So… was it the beard? By now you’ve seen the legitimately shocking news that Bob Chapek, the embattled and recently hirsute Disney C.E.O., has been replaced by Bob Iger, the 71-year-old former weatherman and mostly beloved Disney C.E.O. A Sunday night dagger of a press release thanked Chapek for his service and promised that Iger would lead for two years to “set the strategic direction for renewed growth.” That’s the C-suite version of death by firing squad. Truly amazing stuff.
First, a number of readers have asked if I knew what was brewing when I wrote on Thursday about Iger’s persistent trash-talking of Chapek in private, and how the company’s recent stock slide had played into Iger’s criticisms. Alas, I did not (and in fact I’ve been chatting with a few Disney executives this weekend on another topic, and they had no idea what was up; the top people were told just before the press release). But I knew something was off. Think about it: Iger’s sentiments kept coming back to me via friends and associates, months after one would think that even he would move on with his new endeavors, so he clearly saw a lane.
Plus, as I revealed Thursday, he was taking meetings with investor groups, something more often reserved for executives whose companies, you know, have investors. I didn’t mention it on Thursday, but Iger was also at a conference in Miami this month chatting up shareholders and others. If he didn’t already know what was afoot—and one Disney insider told me tonight that the whole plan likely came together in the past 10 days, after the disastrous earnings call on Nov. 8, even though the board had been antsy since investor Dan Loeb started questioning the strategy this summer—he was certainly acting like someone who was coming back to something.
On the Chapek side, as much negative press as the recent poor earnings generated, I kept hearing that it was his handling of the call and its aftermath that was really questioned internally and by the board. Not just the tone-deaf stuff like talking up the Oogie Boogie Bash at Disneyland as analysts were staring mouths agape at the $1.5 billion loss in streaming. It was the management and judgment stuff. Like, if the cost cuts and layoffs that Chapek announced last Friday were warranted by the worsening fundamentals of the business, why didn’t he mention them until after the earnings call led to a 13 percent stock drop? It seemed so knee-jerk and defensive. And I’m told that Disney’s H.R. group didn’t know that Chapek was going to mention layoffs in that memo to division leaders announcing his cost-cutting “task force,” a move that predictably sounded alarm bells internally and created chaos for them.
It’s early, and Iger already told his new/old staff in an email tonight that more announcements are coming this week, but here are my initial reactions, including the input from people in and around Disney that I’ve gathered tonight (I’ve also printed some messages in the “Feedback” section below):
1. It was everything and nothing. Clearly Susan Arnold and the Disney board hit the panic button here. And yes, it does feel a little like Grey’s Anatomy bringing back Patrick Dempsey for those weird dream sequences when ratings really started to slide. But I don’t think it was one specific thing, as some are speculating.
From the early political misjudgments in Florida to an unpopular and arguably destructive reorganization, from the lack of engagement with the creative community to last week’s earnings debacle, Chapek’s tenure has been marked by a series of flare ups and leadership issues. It was always going to be tough following Iger, especially when the pandemic upended the company’s businesses, but remember that Chapek was Iger’s choice, and he was unable to nurture a relationship with his predecessor that might have smoothed the transition.
Once Iger turned on Chapek, it was arguably over. That’s not totally Chapek’s fault—from the decision to stay on for a year to his persistent griping in “retirement,” Iger seemed unable to let go—but it speaks to Chapek’s shortcomings as a leader. Jim Cramer, the CNBC carnival barker, went a little overboard on Chapek last week, but he was in many ways reflecting Hollywood’s frustrations with Disney. It felt like misstep after misstep for the gold standard media company, which had oddly re-upped Chapek in June (though for two years, not three). Still, he’ll get a pretty huge go-away check.
2. It’s the economy, stupid: One smart banker source texted me tonight: “Nobody survives this. Chapek is first, but all these guys will be out. Economy turned on Hollywood. Nothing he could do.” Perhaps that’s true; even an Iger clone would have succumbed to the Great Netflix Correction and the 40 percent stock drop that has ensued this year. Chapek tried to fund streaming with price-gouging at the parks, but it wasn’t enough when the market turned.
3. Now what?: “So, Kareem is out, right?” That’s from a major agent, speculating that Kareem Daniel, Chapek’s deputy, who was put in charge of all content distribution, will very soon… not be that.
I agree there, and frankly, the immediate changes will likely be more significant. It’s no secret Iger was not a fan of Chapek’s reorganization of the company, which took control away from content executives. That likely means Iger will re-org that re-org in some form. Beyond that, could it mean a return of Iger confidants such as Peter Rice in the TV division or Zenia Mucha, Iger’s longtime communications deputy? The creative community and the major agencies are already cheering the news. (I picture CAA’s Bryan Lourd cracking a tiny smile and texting a smiley-face emoji to Scarlett Johansson.) But who knows whether Iger will be more forthcoming with his checkbook than Chapek—to the extent he ever was—or approach the company differently now that it is so challenged. Those are the questions that will likely drive the news this week.
4. The risk factor: Whose second chapter is better than the first? Remember, Iger told Kara Swisher last year that suggestions of him returning to Disney were “ridiculous” and “you can’t go home again. I’m gone.” This is a huge risk for Iger personally. He’s the rare C.E.O. who enjoyed tremendous success, transformed his company and his industry, and got to leave on his own terms with a legacy intact. The company he’s returning to is fundamentally strong but on its heels, in part because of decisions Iger himself made—spending a fortune on streaming, taking on a lot of debt to buy the Fox assets, holding on to ESPN. So, why would he come back, even in this sort of rescue situation?
My guess is there were two reasons: First, he just can’t let go. Chapek is a guy he picked, and it seemed clear to Iger almost from the moment he made the choice that he believed it was the wrong one. That must have stung. And Iger does care deeply about the company. Second, this move brings Iger the opportunity to fix the one aspect of his legacy that was always problematic: succession. This is the guy that un-retired three times; the guy who groomed Tom Staggs to take over only to kneecap him, who basically told Kevin Mayer that the job was likely his, only to pass him over. And so on. If Iger can indeed use these two years to steady the ship and find a legitimate successor (a big if), he will have patched over the one aspect of his leadership resume that still feels blemished.
5. The big picture: Why, exactly, is Iger doing this? As one longtime Disney observer texted me, he doesn’t put his legacy at risk just for a job. What’s up his sleeve? Perhaps there’s one big deal yet to be made, a doozy that would truly reshape Disney for the digital age in a way that Marvel, Pixar, Fox, and even BAMTech did not. This person suggested it should be Netflix, which would indeed be massive. But let’s not get ahead of ourselves…
