Disney’s new CEO is its old CEO: Bob Iger, who led the company for years and handed it over to his lieutenant Bob Chapek in 2020, is back, and Chapek is out.
This news is very exciting for people working in Hollywood and Silicon Valley, and normally I’d tell you that unless you’re in tech and media, it shouldn’t mean anything to you. But this is different. It’s an executive move that says a lot about the state of the media industry, which is trying to figure out how to adapt to the seismic changes technology is making in the ways we consume media.
There are many theories as to why Chapek was launched, all of which may have some degree of truth. The two men reportedly had a strained relationship throughout Chapek’s short tenure; Čapek rocked Hollywood by feuding with Marvel star Scarlett Johansson over money; perhaps most importantly, he let down Disney employees in the clumsy manner in which Florida Gov. Ron DeSantis handled his attacks on the company. (It was also a lot Iger scratched his head as he left a few years ago.)
But the most important thing to understand about Iger’s return has less to do with the specifics of Disney than with the media industry in general: When Iger left Disney, everyone in media was trying to be Netflix — fast-growing, omni-streaming, and willing to burn big wads of cash to operate — because Wall Street wanted them to be.
Now Wall Street has changed its mind. Because of this, Disney shares – along with shares of most major media companies, including Netflix – fell sharply. Disney’s share was worth about $200 in spring 2021; now it’s going for half that, and that’s after investors pounced early this morning after Iger’s return was announced.
“It’s a very different landscape than even 18 months ago,” one manager at one of Disney’s competitors texted me. “I hope he can understand the model. There is no one yet.”
A new, theoretical model: Figure out how to build a streaming service that people will pay for, but without burning a gazillion dollars — Disney lost more than $2.5 billion on streaming in the last nine months, and another $1 billion a year. before – while continuing to support existing businesses that made a lot of money, but were in perpetual decline, like cable TV.
So, on the one hand, Iger will find himself in the same boat as the rest of the industry. Comcast, Warner Bros. Discovery and Paramount struggle with the same problem and the same investor skepticism.
On the other hand, there is some poetic justice here, since he is the one who launched the boat. Back in 2017, Iger announced that instead of selling content to Netflix, which Disney has done for years, it would build a Netflix competitor. Then he doubled down on the theory that Rupert Murdoch’s purchase of most of 21st Century Fox would require a lot of movies, TV shows and their associated intellectual property to take over Netflix.
Investors cheered all this, even though Iger told them it would cost them billions in losses. And Disney’s competitors tried all versions of the same book. Iger welcomed Disney+ to great acclaim in the fall of 2019. After a few months, he left, declaring that his work was over.
Now it turns out Iger has more to do, though we’re still guessing what that will be. Maybe he just has to rally the troops when speaking to Wall Street, which adores him — “We believe investors will appreciate the transparency and bring back some of Disney’s long-lost magic with a stronger story that drives the stock back up.” analyst Michael Nathanson wrote in a note this morning. Maybe he’ll figure out how to change Disney’s content, which isn’t welcome after years of dominating world culture with its Marvel, Star Wars, and Pixar products.
Or maybe there’s a big, flashy, structural move in the works that could transform the company or make people think they’ve converted. Maybe there is something else to buy – for example, Netflix. (Note: “Disney or Apple or someone should buy Netflix” is one of the media industry’s favorite stories right now, no matter how big or small Netflix is. Also note. A note from Netflix founder Reed Hastings to Iger on Twitter last night.)
A careful note on this: While Iger is rightfully lauded for three company-changing acquisitions—Pixar, Lucasfilm, and Marvel, all closed within a few years of each other—that’s no guarantee of future performance.
For example, it’s quite reasonable to argue that Iger grossly overpaid for the Fox assets he acquired, and that those assets didn’t provide much benefit other than eliminating a competitor. And Iger came very, very close to buying both Vice and Twitter — two moves that guaranteed big headaches and some pretty real losses.
While the media industry loves Iger — people on my version of Twitter last night were falling over themselves to describe how excited they were about his surprise return — that’s a risk in itself. If Iger had stayed away from Disney, everything that happened to the company could be attributed to the failures of his successor (never mind that Iger chose that successor). Now, if he can’t figure out how to fix the problem he helped create, some of his reputation may be at stake.