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In a Leadership Swap, Current Chief Financial Officer Tom Staggs to
Take Over as Chairman of Walt Disney Parks and Resorts;
Current Chairman, Jay Rasulo, to Assume Role of  Chief Financial Officer

By Jason Garcia, The Orlando Sentinel, Fla.McClatchy-Tribune Regional News

Dec. 29, 2009--For two decades, Tom Staggs has plotted strategy for the Walt Disney Co., helping steer the entertainment giant through multibillion-dollar decisions ranging from the acquisitions of ABC and Pixar to the construction of new cruise ships and theme parks.

Now, however, Disney's longtime chief financial officer has to do something for the company that he has never done before: actually run one of its businesses.

This week, Staggs formally takes over as chairman of Walt Disney Parks and Resorts, assuming day-to-day responsibility for an $11billion vacation empire with resorts on three continents and nearly 100,000 employees -- including 60,000 in Central Florida. He succeeds Jay Rasulo, who is, in turn, taking Staggs' place as CFO in a leadership swap orchestrated by Disney Co.'s president and chief executive officer, Bob Iger.

Although the company has disputed it, the move has been widely interpreted as a sign that Disney is grooming Staggs, 49, to be Iger's eventual successor as CEO. By handing him the keys to its theme parks, Disney is giving Staggs the chance to gain operational experience and plug the one obvious hole in his resume. But before Staggs can ascend to the top job, he must demonstrate that he can handle a division that generates nearly one-third of Disney's overall revenue.

The challenges are substantial. Profits at Disney's parks have slumped this year amid a recession-driven drop in consumer spending and travel. And the unit is in the midst of its biggest construction spree in years, building a pair of new cruise ships and a Hawaiian resort; expanding parks in Orlando, California and Hong Kong; and planning a new park in Shanghai.

At the same time, Staggs will have to adapt to an unfamiliar role. As CFO, he oversees a relatively narrow circle of financial executives and interacts with Wall Street analysts. As parks chairman, he must rally a global work force that includes everyone from industrial engineers to aspiring actors and must learn the minds of the 118million guests who visit Disney's theme parks each year.

Friends and colleagues say they expect Staggs, a trumpet player with a taste for Italian wine, will succeed.

"I am 100percent confident -- 100percent -- that he will be fantastic," said Michael Eisner, the former Disney chief executive who promoted Staggs to CFO in 1998.

Disney declined to make Staggs or Iger available for interviews.

Staggs joined Disney in 1990, after the company hired him away from his job as an investment banker at Morgan Stanley. Disney was looking for someone to handle mergers and acquisitions in its strategic-planning department, and it targeted Staggs, who has an undergraduate business degree from the University of Minnesota and an MBA from Stanford University.

He advanced rapidly through strategic planning, which was charged with identifying growth opportunities and scrutinizing the performance of the company's operating divisions. The department was not always well-loved by other Disney managers, some of whom referred to it as "the goon squad," according to the book DisneyWar, which chronicles Eisner's tenure as CEO.

Former executives say Staggs proved a shrewd negotiator who analyzed potential deals carefully and without being clouded by emotion. "He was not a guy who had an ego need to do deals for their own sake," said Larry Murphy, a former chief strategic officer at Disney and Staggs' former boss.

When the company was debating whether to buy the CBS or ABC television networks in 1995, Staggs, according to DisneyWar, argued for the more-expensive ABC deal in part because Disney could gain ABC's 80percent share in the ESPN cable-TV sports network. Disney ultimately bought ABC for $19billion, and ESPN is now one of its most valuable properties.

Former parks-and-resorts executives who worked with Staggs praise him as a financial manager who had the ability to see beyond an idea's bottom-line numbers. Paul Pressler, who was parks chairman before Rasulo, said Staggs supported expanding Disney Cruise Line because he recognized its effect beyond the parks division.

In 1998, Eisner elevated the then-37-year-old Staggs to CFO. The former Disney chief said in a recent interview that Staggs was an invaluable adviser and a "steady force" for the company, particularly through the uncertainty that followed the Sept.11, 2001, terrorist attacks in New York and Washington.

"Every time I had to speak or I had to deal with the finances of the company or I had to appear before an analyst group, my last call before going on stage was always to Tom," Eisner said. The former Disney CEO had such warm feelings for Staggs that he based the family dog in a cartoon show he created for Nickelodeon, Glenn Martin DDS, on Staggs' own dog.

Friends say Staggs' even temperament helped during what may have been the most trying period of his career: the corporate upheaval that erupted in 2003, when the late Roy Disney, nephew of the Walt Disney Co.'s legendary namesake, clashed with Eisner and led a shareholder revolt seeking Eisner's ouster. The prolonged battle ended in 2005, when Eisner stepped down and was replaced by Iger.

It often fell to Staggs to deliver Disney's response to the critical presentations from Roy Disney and others about the company's financial performance, and to defend controversial decisions such as potentially ending the company's relationship with Pixar Animation Studios amid a falling-out between Eisner and Apple Chief Executive Steve Jobs.

"It was incredibly challenging for him," said Richard Nanula, who was Disney CFO before Staggs and who remains close friends with him. But Nanula said Staggs hid the stress well. "Tom never goes too high and never goes too low."

One of the ways Staggs deals with stress: working out, which he does almost daily. "The last time Tom put a carbohydrate in his body was the prior millennium," Nanula said.

Staggs and his wife have three sons, ages 4 through 11. He is said to spend much of his free time with them, including coaching youth basketball. He's also something of an amateur gastronome; Staggs' Beverly Hills home, which is currently being rebuilt, will have multiple varieties of stoves.

People who have talked to him say Staggs was surprised when Iger informed him earlier this year that he wanted him to take over parks and resorts -- as were many analysts who follow the company. But Disney has said not to expect overarching strategies to change because of the executive shuffle.

"We all have pretty much bought into the same set of principles as we manage this company," Iger said at an investor conference in New York this month.

Under Rasulo, Walt Disney Parks and Resorts has emphasized growth in international markets and into businesses beyond theme parks, including cruises, time shares and group tours. Rasulo also centralized leadership of Disney's parks, bringing management of Walt Disney World and Disneyland under a single team rather than running them as independent operations.

Staggs already has some familiarity with the business. Because the parks unit sucks up so much of Disney's overall capital spending -- building a theme park, after all, is much more expensive than making a movie -- Staggs has over the years had to be involved with major decisions at the unit.

"I would characterize Tom as always an enthusiastic supporter of the parks-and-resorts strategy," said Rasulo, who said he has worked closely with Staggs over the years. Rasulo added: "I would think, as you looked back historically, that has not always been the case with" previous financial executives at Disney.

Still, Staggs faces numerous challenges.

In the immediate future, he must engineer a turnaround at Disney's U.S. theme parks by weaning consumers off discounts without sending attendance into a tailspin. Longer term, he will have to successfully incorporate a cruise line that will double in capacity by 2012 and a Hawaiian hotel and time share that will be Disney's first major standalone resort when it opens in 2011.

Staggs also will oversee the development of a new theme park in Shanghai -- a vital plank in Disney's overall strategy to build a customer base in the world's most populous country -- while maintaining a smooth relationship with the Chinese government and avoiding the early stumbles that plagued Disney parks in Paris and Hong Kong.

Disney theme-park executives are under constant pressure to drive more earnings growth, something that is difficult for a business that is already dominant in its industry and that requires spending hundreds of millions of dollars to make meaningful expansions. And what may be the most tempting response -- raising prices and cutting expenses -- can have disastrous long-term consequences if guests rebel.

"There's an intuitive side that's important for running the [theme-park] business. You have to be able to step away from the pro forma and the numbers at some point," said Matt Ouimet, a former president of Disneyland in Anaheim, Calif. "I think he has the ability to do it."

Staggs will likely lean on the parks' existing management, at least early on, particularly president of worldwide operations Al Weiss. Weiss, a former Disney World president, has spent his entire 37-year career with Disney's parks division and has long been seen as a potential parks chairman himself.

"The theme-park resort experience, I think, is distinctly different than any other division in the company," said Judson Green, who has been both CFO and parks chairman for Disney. "You must genuinely like other people and empathize with other people. And he's clearly capable of doing that."

In a written statement, Staggs pronounced himself "excited and honored" to take on the new role.

"Having worked with the parks for years and experienced the product as a dad, I know and love this business," Staggs said. "I also know there is a great deal more I can learn, and I am fortunate to have such a strong team in place to help me in that process."

Jason Garcia can be reached at 407-420-5414



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