Investors sceptical as Iger rides to the rescue
• Disney brings back former CEO to replace Bob Chapek, whom he had hand-picked as his successor
DISNEY IS ABOUT TO ENTER ... INTERESTING TIMES AND ALL EYES WILL BE ON IGER TO SEE IF HE CAN GUIDE THE FIRM TOWARDS STABILITY
Nobody loves a bit of back room boardroom drama as much as Hollywood. So, when Disney announced it was bringing former CEO Bob Iger back as CEO to replace Bob Chapek, the man Iger picked to succeed him less than three years ago, industry pundits and the trades were at once aflutter.
In an industry beset by challenges the fortunes of the House of Mouse are paramount to gauging the future and fortunes of the industry. So the Disney board decision divided analysts and investors, earning hyperbolic descriptions as “the most significant piece of corporate upheaval since Steve Jobs went back to Apple”, and the catchy descriptors of “Bob swap”, and “Battle of the Bobs”, in the torrent of articles written about the move since its announcement on Sunday night.
Wall Street initially seemed to welcome Iger’s return with Disney stock jumping 6% on Monday. But the price has begun to drop as investors have had time to consider the state of Disney’s books and challenges Iger has been given to fix. While Iger is celebrated for the bold and expensive acquisitions that he made in his first term as CEO — including Marvel Comics Universe, Star Wars franchise and Pixar Animation Studios — the pandemic, the unstoppable decline of terrestrial television properties such as ESPN and ABC and Disney’s less than commanding response to Florida’s “don’t say gay” laws have helped to put the group under huge pressure financially and reputationally. Former big buyer Iger may be forced to be a big seller this time.
In the vital arena of the streaming wars, Disney spent $9bn on its Disney+ platform, and though it has gained 235million subscribers at its Disney+, ESPN and Hulu services, it still reported $1.5bn in losses for the most recent quarter, prompting calls from several quarters for it to shed its network channels, including ESPN and ABC.
Iger, who began his career at ABC in 1974, joined Disney after it bought ABC in 1995. He succeeded notorious CEO Michael Eisner as head of Disney in 2005.
Though the “Bob Swap” has sent shock waves through the entertainment business world, it’s so far not nearly as sordid or dirty as the war that between Eisner and Jeffrey Katzenberg in the succession battle after Disney No 2 Frank Wells was killed in a helicopter crash in 1994 and Katzenberg sued the group and left to form DreamWorks with Hollywood heavy-hitters David Geffen and Steven Spielberg.
Iger oversaw 15 years of spectacular growth and bold acquisitions at Disney and must have thought the future of the House of Mouse was in good hands when he handed over the reins to former theme parks and consumer products division head Bob Chapek in February 2020. A month later, the pandemic hit and with cinemas and theme parks closed, the new CEO found himself trying desperately to guide Disney through a sea of potentially profit-destroying icebergs.
Chapek soon proved he lacked the showmanship and charisma many felt necessary to lead the Disney behemoth and place investors and shareholders at ease as he navigated increasingly choppy economic waters.
He took a hardline against Black Widow star Scarlett Johansson after she fought back against the losses to earnings she faced due to the company’s decision to release her MCU franchise title on the streaming platform rather than in cinemas as promised; oversaw a period of heightened tension with China that shut out that country’s lucrative box office as a source of income for Disney; and had to stand by helplessly as the Ukraine closed the tap on the Russian market.
Chapek also announced last month that in an effort to stem losses, the company was freezing hiring and stopping all nonessential travel — a move that employees probably correctly saw as the precursor to inevitable future announcements of layoffs.
The Disney board’s solution to the problem of facing the unparalleled challenges of the pandemic and a swiftly changing streaming and distribution landscape has it seems been to try playing it safe by looking backward to move forward.
There is no financial motivation for Iger to return to occupy the throne at Disney. He’s made tens of millions of dollars and his legacy is solidly guaranteed, thanks to the purchases he made and growth that he oversaw during his tenure, which will already, according to Variety, see him, “go down in history as one of the most consequential leaders in Hollywood”. But once a mogul always a mogul and even though Chapek’s brief and tumultuous tenure may have sullied Iger’s reputation because he chose him, the former king can’t resist the allure of riding to the rescue and proving himself to be the Mouse Mogul of all Mouse Moguls.
With his contract now only extending to two years, it looks as though Disney is about to enter some seriously interesting times and all eyes will be on Iger not only to see if he can guide it towards long-term stability, but also to see who he will pick to take over in the hard-to-stop-watching second season of Disney Succession.