Meet the new Bob, same as the old Bob. Walt Disney Co. CEO Bob Chapek is leaving and his predecessor Bob Iger is returning, the company announced Sunday.
The move surprised even high-ranking Disney executives, coming less than five months after the board had voted to give Chapek a three-year contract extension. In a statement then, board chair Susan Arnold said “Bob is the right leader at the right time for The Walt Disney Company, and the board has full confidence in him and his leadership team.”
Sunday, the board put its full confidence in the previous Bob and gave him a two-year term to reset the company’s growth. Arnold said in the company’s announcement that “as Disney embarks on an increasingly complex period of industry transformation, Bob Iger is uniquely situated to lead the company through this pivotal period.”
Iger, for his part, said in the company’s release: “I am deeply honored to be asked to again lead this remarkable team, with a clear mission focused on creative excellence to inspire generations through unrivaled, bold storytelling.”
Iger had stepped down in February of 2020 after a 15-year term as CEO, saying then that “I have the utmost confidence in Bob and look forward to working closely with him over the next 22 months as he assumes this new role and delves deeper into Disney’s multifaceted global businesses and operations, while I continue to focus on the company’s creative endeavors.”
Chapek’s first challenge was the pandemic that had just begun to erupt and which promptly crushed the company’s theme-park business. He seized on streaming video as the company’s pandemic lifeboat, in particular the Disney+ SVOD service that had launched in the U.S. in November of 2019.
But soaring subscriber totals that hit 102.9 million core Disney+ subs worldwide — the company reported in its fiscal-Q4 earnings — came at a growing financial cost. While Disney as a whole made $162 million in profit for the quarter, barely up from the year-ago quarter’s $159 million profit, it ate a $1.47 billion operating loss on direct-to-consumer services.
Chapek then announced a series of cost-cutting moves that the board apparently found insufficient.
Meanwhile, Chapek also struggled to deal with political pressures, famously flip-flopping from silence to opposition after Florida passed a law mocked as the “Don’t Say Gay” bill that discouraged primary-school classroom discussions of gender identity and sexual orientation.
“Disney’s sudden change at the helm seems to be as much a political move as an operational move, as Iger is a progressive firebrand while Chapek aimed to take a more politically neutral stance, which was highlighted by the brouhaha in Florida,” commented Tammy Parker, principal analyst for global telecom services at GlobalData, in an email. “That, compared with Chapek’s internal cost cutting and price increases at theme parks, did not sit well with many employees and Disney customers, though I think from a stance of financial reason Chapek’s operational moves made a lot of sense.”
Parker added, however, that Iger might not be able to turn Disney around in his two-year term: “It’s unclear whether he can put the House of Mouse back in order that quickly, especially given the current period of macroeconomic instability.”
In a note posted Monday morning, the research firm MoffettNathanson gave a thumbs-up to the board’s CEO switch, saying “Chapek had become wedded to a streaming strategy that did not make sense given today’s reality.”
MoffettNathanson, a subsidiary of SVB Securities, called out Chapek for setting “unrealistically high subscriber targets without a grasp for the underlying return on investment” and focusing only on “general entertainment fare” instead of Disney-specific content.
MoffettNathanson’s forecast for Iger’s next two years: “Putting it all together, we expect the new CEO to re-examine and re-direct Disney’s current streaming strategy, honestly deal with the challenges confronting its linear networks by cutting back on non-essential sports, change the centralized approach to content procurement established under former CEO Chapek and manage the company forward with discipline, sound strategy and flawless execution.”