Disney shocker: Bob Iger returns as CEO, Bob Chapek ousted

In a stunning reversal, the Walt Disney Co. DIS,
announced Sunday night that Chief Executive Bob Chapek would be stepping down and being replaced by his predecessor, Robert Iger.

“We thank Bob Chapek for his service to Disney throughout his long career, including navigating the company through the unprecedented challenges of the pandemic,” said CEO Susan Arnold in a statement. “The board has concluded that as Disney embarks on an increasingly complex period of industry transformation, Bob Iger is in a unique position to lead the company through this pivotal phase.”

Iger served as Disney’s CEO from 2005 to 2020 and as Executive Chairman and Chairman of the Board until 2021. During his 15-year tenure as CEO, Disney rebuilt itself as a media power with acquisitions of Pixar, Marvel and Lucasfilm, and its “Star Wars” properties and 21st Century Fox.

“Mr. Iger has the deep respect of Disney’s senior leadership team, with whom he worked closely with most until his retirement as Executive Chairman 11 months ago, and is greatly admired by Disney employees worldwide – all of which will create a seamless Facilitate leadership transitions,” Arnold said in the statement.

Disney made it clear that Iger’s return will be temporary — two years, with a board mandate to set a new strategic direction and develop a successor.

“Wow,” Wedbush analyst said Dan Ives in a tweet Sunday night. “Iger had a golden touch at Disney,” he said, adding that his return is a “huge strategic move with implications for the media and streaming industry going forward.”

Iger announced he would be stepping down as CEO in February 2020, at which point Disney said he would continue to “lead the company’s creative endeavors.”

Earlier this month, Disney stock endured its worst day since 2001 after the company’s fourth-quarter earnings report forecast significantly weaker-than-expected single-digit growth in the coming fiscal year, in what one analyst described as a “massive earnings downgrade” year-wide below analyst consensus estimate of 25% growth.

This is despite Disney’s best year for revenue growth in more than 25 years. Disney’s theme parks grew steadily in the third year of the COVID-19 pandemic, but its largest business segment, media and entertainment distribution, suffered a sharp drop in revenue. And while the Disney+ streaming service is growing rapidly, it’s still a money loser. The service will add a cheaper, ad-supported tier in December to boost revenue.

Earlier this month, The Wall Street Journal reported on Disney’s company-wide cost-cutting plans, including a near-total ban on business travel, a hiring freeze and likely layoffs. “We’re going to have to make tough and uncomfortable decisions,” Chapek reportedly said in an internal memo.

Earlier this year, Chapek widely criticized Disney’s response to Florida’s new “Don’t Say Gay” law. After initially saying Disney would stay out of the political struggle, he eventually voiced his concerns to Florida Gov. Ron DeSantis and pledged millions for LGBTQ+ causes and paused the company’s political donations in Florida. That drew fierce backlash from conservatives, while many Disney employees went on strike to protest what they saw as Chapek’s slow and lackluster response. Chapek apologized to staff, saying, “I let you down.”

Last June, Disney extended Chapek’s contract for another three years, with Arnold calling Chapek “the right leader at the right time” and saying he has the board’s “full confidence.”

Disney shares are down about 10% since June and are down 38% year-to-date, compared to the 5% drop in the Dow Jones Industrial Average DJIA this year.
of which it is a part.

While Iger has long been seen as a champion of creatives, Chapek angered many at Disney with his decisions, including one to stream new films on Disney+ the same day they hit theaters – prompting a lawsuit from actress Scarlett Johansson in 2021 who claimed the decision “cheated” her out of millions of dollars in revenue. (The lawsuit was later settled.)

In March, CNBC reported that Iger and Chapek – his hand-picked successor – had had a falling out and barely spoke, and that there was significant internal tension caused by Chapek making key decisions about Disney’s future without Iger’s input. “It was extremely awkward,” a source told CNBC.

earlier this year a podcast with Kara SwisherIger dismissed “ridiculous” rumors that he might return to run Disney, saying, “You can’t go back home.”

But in a statement Sunday night, Iger said he was “thrilled” to return.

“I am extremely optimistic about the future of this great company and I am delighted to be asked by the board to return as CEO,” said Iger. “Disney and its incomparable brands and franchises hold a special place in the hearts of so many people around the world – especially in the hearts of our employees, whose dedication to this company and its mission is an inspiration. I am deeply honored to be asked to once again lead this remarkable team with a clear mission focused on creative excellence to inspire generations through unrivaled, bold storytelling.”

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