Bob Chapek Gets the Last Laugh
I must admit that I don’t get shocked very often with Disney stories.
The Walt Disney Company has run a theme park empire for nearly seven decades.
Disney
Disney parks remain a well-oiled machine that’s difficult to screw up, despite what some people on the internet may say.
However, sometimes, something happens that I didn’t see coming. And one of those things just happened.
Is Disney Genie a hit??? Somehow, the answer to that question appears to be yes. So, let’s talk about why Bob Chapek is having the last laugh this week.
The Rise of Bob Chapek
Whenever I argue with people on the internet – come on, you know you do it, too! – I try to remain fair to both sides of a discussion.
In truth, what I believe doesn’t matter, nor does the other individual’s philosophy. The only crucial aspect is the truth itself.
Often, data and statistics drive the search for truth or, at the very least, reveal it.
Photo: sciencenews.org
For that reason, Disney’s most recent earnings call came with a shocking reveal, one that caught even Disney’s biggest optimists by surprise.
CEO Bob Chapek waited for the right moment, and then he pounced with a data point that he gleefully delivered.
Photo: Marc Piasecki/Getty Images
This was his “I told you so!” for the call. His satisfaction was understandable.
As you likely realize, a small but vocal minority of Disney fans doesn’t like Chapek. This group blames him for all the company’s perceived problems.
Photo: Disney
I’ve tried reasoning with these individuals about many of the complaints, as virtually all of them circle back to Bob Iger’s decisions.
Chapek simply hasn’t had control of Disney long enough to impact the parks significantly.
Photo: CNBC
Still, when fans bristle at the rising cost of theme park vacations, they throw darts at Chapek’s face.
The dude doesn’t seem to care, as he takes his stewardship of Disney very seriously.
Chapek doesn’t act like he ever expected to be CEO of Disney, which he shouldn’t have. So, he treats it like a gift and appears to have a bit of imposter syndrome.
Photo: Getty Images
This seems like a good time to remember that Disney auditioned several other executives as Iger’s replacement. Each of them fell by the wayside.
The People vs. Bob Chapek
When Iger was finally ready to leave, Chapek won almost by default.
The only other worthy candidate, Kevin Mayer, was too new and green for Disney’s Board of Directors.
Chapek’s career reminds me of an obscure Night Court joke. It’s fine that you don’t remember the show.
Photo: TheWrap.com
The joke was that Harry Anderson’s character became a night court judge for a silly reason. He was the only person home on a Sunday after they called like 20 other worthier candidates.
That’s Chapek’s ascension as Disney CEO in a nutshell. Nobody would have bet on him, but he answered the call at the perfect time…and timing is everything in corporate America.
Bob Chapek, CEO, The Walt Disney Company
Screen Capture Source: “Once Upon A Disney Wish”
Alas, by this point, Iger had already deduced several ways for Disney to earn more revenue at the parks.
Park officials face a never-ending struggle to generate more revenue without increasing crowd capacity. When crowds go up, Disney survey scores go down.
Disney executives don’t care about Mickey Mouse as much as they care about park survey scores. Okay, I’m joking…mostly.
Anyway, the point is that the only proven way to make more money is with more customers.
Since Disney cannot do that at the parks, it requires more innovative alternatives.
Iger had settled on MaxPass, a paid version of FastPass, as one idea. Another was an annual price increase involving most park necessities.
Everything at Disney, from admission tickets to hotel rooms to parking to beverages and snacks, will cost more next year than it does this year.
I jokingly call this practice Iger’s Law. He found a way to increase revenue annually without ever doing anything that would alienate guests.
How Iger Framed Chapek
After Iger unexpectedly retired at the start of the pandemic, he left Chapek holding the bag. I also often joke that Iger has framed Chapek.
Photo: Disney
People genuinely dislike the man as the leader of Disney. In fact, some shareholders plan to vote against Chapek as CEO at the March meeting.
This vote will fail horribly. Here’s why.
Since March of 2020, Disney hasn’t gotten many wins. As we’ve discussed repeatedly, the pandemic seemingly targeted all phases of Disney’s business.
Photo: Jeff Gritchen, Orange County Register/SCNG
Theme parks and movie theaters closed, the cruise industry shut down, and all live sports paused. It was a financial nightmare.
Ever the pragmatist, Chapek focused on his specialty, the bottom line. So he cleaned up Disney’s books as best he could during impossible circumstances.
Photo Credit: AP Photo/Richard Drew, File
Not coincidentally, Disney’s CFO, Christine McCarthy, recently earned a contract extension and a raise. The two of them have worked magic in keeping Disney afloat.
Alas, one of the changes that Iger set in motion became an albatross around the neck of Chapek.
Credit: Disney
When the parks returned, they did so without FastPasses. Many of us skipped to the end of the page here and guessed what was coming next.
We deduced that the days of free FastPasses were coming to a close. I mean, they were already on the way out at Disneyland Resort. So, it wasn’t much of a leap in logic.
Photo Credit: https://momrewritten.com/disneylands-disability-access-service-das/
However, when Disney dropped the boom with the announcement of the new Disney Genie program, people burned Bob Chapek in effigy.
Nobody cared that the company had announced Disney Genie at a time when Iger was still CEO. Somehow, it was Chapek’s fault.
The Win Chapek Needed
Critics have lambasted Chapek whenever possible over the functionality of Disney Genie, the cost of Lightning Lane, and the questionable value of Disney Genie+.
That’s why I literally laughed out loud when Chapek dropped his bombshell on the earnings call.
More than one out of every three guests had purchased Disney Genie+ or Lightning Lane during its early days in the parks. That’s the mark Disney desired.
That wasn’t the shocker, though. Instead, it was the staggering moment when Chapek revealed more than half of guests paid for Disney Genie+ and/or Lightning Lane during the holidays.
In other words, more than half of Disney’s holiday vacationers spent more at the parks than ever before.
They added so much to Disney’s earnings that the parks had the second-best quarter ever…during a pandemic.
One analyst even asked Disney’s CFO whether the company could ever do better than its current level of earnings per guest.
This one move generated that much extra revenue! It also reinforced a Bob Iger idea eventually implemented by Bob Chapek.
The paid FastPass premise that many bristled against and claimed would fail…hasn’t.
Chapek’s data confirms irrefutably that Disney Genie+ is a hit. More than half of guests are willingly stretching their budgets for this service.
Even the most optimistic evaluations would have described 40 percent of guests as a success. We’re far beyond that.
Disney has increased revenue dramatically without causing overcrowding at the parks.
Photo: Matt Stroshane/Courtesy Disney Parks
Right now, Bob Chapek is having the last laugh. Shareholders aren’t going to vote him out because Disney is making far too much money at a time when it shouldn’t.
Feature Image: AP Photo/Jae C. Hong
