Bob Iger’s return to Disney creates strategic “uncertainty,” one analyst warns.


Disney ( DIS ) shares rose on Monday after news that Bob Iger had replaced Bob Chapek as CEO.

And the long-time CEO’s influence is already felt after his return.

On Monday, Iger made his first big move as CEO — firing Kareem Daniel and rebuilding Disney’s Media and Entertainment Distribution (DMED) division. DMED was one of Chapek’s first big swings as executive director, but the reorganization has long been classified as a controversial move that upset veterans and reportedly “confused” employees.

“In the coming weeks, we will begin implementing organizational and operational changes across the company,” Iger wrote in an internal memo obtained by Yahoo Finance and sent to employees Monday afternoon.

Iger added: “As you know, this is a time of great change and challenge in our industry, and our work will also be focused on creating a more efficient and cost-effective structure… Our goal is to have the new structure in place in the coming months. Certainly elements of DMED will remain, but I fundamentally believe that stories power this company and are at the heart of how we do business.”

Kareem Daniel, Chairman, Disney Media and Entertainment Distribution, Allen & Co. July 6, 2022, Sun Valley, Idaho, USA. Attends Sun Valley Media Conference. REUTERS/Brendan McDermid

Wall Street analysts initially seemed optimistic that Iger’s return would improve the fortunes of a stock that had lagged during Chapek’s tumultuous tenure. But the decision still comes with its own risks.

“The transition creates some uncertainty that we all have to consider in terms of strategic changes,” RBC Capital Markets analyst Kutgun Maral told Yahoo Finance Live before news of Daniel’s departure broke.

“While the longer-term opportunity remains very attractive, we need to see what the next steps are to better assess the near- and medium-term implications for stocks depending on Iger’s path to his ‘renewed growth’ mandate,” Maral said. , highlighting the Board’s decision makes the company’s positioning for the next decade more relevant.

Iger will serve a two-year term as CEO with a mandate from the Board to “set strategic direction for renewed growth and work closely with the Board to develop a successor to lead the Company,” Maral said in a company press release. expiry of the term”.

“I think investors would like to see more expression and reshaping over the next two years [Disney’s] plan with the creative side of the business,” the analyst said, adding that pricing strategy and the evolution of the direct-to-consumer portfolio will also be a focus.

Still, Maral said, “The reality is, with Iger coming in, there’s a lot he can do operationally in his two-year tenure.

“The most important thing would be: What is he doing to really change the strategic direction of the company? We look forward to that.”

HOLLYWOOD, CA - MARCH 04: (L-R) Walt Disney Company Chairman and CEO Bob Iger and Marvel Studios President and Producer Kevin Feige attend the World Premiere of Marvel Studios in Los Angeles'

Walt Disney Company Chairman and CEO Bob Iger and Marvel Studios President and Producer Kevin Feige attend the Los Angeles World Premiere of Marvel Studios’ Captain Marvel at the Dolby Theater on March 4, 2019 in Hollywood, California. (Photo by Alberto E. Rodriguez/Getty Images for Disney)

Chapek’s departure comes months after Disney’s board of directors voted unanimously in June to extend his contract for another three years, through 2025. At the time, the board noted that Chapek’s leadership was essential to helping the company weather the headwinds of the pandemic.

Even so, his tenure has been fraught with controversy—from political battles and A-list talent issues to controversial restructurings and the ever-looming shadow of Iger, who opposed some of Chapek’s decisions.

Since Čapek took over as CEO of Disney in late February 2020, Disney shares have fallen about 19%; The S&P 500 is up nearly 34% over the same period.

Alexandra is a Senior Reporter for Entertainment and Media at Yahoo Finance. Follow him on Twitter @alliecanal8193 and email her at alexandra.canal@yahoofinance.com

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