https://www.wsj.com/articles/disney...-mccarthy-to-step-down-3ba5b1e8?siteid=yhoof2
Disney Finance Chief Clashed With Top Executives Before Stepping Down
Company says Christine McCarthy is taking a family medical leave; move catches associates by surprise
By
Joe Flint and
Mark Maurer
Updated June 16, 2023 1:57 am ET
Walt Disney Co. Chief Financial Officer Christine McCarthy, who
has been a key executive at the entertainment giant for more than two decades, is stepping down.
Disney said McCarthy is taking a family medical leave. McCarthy has an ailing husband, who has been in a healthcare facility since the start of the year.
The abrupt exit of McCarthy caught some colleagues and associates by surprise. A person familiar with her situation said there have been no dramatic changes in her life recently that would require her to step back.
McCarthy has clashed with Disney Chief Executive Robert Iger and other top executives over strategy, including the amount of money Disney spends on content and a recent restructuring that she felt didn’t go far enough to streamline the company, a person familiar with the matter said.
In February, Iger
reorganized the company and created three main units: one for theme parks and consumer products, another for ESPN, and a Disney Entertainment unit that houses movie and television operations, as well as streaming services Disney+ and Hulu.
McCarthy pushed for the Disney Entertainment unit to be further consolidated to improve profit margins and give Disney a leaner structure more akin to
Netflix, putting her at odds with the unit’s leadership, the person familiar with the matter said.
McCarthy
was unafraid to challenge her bosses if she felt a bad move was being made, people who know her said. A familiar figure to Wall Street, McCarthy delivered financial results for Disney to analysts for decades in a robotic voice that belied her sharp tongue, quick wit and strong opinions.
Kevin Lansberry, who is currently executive vice president and chief financial officer of Disney Parks, Experiences and Products, will step in as interim CFO starting July 1. McCarthy will serve as a strategic adviser through June 2024, the company said.
Iger said McCarthy’s impact on Disney “cannot be overstated.” A spokeswoman declined to comment beyond his statement.
McCarthy said she would “always be rooting for the success of my extended Disney family.”
McCarthy’s departure comes at a critical time for Disney, which like rivals in the entertainment industry is grappling with how best to transition to a streaming-first business model. While Disney’s theme parks are performing well, other core businesses—cable networks such as ESPN and its ABC broadcast network—are facing strong headwinds because of
cable cord-cutting and a weak advertising market.
In response, Disney
has eliminated 7,000 jobs in the past few months. Earlier this month, Disney said it would incur a $1.5 billion impairment charge in its next quarterly report relating to its removal of content from streaming services including Disney+ and Hulu.
McCarthy played a major part
in the ouster of Bob Chapek as CEO of Disney last fall, informing the board that she had lost confidence in his leadership after the company endured a dismal quarter that showed cracks in its foundation, The Wall Street Journal reported.
Chapek was pushed out after just over two years in the role. McCarthy helped recruit Iger to come back to Disney and succeed him.
Chapek wasn’t the only high-ranking executive McCarthy helped push out. She also was instrumental in Chapek’s decision to
abruptly fire Peter Rice from his role as chairman of Disney’s general entertainment unit, which oversaw content strategy for much of the company’s television and streaming businesses.
McCarthy questioned Rice’s management style and some of his financial decisions and
persuaded Chapek to replace him, the Journal reported.
McCarthy also long felt Disney executives and directors should be required to own a significant amount of stock to make them more conscious of shareholder concerns, the person familiar with the matter said.
Disney has made a range of executive changes during Iger’s current tenure. An early reorganization of entertainment operations led to the exit of some top executives, including distribution chief Kareem Daniel and international head Rebecca Campbell, while other top lieutenants such as longtime entertainment executive Dana Walden saw their roles expand.
Meanwhile, Iger is also searching for his successor. He said upon returning to the company last November he would stay through December 2024.
A Boston native, McCarthy joined Disney in 2000 as treasurer after spending years in banking including as chief financial officer of
Imperial Bancorp. She was named chief financial officer in 2015. Known for her nonstop work habits, McCarthy battled cancer twice. She would often leave work for treatments at St. Joseph hospital next door to Disney’s headquarters, and then return later in the day.
“Some doctors and nursing staff thought I was crazy but those who knew me and my history were amused,” McCarthy, 67, previously told The Wall Street Journal.
McCarthy was instrumental in
building up the parks business as well as the streaming platforms Disney+ and ESPN+, said Jonathan Kees, a senior research analyst at a subsidiary of
Daiwa Securities Group Inc., the Japanese investment bank. “Christine is well-respected and has been a big piece of the woodwork,” he said.
Her interim successor will face a steep learning curve. Most of Lansberry’s experience at Disney has been at theme parks, and he hasn’t worked on the entertainment side of the company, which is where its biggest challenges lie.
Helping to navigate legal and political disputes is also part of the job, particularly as Disney continues its fight with Florida Gov.
Ron DeSantis, Kees said.
Disney has sued DeSantis, accusing the governor of waging a “targeted campaign of government retaliation” against the company for criticizing legislation he backed.
Under McCarthy’s successor, the company
could also revive its long-paused dividend. Disney is one of the few large companies that stopped paying dividends in 2020 to preserve cash and hasn’t yet resumed them.
The company has said it would weigh reinstating its dividend once it further reduces its debt, which rose partly because of its 2019 acquisition of entertainment assets from 21st Century Fox for $71.3 billion.
“We’ve talked about resuming a dividend in [the] not too distant future,” McCarthy said at a May 17 conference. “It’s not going to be where we left off, but we’re going to get back in the game.”