Bob Iger, who served as the CEO of Disney for 15 years, stunned Hollywood by returning to his successor, Bob Chapek, after a difficult 33-month tenure.
Iger, who tapped Chapek as his successor only to see the relationship deteriorate rapidly, will serve two more years in the job that has made him one of the world’s most popular business leaders.
His sudden return reflects what the board sees as an irreversible loss of confidence in Chapek’s leadership, which has steered Disney through the pandemic but struggled to attract investors and Hollywood’s creative community. Disney shares rose 8 percent in premarket trading Monday in New York.
In a statement, Disney said Iger had “a Board mandate to set strategic direction for renewed growth.” He will also work closely with the board to find a successor.
Iger, who delayed his retirement four times before finally leaving the company, said in a memo to staff on Sunday that he was “a little surprised” to return to the company as CEO.
Prior to today, the stock had fallen more than 40 percent this year amid growing investor concerns about the high costs of the streaming business. Disney has spent billions — its content budget was $30 billion this year alone — as it competes with Netflix and other broadcasters for subscribers.
Chapek also found herself at the center of a culture war this spring over a Florida law that regulates what teachers can say about LGBT+ issues. The mixed battle with Florida Gov. Ron DeSantis has generated weeks of negative headlines and concerns for LGBT+ activists and their allies.
The shakeup, which has concentrated significant power with Chapek’s allies within the company, has long been a source of resentment among Disney’s top management, who have long viewed the new structures as ineffective and unnecessary.
Despite the challenges, the board renewed Chapek’s contract this summer. The decision to bring Iger back to the company appears to have been surprisingly reversed by chairman Susan Arnold.
“The Board has concluded that as Disney enters an increasingly complex period of industry transformation, Bob Iger is uniquely positioned to lead the Company during this important period,” said Arnold.
Rich Greenfield, an analyst at LightShed Partners, said the move was “strange in light of the board’s recent renewal” of Chapek’s contract.
Iger will take over the company as it tries to recover from billions of dollars in losses in its streaming business — partly a legacy of his decision to plunge the company into a streaming war with Netflix. Next month, Disney will launch an ad-based version of its Disney Plus service as the company aims to become profitable in streaming by 2024.
This month, Disney shocked investors with news that operating losses from the streaming service rose $800 million to $1.5 billion in the third quarter, thanks to higher content costs and marketing costs. As a result, Disney’s media and entertainment group’s operating income fell 91 percent to $83 million.
Greenfield says Iger will also have to make tough decisions about spinning off the ESPN sports television network and buying Comcast’s stake in the Hulu streaming service.
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, which retained the most valuable collection of franchises in the entertainment business.
Under Chapek, Disney’s streaming services — including Disney Plus, Hulu and ESPN Plus — experienced rapid growth, reaching a combined 235.7 million subscribers; more than the 227 million that industry pioneer Netflix expects to achieve by the end of this year. He also oversaw the revival of the Disney theme parks business he once ran as Covid-19 restrictions eased.
Čapek took the helm in February 2020 before the pandemic began and closed the company’s theme parks and other operations a few weeks later. He soon clashed with Iger, who remained on the bench, and Iger suggested he would take a greater role in running the company during the crisis. Iger’s term as chairman ended in January.
Chapek, a reserved Midwesterner with a background in marketing and sales, was never embraced by Hollywood’s elite—unlike Iger, who enjoyed the creative side of the business and the glamor of the film industry. In an interview with the Financial Times last year, Čapek pushed back against his image as a bean counter, saying: “I saw creativity in this company through every possible lens.”
Still, Capek made decisions at Disney that troubled creators — especially when it came to streaming. He fought a very public battle with Scarlett Johansson, who sued Disney over potential lost revenue over her decision to release him. Black Widow on its streaming service at the same time the movie was in theaters.
While the Johansson fight generated headlines, behind the scenes studio executives feared losing decision-making power under Chapek’s stream-first structure. Much of this power was in the hands of Kareem Daniel, a trusted ally of Čapek.
Greenfield said he expects Iger to overhaul Chapek’s stream structure. “It’s clear that studio executives are increasingly angrier about losing power,” he said.