Bob Iger, who served as Disney’s chief executive for 15 years, stunned Hollywood by returning to replace his successor Bob Chapek after a difficult tenure that lasted just 33 months.
Iger, who chose Chapek as his successor only to see the relationship quickly deteriorate, will serve another two years in the post that made him one of the world’s most famous business leaders.
His abrupt return reflects what the board saw as an irretrievable loss of faith in the leadership of Chapek, who steered Disney through the pandemic but struggled to win over investors and the creative community in Hollywood. Disney shares jumped 8% in premarket trading in New York on Monday.
In a statement, Disney said Iger has “a mandate from the board of directors to set the strategic direction for renewed growth.” He will also work closely with the board to find a successor.
Iger, who delayed retirement four times before finally leaving the company, said in a memo to staff on Sunday that he felt “a bit of amazement” at the prospect of returning to the company as a director. general.
Prior to today, the stock had fallen more than 40% this year amid growing investor concerns over the high costs of its streaming business. Disney has spent billions – its content budget this year alone was $30 billion – as it competes with Netflix and other streamers for subscribers.
Chapek also found himself at the center of a culture war this spring over a Florida law regulating what teachers can say about LGBT+ issues. The messy fight with Florida Governor Ron DeSantis made negative headlines for weeks and upset LGBT+ staffers and their allies.
Within the company, a reshuffle that concentrated significant power with Chapek’s allies had also been a long-standing source of discontent among senior Disney executives, who saw the new structures as cumbersome 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 reversal on the part of board chair Susan Arnold.
“The Board of Directors has concluded that as Disney enters an increasingly complex period of industry transformation, Bob Iger is uniquely positioned to lead the company through this pivotal time,” Arnold said in a statement. .
Rich Greenfield, an analyst at LightShed Partners, said the move was “odd in light of the recent board renewal” of Chapek’s contract.
Iger will take over the company as it seeks to stem billions of dollars in losses in its streaming business — in part a legacy of his own decision to plunge the company headfirst into a streaming war with Netflix. Next month, Disney will launch an ad-based version of the Disney Plus service as the company targets streaming profitability by 2024.
This month, Disney shocked investors by announcing that its streaming service’s operating losses had soared from $800 million to $1.5 billion on higher content spend and marketing spend. in the third trimester. As a result, operating profit for Disney’s media and entertainment group plunged 91% to $83 million.
Greenfield says Iger will also have to make tough decisions about whether to part ways with sports television network ESPN and buy out Comcast’s stake in streaming service Hulu.
Iger has long been an investor favorite. During his tenure, he transformed Disney through a series of acquisitions – including Marvel, Pixar, Lucasfilm and 20th Century Fox – that left him with a collection of the entertainment industry’s most valuable franchises.
Under Chapek, Disney’s streaming services – which include Disney Plus, Hulu and ESPN Plus – have grown by leaps and bounds, reaching a total of 235.7 million subscribers; more than the 227 million industry pioneer Netflix expects to have by the end of this year. He also oversaw the relaunch of Disney’s theme park business, which he once ran, as Covid-19 restrictions eased.
Chapek took the reins before the pandemic hit in February 2020 and found himself shutting down theme parks and other company operations a few weeks later. Soon he and Iger – who had remained chairman – began to clash, with Iger suggesting he would play a bigger role in running the company through the crisis. Iger’s term as president ended in January.
A reserved Midwesterner with a background in marketing and sales, Chapek was never accepted by Hollywood’s elite — unlike Iger, who enjoyed the creative side of business and the glitz of the film industry. In an interview with the Financial Times last year, Chapek pushed back on his bean counter image, saying, “I’ve seen the creativity in this business through every lens possible.”
Still, Chapek made some decisions that upset Disney creatives, especially when it came to streaming. He had a very public fight with Scarlett Johansson, who sued Disney for potential loss of revenue over her decision to publish. Black Widow on its streaming service at the same time the film was in theaters.
And while Johansson’s fight made headlines, behind-the-scenes studio chiefs bristled at their loss of decision-making power under Chapek’s broadcast-first structure. Much of this authority rested with Kareem Daniel, a trusted ally of Chapek.
Greenfield said he expected Iger to overhaul Chapek’s streaming structure. “It’s clear that studio executives have become increasingly furious” about their loss of power, he said.