Making Sense of Disney’s CEO Turmoil
Corporate news rarely breaks at 10 p.m. on a Sunday. In fact, the Friday news dump has remained a thing long after it should have.
Despite the 24/7 social media news cycle, corporate leaders still provide shocking updates after 4 p.m. on Fridays to avoid impacting stock prices.
That’s what made what happened with Disney even more shocking. First, news broke that Bob Iger would replace Bob Chapek, which is a showstopper on its own.
However, the timing made the story that much more dramatic. People found out between 9:30 and 10 p.m. on a Sunday evening.
Chapek was even about to appear on stage as part of a Disney+ event starring Elton John.
So, what happened behind the scenes to cause such an odd timeline? Let’s try to make sense of Disney’s CEO turmoil based on various media reports.
Why Now?
Everyone agrees that Disney’s Board of Directors permanently soured on Chapek two weeks ago.
The then-leader of Disney performed his duty by reporting Disney’s fiscal earnings for the fourth quarter of 2022 and the year as a whole.
I must admit shock at the reception Wall Street provided to Chapek’s overall performance. More than one respected analyst described him as delusional.
For my part, I found Chapek and his staff almost hypnotic in their robotic pronouncements. There simply wasn’t any passion on display.
In truth, based on Chapek’s recent behavior, I’d expected a solid earnings report, as the man appeared more comfortable than ever.
In truth, Disney’s earnings were quite solid, as the company claimed a record-setting year for revenue. However, Disney missed on Wall Street projections.
Analysts demanded their pound of flesh while Chapek appeared oddly at peace with how he had steadied the ship at Disney.
People like Jim Cramer set the entire industry into a panic by calling for Chapek’s firing.
Remarkably, Chapek appeared unaffected by such concerns. On the contrary, his recent actions indicated that he was completely at peace with Disney’s financial status.
For Disney’s Board of Directors, that was a problem without an internal solution. They faced another year of uncertainty with Chapek as the face of the company.
Wall Street had soured on Chapek, and Disney’s internal projections showed little hope of anything splashy happening over the next 12 months.
With Disney stock seemingly stuck under $100, the Board held little hope for any short-term improvements during fiscal 2023.
The Board preferred someone with a competing view on how to manage Disney. Who could possibly be better at that than Bob Iger?
When Did Negotiations Occur?
Iger officially quit Disney 324 days ago. However, he remained in contact with several members of Disney’s Board.
I would imagine they exchanged several bemused emails with one another about Chapek’s 2022 missteps. Frustration likely abounded.
We should assume that people connected with Disney perceived Chapek the same way that many of his critics did.
Still, the Board couldn’t exactly engage in a series of interviews to evaluate potential candidates.
Indeed, according to CNBC, the Board ultimately settled on a single candidate. Nobody currently working at Disney could have righted the ship enough to make such a controversial change.
So, members of the Board checked with Iger to verify whether he had a serious interest in his old job.
When did this happen? CNBC reporter David Faber suggests the following: “(Disney) reached out to Bob Iger on Friday, without any other serious candidates in mind to replace Bob Chapek as CEO.”
In other words, this deal came together in less than 72 hours. So naturally, long-time Disney analysts are cracking up at this realization.
Simply getting a reply from Disney often takes longer than that. But the Board had grown so frustrated with Chapek that they didn’t even hesitate on this one.
When the opportunity to restore Iger revealed itself, the entire Board readily signed off.
Chapek vs. Iger
Putting two and two together, Bob Iger was unemployed and frustrated last Thursday. He watched helplessly as his successor tarnished his legacy.
Today, Iger can do something about the matter, as he is once again steering Disney toward its future.
Meanwhile, the reverse is true of Chapek. Last Thursday, he was brushing off Wall Street and the Board’s concerns about Disney’s next fiscal year.
Today, none of this is his problem anymore. Instead, he’s walking away with a reported $24 million. That’s the amount of money Disney still owes him on the three-year contract extension he just signed in late June.
Those three years turned out to be less than five months. Chapek still gets paid for the whole thing, though.
Meanwhile, insiders like Semafor co-founder Ben Smith have already gone on record as saying Iger wasn’t happy with Chapek’s work.
I discussed a Puck article that said something similar on Friday, but I must apologize for the fact that it didn’t publish until after this story broke.
I definitely didn’t expect a change of this magnitude to occur late on a Sunday. My fault!
The point is that Iger was beginning to express his displeasure more loudly behind the scenes. That behavioral change would have caused problems for Chapek and the Board.
Bringing back Iger makes the entire situation more palatable for all involved. In addition, Iger better understands what he wants for Disney.
Meanwhile, Chapek was trying to combine his own new ideas with the marching orders he’d previously received from Iger.
There’s no hodgepodge of mismatched strategies now. Instead, we’re back to a singular vision at Disney.
What is Chapek’s lasting legacy at the park? Well, I found colleague Kristin Sabol’s post from this morning quite fitting.
We’ll always have Mr. Chapek to “thank” for massive price increases!
What Happens Next?
That’s the question of the moment, with analysts and reporters lining up to share their thoughts. I’ll do so at a later date.
However, I can confidently say that we’re all jumping to the same conclusion.
Iger isn’t likely to make this move unless he has an ace up his sleeve. The dude’s a mastermind who can seemingly see the future.
Historically, Iger’s best move has been acquisition. After all, he’s the genius responsible for Disney’s purchases of Marvel, Lucasfilm, Pixar, and Fox.
Several tantalizing media conglomerates are on the table, one of which shares connections with Disney.
You may be unfamiliar with Candle Media, but you surely know its prized asset, CoComelon. It’s one of the most watched programs on Netflix and YouTube alike.
Do you know who runs Candle Media? The answers are Thomas Staggs and Kevin Mayer, two former Disney executives whom Iger groomed to become CEO.
Could one or both of them return to Disney and run the company? This scenario could be in play, as Iger has only agreed to return for two years.
Then again, having (unsuccessfully) tried retirement for the past 10 months, Iger may have decided that he’s got many more years in him as Disney’s leader.
I’m confident that’s what Disney’s Board of Directors wants, just as I’m confident that everybody involved has seen enough of Bob Chapek.
FEATURE IMAGE: CBR.com