Bob Iger Returns as Hero in Waiting to Save a Battered Disney

Bob Iger Returns as Hero in Waiting to Save a Battered Disney

Top executives Dana Walden, Craig Erwich and Elton John were planning to spend Sunday evening at Dodger Stadium enjoying the AMAs and the Elton John farewell concert. the shocking news that Bob Iger was back as CEO of Disney and Bob Chapek exploded through Hollywood like a bolt. (Both Erwich and Walden figuratively vanished from the AMAs shortly before a company-wide e was sent to all employees). According to insiders, few people at the top knew that the announcement was coming.

It was a great victory for Iger, but he inherits the same vexing issues plaguing all legacy media businesses as their long-term revenue sources shrink and the shift towards streaming continues to be a money-loser while doing less to charm Wall Street.

According to one industry source, the Disney board was divided over Chapek’s continued employment for the past few months. According to this account, Chapek’s performance during the latest earnings call earlier in the month was the decisive factor. Although Chapek mentioned the need to save money during the call, it was not until later in the week that he presented dramatic plans to reduce costs, including a hiring freeze, and possible layoffs.

Sources claim that the deal to bring Iger home was made quickly — within the last week. Although there are many questions, it seems certain that Iger will end the Chapek-imposed reorganization, which effectively transferred the power of purse from Iger’s creative executive team, to Chapek’s trusted lieutenant Kareem Dan. Susan Arnold, the Board Chairman, stated that Iger is “greatly admired by Disney employees…which will allow a seamless transition in leadership .”

The Hollywood Reporter reached out to Chapek and Iger for comment.

Chapek has never been admired by the masses. Although Chapek was a long-standing Disney executive, he was not well-known to the wider entertainment community. Early mistakes – including a messy public dispute with Scarlett Johansson about compensation and a refusal to denounce Florida’s “Don’t Say Gay” law, which was quickly reversed following a staff outcry — did little to inspire trust. Although Iger did not make any comments publicly about Chapek’s views, he did make some of his views known, such as when he tweeted his opposition to the Florida law and Chapek trying to avoid taking a position.

The past quarter saw Disney miss analyst expectations for revenue of more than $1B and also miss earnings per share (EPS) targets. The company also reported significantly higher than expected losses of $1.5 Billion in its direct-to consumer business, more than twice the losses in the previous year. Analysts were told by Christine McCarthy, CFO of Iger, and Chapek that they expect the segment to reach profitability in fiscal 2024..

While Disney continued to grow at an incredible rate, exceeding Wall Street predictions, the average revenue per user (ARPU), continued to shrink as consumers bought into less lucrative bundled options.

While Disney’s parks, consumer products and businesses are still strong — Chapek stated that the parks business had its strongest year ever — the extent to the which those profits were driven price increases and upsells such as Genie have alienated some customers and alarmed analysts who fear that the company could be making their parks less accessible for middle-class families which could lead to financial problems down the road.

It was obvious that Iger was unhappy with Chapek’s choice to be CEO, even before he left the premises at December 2021. The board extended Chapek’s contract in June. However, it was a qualified endorsement as Chapek was granted a two-year extension, but not a new three year contract.

Iger gave a passionate speech about creativity in his last formal appearance before Disney’s board and top executives. Many within the company saw it as a slam to Chapek. He said, “In a world and a business that is awash in data, it is tempting for data to answer all our questions, even creative questions.” “I urge all of you not to do that.” If Disney had relied too heavily on data, he noted, the company might never have made big, breakthrough movies like Black Panther, Coco and Shang-Chi and the Legend of the Ten Rings.

Chapek’s last email to all employees on Nov. 11 was about the creation of a “cost structure task force” — comprising himself, McCarthy and General Counsel Horacio Gutierrez — that would “make the critical big picture decisions necessary to achieve our objectives,” including potential layoffs and a “rigorous review” of the company’s content spending. It is unclear what will happen with these plans.

Chapek spoke out about how to balance respect for the past and a desire for the future in an interview he gave at the Paley Center for Media, New York, on Nov. 9. “If we stick to the old model, we will know what’s going on, right?” Chapek stated that you become extinct. “We at Disney have to try to preserve the past and keep as much as possible of it. But when the consumer tells you that it’s time for you to move on to something better, you must take that cue.

Additional Reporting by Lacey Rose .

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