Bob Iger and the Judas Effect
We finally know what transpired behind the scenes at The Walt Disney Company that led to Bob Chapek’s ouster. None of it is surprising, but it is enlightening.
Let’s talk about Bob Iger and the Judas effect.
I Quit but I Want to Stay
The Wall Street Journal recently posted an exhaustive examination of what happened at Disney this past year.
This article details the frosty relationship former Disney CEO Bob Chapek shared with not just Bob Iger but several other high-profile executives.
While discussions like this primarily use off-the-record sources, the shocker in this piece comes from its transparency.
Several Disney people you know must have leaked details since the conversations only involved the people in the room at the time.
For example, Bob Iger obviously never trusted Chapek as a worthy successor.
No matter what Iger said at the time or what you may have read, Iger undeniably had questions about Chapek’s viability.
In fact, the reporting here uses the word “antipathy” to describe Iger’s opinion of his replacement. That’s a strange choice to promote for a job.
According to The Wall Street Journal, Iger refused to remain quiet and allow Chapek to succeed on his own.
Instead, Iger encouraged his proteges, many of whom still worked at Disney, to communicate with him directly about their problems rather than speaking with Chapek.
Theoretically, Iger acted as a sounding board, but he also attained intel about Chapek’s performance. In fact, the inference is that Iger undercut Chapek whenever possible.
Frankly, Iger’s actions as described here sound so combative that it would just as easily read as an insider story where Chapek was the primary source.
Iger simply isn’t ashamed of the actions he took to relieve Disney of its worst problem, which he perceived to be Chapek.
Confirmations and Allegations
MickeyBlog has previously commented on much of what this article discusses. Still, we can update these tidbits from rumored to confirmed.
For example, the breaking point between Iger and Chapek did prove to be that fateful interview Iger had with the New York Times.
When Chapek read the report that his boss had retaken control, at least in the Executive Chairman’s own mind, Disney’s then-CEO realized he’d always have Iger looking over his shoulder.
Once Chapek froze Iger out, the latter gentleman realized there was little he could do, at least publicly.
Once you say you’re leaving, people have the audacity to expect you to leave.
Iger kept his ear to the ground, though. He gradually learned about many missteps that were happening in Disney’s C-suite.
Notably, one of Iger’s strongest sources of intel was someone I would have guessed was on Chapek’s side.
Disney CFO Christine McCarthy, a controversial person in her own right, worked to support Chapek during his early days.
After a time, she grew to despise him every bit as much as the blogosphere did.
In fact, if the reporting here is accurate, McCarthy was the one who reached out to Iger first to gauge his interest in returning.
As I mentioned at the time, Disney’s Chairperson of the Board, Susan Arnold, contacted Iger for the first time less than 48 hours before he returned.
However, McCarthy apparently worked as the go-between who incepted Iger with the tantalizing thought of returning home.
By the time Arnold reached out, Iger had already accepted the job in his head and was ready to return.
The Judas Effect
What caused McCarthy to abandon Chapek during his time of need?
Well, part of the decision undeniably stemmed from her instinct that Chapek might have used her as the fall person at some point.
Even if not for that bit of survival instinct, McCarthy would have soured on Chapek anyway.
At some point, the two stopped seeing eye-to-eye on financials. The final breaking point reportedly happened during Disney’s 2022 fiscal earnings call.
McCarthy felt that Chapek refused to answer valid questions about Disney’s disappointing financials for the quarter.
Meanwhile, her responses confused and angered Chapek. He felt she went off the reservation with her responses in an attempt to make him look bad.
Perhaps the weirdest part of the story, at least to me, is that McCarthy engaged in texts with that crazy old coot, Jim Cramer of CNBC, on the day of that earnings report.
He’s the one who called for Chapek’s head in the aftermath of that earnings report. Apparently, McCarthy and he worked each other into a frenzy while complaining about Chapek that afternoon.
So, McCarthy resolved herself to speak with Iger about a job that she legally couldn’t even offer to him. Honestly, I have no idea what she was thinking there, but it worked.
I mean, could you fire your boss and replace them with somebody you used to work with/for? Of course not!
McCarthy was fed up enough to try the Hail Mary, though, and now we know why.
Apparently, several high-profile Disney executives had grown so frustrated with Chapek that they were ready to leave. And one of the names will shock you.
The Wall Street Journal specifically names Disney Parks Chairman Josh D’Amaro as someone contemplating an exit from the company.
Can you imagine the Disney community meltdown that would have occurred if he’d left?
Why Chapek Is Gone
Interestingly, the potential defections weren’t what upset Disney’s Board the most. Or, at least, that wasn’t all of it.
Several high-profile hedge funds either reduced their holdings in Disney stock or sold completely.
When that happens, Wall Street is saying that it doesn’t believe in what you’re selling at the moment.
More importantly, a lack of major hedge fund investments all but ensures that your stock price will remain stagnant indefinitely.
That’s a non-starter for a company the size of Disney. Losing talented executives is worrisome, but a flailing stock price is wholly unacceptable.
Board members weighed their options, but it was McCarthy who spoke the obvious.
Disney needed Iger back, and she was the one who extended the offer, even though – and I’m gonna keep stressing this – she had no right.
I suspect that McCarthy or someone close to her worked as a source in this report, as she comes across quite well, almost calculatedly so.
Still, the article notes that Chapek had soured on McCarthy just as much. He didn’t invite her to a Board meeting, and he also reportedly expressed frustration about her behavior.
The article notes that Chapek felt McCarthy had grown distracted by her husband’s lingering health issues.
However, the report adds this: “People who know Mr. Chapek said such language would be out of character for him.”
Based on what I know of Chapek, I’m inclined to agree. He’s many things, but he’s by all accounts decent, not the sort who’d discredit someone in that situation.
Why Iger’s Back
Still, McCarthy’s offer came at an ideal time for Iger, who realized too late that while he had retired, his wife had not.
Willow Bay had signed a multi-year extension to continue her work training the next generation of journalists, leaving Iger alone too often for his tastes.
You can imagine how he would feel. For a quarter-century, when Iger said anything, everyone within listening distance stopped and paid attention.
Suddenly, he was trapped in a mansion without his only companion. An unexpected offer to return to Disney must have felt like a prayer answered to a lonely, bored person.
The article ends with a discussion of the challenges Iger faces, but we’ll cover those later.
Instead, I’ll end with this tidbit I rediscovered while combing the archives of MickeyBlog stories from the past year.
Here’s a now-prophetic CNBC prediction that Iger would return to Disney in 2022.
If that person had put their name to that prediction, they’d be the toast of Wall Street right now.