Bob Iger returns to Disney
After Chapek's dismissal as CEO: Long-time CEO back again
After a turbulent 33-month tenure, Bob Chapek will be succeeded by Bob Iger, who has been at the helm of Disney as CEO for 15 years.
Iger will hold the post, which has made him one of the world's most renowned corporate leaders, for two more years. He had personally chosen Chapek as his successor, but the two soon fell out.
Iger has "a mandate from the board to set the strategic direction for continued growth," according to a Disney statement. He will work closely with the board to find a successor.
In a memo to his colleagues Sunday, Iger said he was "a little surprised" to return to the company as CEO after postponing his resignation four times before leaving.
Disney's stock price has fallen more than 40% this year as investor concerns have grown about the high cost of its streaming business. To compete with Netflix and other streaming providers for customers, Disney has invested billions of dollars; this year alone, its content budget was $30 billion.
This spring, Chapek also became embroiled in a cultural clash over a Florida law that restricts what educators can say about LGBT+ issues. The messy standoff with Florida Governor Ron DeSantis angered LGBT+ staff and their allies and generated weeks of unflattering headlines.
The board decided to renew Chapek's contract this summer despite the challenges. A surprising about-face by Susan Arnold, the board chair, is evident in her decision to reinstate Iger to the organization.
Arnold said in a statement, "The board agrees that Bob Iger is uniquely positioned to lead the company through this important era as Disney enters an increasingly challenging period of change in the industry."
A LightShed Partners analyst named Rich Greenfield called the move "odd given the board's recent extension of Chapek's contract."
Iger will take over the company as it tries to stem billions in losses in its streaming business, due in part to his own decision to drag the company into a streaming conflict with Netflix. In an effort to make its streaming business profitable by 2024, Disney will offer an ad-supported version of its Disney Plus service starting next month.
Disney stunned investors this month when it announced that operating losses at its streaming service rose $800 million to $1.5 billion in the three months ended Oct. 1 due to rising investments in content and marketing costs. As a result, operating income for Disney's media and entertainment division fell 91% to $83 million in the quarter.
Greenfield said Iger will also have to decide whether to spin off sports television network ESPN and buy out Comcast's stake in streaming service Hulu.
Investors have favored Iger in the past. Through a series of acquisitions, including Marvel, Pixar, Lucasfilm and 20th Century Fox, he has transformed Disney under his leadership, giving the company access to some of the entertainment industry's most valuable franchises.
Disney's streaming services, which include Disney Plus, Hulu and ESPN Plus, have grown explosively under Chapek, reaching a combined 235.7 million subscribers, surpassing the 227 million subscribers that market leader Netflix is expected to have by the end of this year. When the Covid 19 constraints were loosened, he also oversaw the resurgence of Disney's theme park division, which he had previously led.
A few weeks after taking the helm in early February 2020, Chapek was forced to shut down the company's theme parks and other divisions. He and Iger, who remained chairman, soon became embroiled in a dispute after Iger said he would play a bigger role in running the company during the crisis. Iger's chairmanship came to an end in January.
Unlike Iger, who loved the creative side of the business and the glitz of the film industry, Chapek was a low-key Midwestern man with a background in marketing and sales. Chapek was never accepted by the Hollywood elite. In an interview with the Financial Times last year, Chapek dismissed his reputation as a bean counter, saying, "I've looked at creativity in this business from all kinds of angles."
Still, Chapek made decisions that angered Disney's creative staff, particularly in the area of streaming. He got into a public spat with Scarlett Johansson, who sued Disney for possible lost profits because the company released Black Widow on its streaming service at the same time as the movie.
While the dispute with Johansson made headlines, studio bosses fretted that they were losing control of their decisions under Chapek's streaming-first rule. A trusted ally of Chapek's named Kareem Daniel held much of that power.
Greenfield stated that he expected Iger to change Chapek's streaming system. It's obvious that studio executives are getting angrier about their waning influence.