From Chapek, back to Iger — Disney’s leadership transition
Background
Last month, the board of the Walt Disney Co. announced that it was replacing current CEO Bob Chapek with Bob Iger, the former leader of Disney who retired in 2019. This news shocked everyone in the entertainment industry, especially after the Disney board, just a few months prior, had unanimously extended Chapek’s contract for another three years. It cited Chapek’s leadership during COVID as one of the key factors to his extension. Iger also repeatedly said that he wouldn’t come back to the company as CEO.
Economic downturn for Disney
Although this leadership change was a complete surprise, it does make sense in retrospect. Chapek had several rocky moments in his tenure, especially now as Disney stock is down 40% from January 2022 and layoffs are pending. In Disney’s fourth quarter earnings report, the company announced that it didn’t meet profit or revenue and reported a $1.5 billion loss in it’s direct-to-consumer segment. Revenue per domestic Disney+ subscriber dropped 10% after Disney gambled on people purchasing pay-per-view movies such as “Jungle Cruise” and “Black Widow.”
Image is also very important for a family-friendly branded company like Disney. Chapek had several instances where he had to do damage control, which worried investors. Chapek wasn’t viewed in a good light for his lack of action from Florida’s “Don’t Say Gay” bill. Instead of speaking out against it, like Iger, Chapek privately expressed worry about how discussing it would affect Disney’s brand image.
Analysts also questioned if Chapek’s business methods for acquiring customers for Disney’s direct-to-consumer products would be sustainable — the former CEO reiterated that these products will be profitable by fiscal 2024.
Chapek and Iger’s differences
Although Chapek was Iger’s hand-picked successor, they often didn’t see eye-to-eye on key business decisions. In his tenure, Chapek created a new division called the Disney Media and Entertainment (DMED), which entirely restructured the company and removed profit-and-loss power from Disney’s division leaders. Instead, all that power was consolidated under Chapek’s protege, Kareem Daniel. Iger also believed that the price of Disney+ should be lower so consumers can have a higher price-value perception of the streaming service. Instead, Chapek raised the price to $10.99 a month without ads, making it one of the most expensive no-add streaming services.
What Iger means to Disney
After leading Disney from 2005–2020, Iger was considered one of the greatest CEOs in company history. He was in charge of the acquisition of Pixar from Steve Jobs, Marvel, Lucasfilm, and bought most of 21st Century Fox for $71 billion. Iger also saw streaming trends rising and created Disney+ in 2019. Since then, the streaming service has been an integral part of the company’s stability throughout COVID. Iger is also widely known to have much more emotional intelligence and rapport with his colleagues, investors, and customers than Chapek, who has a more difficult time. Iger’s reinstatement boosted Disney share prices 6% on Monday, and sentiment should only rise as investors hope that Iger’s reputation and relationship with the company will boost earnings.
