Bob Iger’s return as Disney CEO shows there are major problems at the House of Mouse. There is a sense in which the modern Disney should be considered “the house that Iger built.” Under his watch, Disney expanded by acquiring Pixar, Marvel, Lucasfilm, and the bulk of Fox’s film and TV empire. When he finally stepped down as CEO in February 2020, DIsney’s dominance of Hollywood looked unassailable – even with the coronavirus pandemic beginning to bite.
That makes the latest changes at Disney quite remarkable. Iger has now returned as Disney’s CEO, with his replacement Bob Chapek fired by the board. According to the New York Times, the board judged Chapek “had done irreparable damage to his ability to lead, with a string of missteps resulting in the lost confidence of Wall Street and most senior Disney executives, as well as many rank-and-file employees.” The announcement has been compared to an unexpected and unbelievable plot twist in a badly-written screenplay, and it points to massive problems at Disney.
Bob Iger’s Succession Is A Massive Problem At Disney
Disney has rarely handled successions well, and Iger’s own ascension back in 2000 was a troubled one. This seems to have left him wary when it came to choosing his successor, concerned to ensure whoever took over was battle-tested. He lined up a series of potential replacements, notably Jay Rasulo and Tom Staggs, but both left Disney in 2016. In the end, Iger hand-picked Bob Chapek as CEO, with reports he had to fight the board for his chosen successor. Iger initially put together a plan that involved his remaining in place as executive director under Chapek, ensuring a smooth transition of power, but this didn’t survive the stress-testing of the pandemic. The two men pulled in completely different directions, and the board backed their new CEO, with Iger’s exit accelerated.
Iger’s struggle to find a replacement was widely considered a rare stain on his own career as far back as 2019. There were reports of tension between Iger and the board over the lack of a succession plan, and the board’s concerns seem to have been proven correct by Chapek’s fall from grace. Iger has now returned, signed up for two more years, and he must choose a replacement and ensure things work more smoothly this time.
Disney Needs To Regain The Trust Of Staff & Creatives
Iger’s first priority, though, will be regaining the trust of staff and creatives. A high-profile lawsuit by Scarlett Johansson did serious damage to morale in the company early on in the transition of power from Iger to Chapek, with reports Marvel Studios president Kevin Feige felt the new boss had “bungled” it. This led to discussion on ethical standards and bad practices that had never caught the public eye before. The latest controversy is over Disney’s handling of VFX teams, with reports of burnouts across the industry.
These particular crises have been unusually public, but behind the scenes there have been reports of greater problems. Chapek swiftly reorganized Disney to give more power to executives who were responsible for distribution; this seemed a logical decision at a time when Disney was pushing its new Disney+ streaming platform, but it led creatives to feel increasingly sidelined. Pixar seemed largely relegated to Disney+, which appears to have damaged the brand, with theatrical releases such as Lightyear now underperforming. There have been constant reports that staff at Pixar have been left demoralized and frustrated.
Chapek’s most visible misstep, however, came over his struggle to navigate politics – specifically, his attempt to remain neutral over Florida’s “Don’t Say Gay” bill. This aimed to limit LGBTQI+ discussion in schools, and large numbers of Disney staff were appalled at their employer’s attempt at neutrality, conducting mass walkouts. Chapek seems to have been slow to recognize the scale of the problem internally, still less the attention it would draw, with his spokesperson eventually issuing a response on Disney’s behalf that was generally seen as too little, too late (even if it did draw the ire of right-wing critics). Iger should be able to swiftly regain employee trust in this matter, however, given he was much more openly critical of the bill. “A lot of these issues are not necessarily political,” Iger insisted in an interview with CNN. “It’s about right and wrong.“
Disney’s Brand Has Been Damaged By A String Of Scandals
Chapek’s missteps have been public, and they have done real damage to the Disney brand; the Johansson lawsuit was a PR disaster, occurring in the middle of a difficult transition period, and his apparent ambivalence over the “Don’t Say Gay” bill drew widespread condemnation. These were far from the only controversial moves, though, with Chapek abruptly firing his top TV boss, Peter Rice, in June 2022. The firing came straight after reports Chapek’s tenure as CEO was in a rocky place, with Rice’s name mentioned as a possible successor within the next two years. Disney shares sank roughly 4 percent the day after Rice’s firing, and the board was forced to issue a rare statement insisting it still backed its CEO. The falling share value serves as a useful indicator of the brand damage being done by Chapek’s mistakes.
The Future Of Streaming & Theatrical Is In Question
In the end, though, Chapek’s fate was likely decided by a disappointing financial statement at the beginning of November 2022. The core problem lies with streaming; although Disney+ has exceeded expectations for subscriptions – ironically helped by the pandemic – it is still making a loss. The streaming industry is a competitive one, and shows are extremely expensive; Amazon’s recent The Lord of the Rings prequel series had a budget of over $1 billion, for example. The cost of competing in this particular market led to Disney reporting “peak” losses of $1.5 billion in the last quarter (up from $630 million a year earlier). Disney had failed to prepare the ground for this, meaning estimates were wildly out, and Chapek struck the wrong tone discussing the losses on a business call. Shares dropped 12 percent the next morning.
This context means Bob Iger will have to make a lot of quick decisions about the future of both streaming and theatricals. This is especially true given the shifting economic conditions, which will surely put a strain on Disney+’s continued growth. Still, shareholders appear confident Iger is the right man for the job, with shares rising by about 8 percent in premarket trade on Monday after the announcement. Hopefully Iger will indeed be able to navigate all these issues, giving Disney a much more secure future.
