gubbels was named CFO at Gold Royalty Corp. (NYSE American: GROY), effective Jan. 1. Gubbels will succeed CFO Josephine Man, who will be leaving the company in 2023 to focus on other opportunities. Gubbels joins the Gold Royalty team from Aris Gold Corporation. Before Aris Gold, Gubbels was in charge of investment management in the Americas for Eurasian Resources Group.

Ankit Patel was named EVP and CFO at BioMed Realty, a provider of real estate solutions to the life science and technology industries, effective Nov. 28. Patel joins BioMed Realty with over 13 years of experience in the healthcare and life science real estate sectors at Ventas. He most recently served as the SVP of corporate finance and capital markets, and his previous roles involved investor relations, acquisitions, and contributing to the company’s ESG efforts. 

Overheard

“We’re seeing a resurgence for people to have that Thanksgiving meal…They’ll probably be demand for some of the larger birds as well, so it’s kind of getting back to normal pre-COVID, which is a certainly a good thing for all of us.”

—Jay Jandrain, CEO of the turkey brand Butterball, discussed with Yahoo Finance the findings of the company’s 2022 Thanksgiving Outlook survey. Despite inflation and higher prices for turkeys, 90% of people surveyed plan to buy the same size or an even larger turkey than last year.