November 22, 2022
On Sunday night, November 20, Walt Disney’s board of directors CEO Bob Chapek with Robert Iger, the company’s former chairman and CEO who left the company at the end of last year, reports The Wall Street Journal.
“The board has concluded that as Disney embarks on an increasingly complex period of industry transformation, Bob Iger is uniquely situated to lead the company through this pivotal period,” said Susan Arnold, chairman of Disney’s board, in a statement.
“We thank Bob Chapek for his service to Disney over his long career, including navigating the company through the unprecedented challenges of the pandemic,” she added.
The surprise change comes at a tumultuous time for Disney.
This month, the company reported weaker-than-expected fourth quarter financial results—killing the momentum built up over a strong year that saw record revenue and profits in multiple divisions, especially the one that includes theme parks.
Disney’s theme-park business has recovered strongly since the coronavirus pandemic shut down its venues across the world, but the division continues to subsidize widening losses in the streaming video business.
Chapek has said repeatedly that he expects the streaming business to be profitable by September 2024. In the most recent quarter, however, it lost $1.47 billion, more than twice the year-earlier loss.
The company also cautioned that its profitability target would only be met if there weren’t a significant economic downturn—the first time it has added such a caveat. Disney’s stock price shot up 9% to more than $100 a share in premarket trading early Monday. Some observers said the management change might benefit the company’s stock.
“It is with an incredible sense of gratitude and humility—and, I must admit, a bit of amazement—that I write to you this evening with the news that I am returning to the Walt Disney Company as chief executive officer,” he wrote in the email, which was viewed by The Wall Street Journal.
Several top Disney executives first learned the news that Iger was returning after they read his Sunday email, while some of them were together attending an Elton John concert at Dodger Stadium in Los Angeles that was streamed live on Disney’s flagship streaming service Disney+, according to people familiar with the matter.
Chapek also was expected to attend the event and the company had planned for him to introduce Elton John from the stage before the concert, according to two people with knowledge of the plans, although it isn’t clear if Chapek actually was there, they said. Other Disney employees said they were baffled by Iger’s Sunday email and immediately began asking if the message to employees was real or if it came from a hacked email account.
Negotiations between Iger and the board to return as CEO were initiated only in recent days, according to a person familiar with the talks. Iger has said publicly on at least two occasions over the past year that he isn’t interested in returning to Disney. In recent months, he has focused on investing in and advising startups, particularly in the technology industry.
Adding to the surprise, Chapek, who has served as CEO since February 2020, over the summer saw his contract renewed through the end of 2024. At the time,. Arnold, the board chair, said that while the company was “dealt a tough hand by the pandemic,” Chapek “not only weathered the storm but emerged in a position of strength.”
Wells Fargo analyst Steven Cahall wrote in a note to clients: “Iger will be viewed as a catalyst to improve the content aspects of Disney, and we expect bigger potential strategic changes around the long-term shape of” the streaming business.
Chapek couldn’t be reached for comment.
Research contact: @WSJ