Company Town: Disney’s Mega-Merger : MANAGEMENT : It’s a Marriage Attended by Many Talented Executives

Despite their extraordinary achievements, both Walt Disney Co. and Capital Cities/ABC Inc. have been plagued by concerns about management succession.

Who, critics wondered, was being groomed to replace the legendary Thomas S. Murphy as head of Cap Cities?

What executive could step into the shoes of Disney’s intense chairman, Michael D. Eisner, given the vacuum created by the tragic death of Disney President Frank Wells and the departure of studio chief Jeffrey Katzenberg? Wasn’t this all rather urgent in light of Eisner’s recent brush with heart disease?

Such questions appeared to be allayed by the companies’ $19-billion merger agreement, announced Monday. The combination, entertainment industry recruiters said, will create an enviable pipeline of talent, even if no clear-cut heir to Eisner has immediately emerged. And because there is little overlap between the companies’ operations, most key executives are expected to remain.

As for Eisner’s personal health, he told CNN Monday that he feels “less stress” managing the combined companies than he would Disney alone.

“These are two companies known for being well managed,” said Stephen A. Unger, managing director of the worldwide entertainment and communications practice at Spencer Stuart, a big executive search firm. “Here you have an abundance of talented executives.”

Under the proposed deal, Eisner, 53, would reign over the merged company, although he emphasized that Cap Cities would maintain its independence. Murphy, 70, would retire for the second time, leaving the running of the publishing and television conglomerate to Robert A. Iger, who has served as Cap Cities’ president and chief operating officer since last September.

While it appears that Iger will still get the chance to prove that he is CEO material at the combined company, doubts about his ability to assume Murphy’s post might have helped spur the deal in the first place. In particular, industry observers have noted that Cap Cities’ chief investor, Warren Buffett, was reluctant to wholeheartedly endorse Iger.

Disney’s image has been bruised of late by the rancorous departure of Katzenberg, the loss of television chief Richard Frank and other defections, but recruiters point to a number of strong managers in the ranks. They include Richard Nanula, former chief financial officer who now heads the Disney Stores division; Sanford M. Litvack, corporate senior vice president; Dennis Hightower, president of Walt Disney Television; Judson C. Green, who heads the theme parks, and Stephen F. Bollenbach, recently appointed chief financial officer.

On the Cap Cities side are Iger, who is in his early 40s; Ted Harbert, who runs network programming; Steve Bornstein, in charge of ESPN, the sports cable network, and Nickolas Davatzes, who heads the A & E Television Network.

“I don’t think we’ll see [the Cap Cities] team replaced,” said Michael Wolf, head of the media and entertainment practice at Booz-Allen & Hamilton, a management consulting firm. Trying to take on the management of that big company on top of all its own operations would be “the biggest mistake Disney could make,” he added.

Entertainment industry recruiters contacted Monday applauded the proposed merger, calling it a smart, sensible deal between two well-run companies with fairly compatible cultures and philosophies. But they acknowledged that some executives at Cap Cities might be sweating things a bit.

“If you’re good, you’re very excited,” said William D. Simon, managing director of the entertainment and media division of Korn/Ferry International, an executive search firm. “If you’re not good, you’re nervous, but you were probably nervous yesterday too.”