Just when you thought Hollywood had spewed all the drama it could muster in a single year with high-profile trials, a Netflix course correction, the birth of media giant Warner Bros Discovery, and entertainment sector cost-cutting, Disney has gone and trumped all of them with the shock firing of its CEO and the return of the man he was meant to replace.
Sunday night’s abrupt changing of the guard at The Walt Disney Company has put Bob Iger, the widely admired uber-chief executive who led the company for 15 years, back in the hot seat at the expense of his relatively short-lived successor Bob Chapek.
It is a remarkable development. Returning CEO’s are not unheard of in corporate America – think of Apple guru Steve Jobs, who came back in 1997 some 12 years after he left, or Howard Schultz’s back-and-forth trajectory at Starbucks – but to come out of retirement after less than a year (Iger ended his term as Disney’s executive chairman 11 months ago) when your replacement has been in the job for less than three is saying something.
And the people saying it are the board, led by Susan Arnold. Behind the requisite polite platitudes for Chapek – a Disney employee for just shy of 30 years – the line that said it all in Arnold’s statement on Sunday night was this: “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.”
Which is to say: we’ve been through a pandemic and now political turmoil has plunged the world into economic dire straits with no immediate end in sight. This is the time for a steady hand trusted by Wall Street and Hollywood.
In fairness to Chapek he was dealt an impossible hand. To succeed a man regarded as one of the greatest CEO’s corporate America has ever seen cannot have been easy. To do so in February 2020, weeks before Covid was about to change the world, was tougher still. Yet Chapek made streaming front and centre of his film and TV businesses and steered Disney through the pandemic as best he could.
Unfortunately the course he chose involved a handful of public relations disasters – the public spat with Scarlett Johansson, the response (eventually) to Florida’s “Don’t Say Gay” bill, and the revelation that Disney was cutting scenes of “overtly gay affection” from Pixar stories. The episodes revealed a rough-hewn CEO with seemingly zero empathy and no ability to read situations involving human relations.
Chapek’s leadership style grated with many inside and outside the company and was in stark contrast to the slick, diplomatic and brilliant political skills of Iger – with whom it has been reported he did not get along in the past couple of years. Observers agreed that had Iger been in charge things would not have got so out of hand. There were even reports earlier this year speculating, perhaps even fantasising, about the notion of his return.
Yet had things gone differently for Chapek, had he been able to steady the ship and steer it through stormy economic waters, these episodes could have been consigned to the footnotes of his career. It did not turn out that way.
Yes the Disney+ subscriber base is growing, but Disney’s overall streaming business remains challenged and costly. Whilst the parks division – which Chapek led before becoming CEO – just returned record fiscal year revenue, there were financial misses in the fourth quarter. And as Netflix and every other company with a streaming component has learned this year, solid overall financial performance and fiscal prudence mean more than pursuing new subscribers at all costs.
Chapek and his top executives announced 10 days ago that cost-cutting is coming. Disney’s board understands better than anyone how painful this is going to be amid the punishing macroeconmic climate as the company faces lay-offs and reviews its content spend.
Iger is back for two years and will work to find his next successor. First, however, he must guide Disney and set strategic direction for renewed growth, per the board’s statement on Sunday.
The returning CEO first took the job in 2005 when Disney’s stock was around $46bn and helped it soar to $260bn by January 2020. By last week it had nosedived to $167bn. Iger, 71, will need to summon his experience and instinct to get Wall Street on side and restore its excitement in a company which still boasts a content stable to die for – thanks to Iger, who brought in Marvel Studios, Lucasfilm, Pixar and the entertainment assets of 21st Century Fox in his last CEO stint.
He will also need to use his famed people skills to reassure employees and the creative community. Iger’s deep ties to and understanding of talent will be crucial as he implements tough calls and tries to frame conversations in ways that preserve relationships. When the dust settles talent will align itself with the studios where they feel valued and that is essential at a time when content is king, never more so than in the streaming wars.
Can Iger pull one last rabbit out of the Disney hat? The board seems to think so. It saw two Bobs and knew there was really only one.
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