Would Logan Roy’s death in Succession tank Waystar’s stock?
A shocking death at the heart of a media dynasty in Succession prompts speculation about the company’s share price. Warning: this article contains spoilers.
After the death of Logan Roy, the Machiavellian mogul at the centre of HBO’s Succession, his power-hungry children are in shock. Then they remember the stockmarket. “Can we, uh, keep it up there for an extra beat?” Shiv asks of the private jet bringing her father’s body back to land, hoping to buy some time before making a company announcement.
The Roys fear the loss of their father, the founder of a publicly traded media conglomerate, could hurt the company’s share price.
Indeed, the price of Waystar Royco drops precipitously after Logan’s heirs share the news of his death at a press conference.
But corporate precedents and real-world analysts suggest a chief executive’s death can sometimes have the opposite effect: triggering a frenzy of trading that drives the share price upward in the days that follow.
“For family-controlled public companies like the one featured in Succession, most people think the stock will skyrocket once the family owner is rid of and value can be unlocked,” says Spencer Burke, a lawyer and adjunct lecturer in family business at the Washington University in St Louis business school.
Burke will parse the impact of Logan’s death in a weekly Zoom meeting that he and more than a dozen other lawyers from different disciplines call the Waystar Royco School of Law, a lark for lawyerly superfans of Succession.
Stock prices rise nearly half the time when a chief executive dies unexpectedly, according to a study of 240 US public companies from 1950 to 2009 by the University of Notre Dame and the University of Georgia. Not surprisingly, share prices surge when a corporate leader seen as ineffective dies, and drop when a chief executive seen as successful dies, according to the 2016 research, a result co-author Craig Crossland calls “somewhat macabre”.
The day after Steve Jobs died in 2011, after a public battle with pancreatic cancer, Apple stock showed some volatility, with slight gains and losses. But analysts expressed confidence that the company would continue to drive growth under its new chief executive, Tim Cook, who took over from Jobs a few months earlier. It did.
At Berkshire Hathaway’s 2017 annual meeting in Omaha, Warren Buffett said, “If I died tonight, I think the stock would go up tomorrow and there’d be speculation about breakups and all that sort of thing.”
The Waystar Royco sell-off is not altogether unrealistic.
“The initial reaction is very negative if the next in line family member is viewed as unprepared – as would be the case with any of the Roy kids,” Burke says. “ ‘Look out below’ would be the situation.”
As the Roy children struggle to accept the fact of Logan’s death, the stock price is in some ways more real than their father’s corpse, which most of the kids decide not to see.
Roman opens his phone to a stock chart showing a steep drop in Waystar Royco share prices. “That,” he says, “is Dad.”
In the world of the show, where despite more than three seasons no firm succession plan had yet been worked out, Logan’s death creates not business headaches but turn-out-the-lights, get-into-bed-level migraines.
“This is going to throw everything into complete disarray,” says Diane Kemker, a visiting law professor at DePaul University college of law.
Logan’s three children from his second marriage did not manage to take over Waystar Royco when their father was alive – Logan’s child from his first marriage, Connor, is a non-starter – and now their fate rests in the hands of the board that Logan once controlled.
Kendall’s bid to run the company failed in season one, and Roman and Shiv have no real business experience, making interim chief executive Gerri Kellman the only person whose appointment to the top job seemingly wouldn’t roil markets, Kemker says. Meanwhile, only a handful of people atop the fictional company know that Logan was planning to fire Gerri. The upheaval could break up Waystar Royco’s deal to be bought by streaming giant GoJo, whose negotiations have spanned multiple episodes, and bring corporate raiders to what was once Logan’s domain, Kemker says. And other questions loom: Did GoJo’s lawyers include a provision for the death of Logan or a plunge in stock in their deal terms? Who is left on the Waystar Royco board?
“All this uncertainty would make shareholders say, ‘Would I still want to own stock in Waystar Royco when I have no idea who’s at the helm?’” she adds.
It’s not just fictional companies that lack a formal succession line-up in the event of a CEO’s sudden death. “What’s scary is that a lot of them don’t have a plan for it,” says Kimberly Eddleston, a professor of entrepreneurship who uses Succession in her Northeastern University course on family business.
“They haven’t groomed anybody, and the whole advantage of a family business is the ability to get a successor ready. You’d think it would be rare, but it’s not.”
The Wall Street Journal
Succession is screening on Foxtel and Binge.