Bob Iger, who served as Disney’s chief executive for 15 years, surprised Hollywood by returning to replace his successor Bob Chapek after a rocky tenure that lasted just 33 months.
Iger, who chose Chapek as his successor only to see the relationship sour quickly, will serve another two years in the job that made him one of the world’s most celebrated business leaders.
His abrupt return reflects what the board saw as an irretrievable loss of confidence in the leadership of Chapek, who has guided Disney through the pandemic but struggled to win over investors and the Hollywood creative community. Disney shares rose 8 percent in premarket trading in New York on Monday.
In a sentence, Disney He said Iger has “a mandate from the Board to set the strategic direction for renewed growth.” He, too, will work closely with the board to find a successor.
igerwho delayed his retirement four times before finally leaving the company, said in a memo to staff Sunday that he was “a little astounded” to return to the company as chief executive.
Before today, the stock had fallen more than 40 percent this year amid growing investor concern over the high costs of your streaming business. Disney has spent billions (its content budget this year alone was $30 billion) while competing with Netflix and other streamers for subscribers.
Bob Chapek speaks at Disney’s D23 Expo in California in September © Mario Anzuoni/Reuters
Chapek also found himself at the center of a culture war this spring over a Florida law regulating what teachers can say on LGBT+ issues. The messy fight with Florida Gov. Ron DeSantis generated negative headlines for weeks, upsetting LGBT+ staff members and their allies.
Within the company, a shakeup that concentrated significant power with Chapek’s allies had also been a long-standing source of discontent among the highest ranks of Disney management, who saw the new structures as unwieldy and unnecessary.
Despite the difficulties, the board renewed Chapek’s contract this summer. The decision to bring Iger back to the company marks a surprising change on the part of board chair Susan Arnold.
“The Board has concluded that as Disney embarks on an increasingly complex period of industry transformation, Bob Iger is uniquely positioned to lead the Company through this pivotal period,” Arnold said in a statement. release.
Rich Greenfield, an analyst at LightShed Partners, said the move was “odd in light of the recent board revamp” of Chapek’s contract.
Iger will take over the company in a bid to stem multibillion-dollar losses from his streaming business, partly a legacy of his own decision to plunge the front company into a streaming war with Netflix. Next month, Disney will launch an ad-supported version of the Disney Plus service as the company targets streaming profitability by 2024.
This month, Disney investors surprised with news that its streaming service’s operating losses had ballooned by $800 million to $1.5 billion thanks to higher spending on content and marketing expenses in the third quarter. As a result, operating income for Disney’s media and entertainment group plunged 91 percent to $83 million.
Greenfield says Iger will also have to make tough decisions about whether to spin off the sports television network ESPN and buy Comcast’s stake in the Hulu streaming service.
Iger has long been an investor darling. During his tenure, he transformed Disney through a series of acquisitions, including Marvel, Pixar, Lucasfilm and 20th Century Fox, leaving him with a collection of the most valuable franchises in the entertainment business.
Under Chapek, Disney’s streaming services, including Disney Plus, Hulu, and ESPN Plus, have experienced breakneck growth, reaching a total of 235.7 million subscribers; more than the 227 million that the industry pioneer Netflix expects to have by the end of this year. He also oversaw the revival of Disney’s theme park business, which he once ran, as Covid-19 restrictions were eased.
Chapek took the reins before the start of the pandemic in February 2020 and found himself closing the company’s theme parks and other operations just weeks later. Soon he and Iger, who had remained president, began to clash, with Iger suggesting that he take a larger role in running the company during the crisis. Iger’s term as president ended in January.
A secretive Midwesterner with a background in marketing and sales, Chapek was never accepted by Hollywood’s elite, unlike Iger, who enjoyed the creative side of the business and the glitz of the film industry. in a interview with the Financial Times last yearChapek rejected his bean-counter image, saying, “I’ve seen the creativity in this company through every possible lens.”
Still, Chapek made decisions that upset Disney creatives, particularly in regards to streaming. he he had a Very public fight with Scarlett Johanssonwho sued Disney for the possible loss of revenue due to its decision to release black widow on his streaming service at the same time the movie was in theaters.
And while the Johansson fight generated headlines, behind the scenes studio bosses raged at his loss of decision-making authority under Chapek’s broadcast-first structure. Much of that authority rested with Kareem Daniel, a trusted ally of Chapek’s.
Greenfield said he expected Iger to review Chapek’s broadcast structure. “It’s clear that studio executives have become increasingly angry” over his loss of power, he said.