Iger vs. Chapek Part III — Return of the King

Breaking up is hard to do. It’s that much worse when you work with the person.

Disney’s current and former CEOs, Bob Iger and Bob Chapek, found themselves in this situation in 2021.

Chapek believed that his old boss was undermining him every step of the way.

Iger quickly recognized that he’d made a huge mistake in choosing his successor and engaged in damage control.

Since Iger’s days at Disney were numbered, Chapek employed a dual strategy of consolidating power and waiting out the clock.

As we all know, Chapek’s tactics worked right up until they really, really didn’t.

Here’s the story of how “The Assassin” lived up to his moniker and thereby enabled the return of the king.

Lonely on Top

As discussed in the first two parts of this story, Bob Chapek didn’t have many friends at Disney.

The new CEO had known for years that his lack of contacts had held back his career.

His professional acumen had empowered his professional ascension to the highest rung of Disney, though.

Still, once Chapek had the job, he quickly realized what a social position he held.

More than 200,000 Disney employees looked to him for direction, and one of his first actions was to lay off 40 percent of them.

Iger’s intervention protected those Cast Members financially, at least to a degree, but the whisper campaign started about Chapek.

Alongside CFO Christine McCarthy, Chapek quickly developed a reputation as being an economics-based leader.

The new CEO (correctly) viewed Disney’s position as perilous and fought to save the brand, even if it hurt anyone’s feelings.

By this point, Iger fell into the “hurt feelings” bucket, and he didn’t appreciate that Chairman of the Board Susan Arnold berated him.

Arnold, who comes across as the adult in the room throughout Disney’s chaotic pandemic era, felt both executives behaved immaturely.

Still, since Chapek represented Disney’s future, Arnold tried to work with him.

Similarly, McCarthy believed that Chapek was a fitting business partner since both of them kept their eye on the bottom line.

Beyond these two executives, Chapek found few new allies at Disney.

The CEO approached Alan Bergman about an upcoming initiative.

Disney’s current Co-Chairman of Entertainment provided a non-answer and then quickly deferred with his old boss, Bob Iger.

After that discussion, Bergman chose not to align with Chapek, who was left to promote an unknown named Kareem Daniel instead.

Due to Iger’s underhanded methods, Chapek referred to his mentor as “The Assassin.”

Chapek’s Early Mistakes

After Iger told The New York Times that he had reasserted control of Disney, even Chapek’s own wife called him a “lap dog.”

Chapek went on the offensive with Disney’s Board members, insisting that he held little authority until they added him, too.

On April 15^th, The Walt Disney Company assuaged Chapek’s concerns by making him a member of the Board of Directors.

All these battles and controversies occurred during the first two months of Chapek’s tenure. He was off to an atrocious start.

Somehow, Chapek never fully righted the ship. Iger had grown dismissive and sometimes even mean with his successor.

Chapek tried to grin and bear it, but the hallmark characteristic of his Disney tenure was the unforced error.

With the pandemic devastating Disney, Chapek leaned hard toward its one growth business.

The CEO consolidated all the company’s storytelling and entertainment in a new division, Disney Media and Entertainment Distribution (DMED).

His decision caused shockwaves, as several longtime Disney executives suddenly found themselves reporting to a complete unknown.

Virtually overnight, Chapek’s former protégé, Kareem Daniel, became arguably the most influential person in Hollywood.

Nobody outside the company knew Daniel at all. Even worse, few of his new employees did, either.

The already friendless Chapek had just alienated his most powerful staff members, all of whom complained to Iger.

This was the job offer Bergman refused, causing Chapek to select someone he could trust, the inexperienced Daniel.

Hollywood was already facing twin existential threats: the forced closure of movie theaters and the sudden ascension of streaming.

Suddenly, Disney had cast its lot with digital content distribution and thereby negated the power of its most established executives.

Bob Chapek wanted everyone to know he, not Bob Iger, was running the show.

Burning Bridges

You know many of these stories individually by now. Still, when you judge them in totality, you recognize Chapek’s failings.

The troubles began when Chapek violated the terms of Scarlett Johansson’s contract on Black Widow.

Disney+ offered a day-and-date release for the Marvel title, a decision that burned bridges in Hollywood.

Chapek’s decision would have cost Johansson as much as $50 million, but that’s somehow not the worst part.

When Johansson protested through her agent, Disney ignored her. Later, she filed a lawsuit.

At this point, Chapek publicly attacked the beloved actress, accusing her of “callous disregard” in a time of world crisis.

As the authors note, Chapek had just fallen victim to one of the flaws of the new DMED infrastructure.

This precise issue was one Bergman had anticipated, causing him to side against Chapek.

Disney ultimately settled that lawsuit and paid Johannson a large settlement as an apology.

Bad Advice

Soon afterward, Chapek somehow angered everyone inside and outside Disney through his reckless actions.

Chapek had hired a new company spokesman, Geoff Morrell. Almost immediately afterward, Disney faced a new crisis.

The company’s most popular theme parks reside in Orlando, Florida.

The state government there, working under the direction of Governor Ron DeSantis, created the so-called “Don’t Say Gay” bill.

Arnold, Disney’s Chairman of the Board at the time, is gay. Chapek liaised with her on how to handle the matter.

Disney wanted to support its Cast Members, but Chapek felt strongly that the company shouldn’t participate in politics.

Arnold provided Chapek with sage advice. She argued that Disney shouldn’t decry the bill publicly beyond one simple action.

More than 100 companies had signed a letter decrying the legislation.

Arnold correctly stated that there’s power in numbers. Nobody could call Disney out for playing politics if 100+ other companies had, too.

Chapek spoke with Morrell. The two of them came up with an alternative plan for Disney to fight “the wars, not the battles.”

Disney never signed the letter, which was news to Arnold, who considered the matter settled.

Instead, Chapek had sided with the newly hired outsider, Morrell, over his direct report, Disney’s Chairman of the Board.

In a way, this action reflected Chapek’s distrust of everyone linked to Iger, even the ones Iger believed acted too favorably to Chapek.

Disney later flip-flopped its positioning, and Morrell soon found himself unemployed due to his terrible advice.

Chapek spent the rest of his Disney tenure playing defense against people on both sides of the political aisle.

Even worse, many Cast Members felt betrayed by his lack of support during a crisis.

For his part, Iger loudly decried the bill…from a distance. He’d officially left Disney by then.

Downfall

Despite numerous acts of demonstrable incompetence, Chapek likely could have survived if he’d been right about one thing.

The CEO bet his Disney career on the growth of streaming and the performance of DMED.

Daniel showed promise as an executive, but Disney’s Board had lost confidence in Chapek.

Members debated how to handle Chapek’s contract. With Iger gone, the Board viewed Chapek as the only choice.

The CEO expected a contract extension and said so repeatedly.

Some Board members spoke against Chapek. If Iger were still with Disney, something different might have transpired.

Instead, Disney grudgingly extended Chapek’s contract, even as he struggled mightily in crisis after crisis.

Iger’s friend, former Nike CEO Mark Parker, had joined Disney’s Board. His cohorts asked him to take over as CEO, but he declined.

So, Chapek stayed even as his world crumbled. The streaming division lost more money than anyone had anticipated.

Outside investors were frustrated by their lack of revenue. Two of them, Daniel Loeb and Nelson Peltz, pushed for Board seats.

Chapek shared a solid relationship with Isaac Perlmutter, a kindred spirit in prioritizing numbers over people.

Perlmutter suggested that Chapek meet with Peltz and add him to the Board, giving the CEO a new ally.

When Chapek approached Disney’s Board with this idea, they were apoplectic.

Chapek’s bosses instructed him to stop speaking with Peltz, a decision he ignored.

FWIW, Chapek has denied this part, but the reporters have other confirming sources.

McCarthy had remained loyal to Chapek, even though she’d long since lost confidence in him.

Then, even McCarthy reached her breaking point.

Endgame

In a karmic twist, it was economics that ultimately set Bob Chapek.

Wall Street had grown tired of all the streaming losses that media corporations had reported during the pandemic.

In 2022, when Netflix lost 35 percent of its stock price overnight, the writing was on the wall about Disney’s streaming content.

Chapek trusted the inexperienced Daniel too much with the budget and did not personally oversee the numbers enough.

When Disney prepared to report its quarterly fiscal earnings, McCarthy warned Chapek of the severity of the situation.

Chapek scoffed at the criticism, arguing that Disney’s streaming services were “killing it.”

By “it,” Chapek must have meant the bottom line, as the streaming division reported quarterly losses of more than $1.5 billion.

Chapek claimed that McCarthy was trying to sabotage him by telling the Board that Disney’s balance sheet was imperiled.

McCarthy’s retort was, “I am telling the truth.” The truth was not Bob Chapek’s friend, as it painted a bleak picture of Disney finances.

Once Disney’s Board learned of the financial shortfall, members openly wondered whether Chapek was up to the task.

When asked her opinion of her boss, McCarthy succinctly said of Chapek, “He can’t do it.”

At that moment, Chapek’s fate was sealed.

A Phone Call and an Apology

Disney’s Board weighed its options and settled on the plan that made the most sense.

The members wanted Bob Iger to return as Disney CEO.

To this day, Iger swears that he loved his retirement. His Disney cohorts don’t understand how that’s possible, though.

Their recollection was that whenever they spoke to the retired Disney executive, he spent the entire conversation complaining about Chapek.

Iger also felt betrayed by some of the people he’d previously brought on board, like Susan Arnold.

Both individuals claim that they never spoke after Iger left the company.

So, even though Disney’s Board wanted to bring Iger back, none of them remained in close contact with them.

A couple of other Disney executives had, though. Berman lived near Iger, and the two interacted regularly.

Similarly, Dana Walden, the other Co-Chairman of Disney Entertainment, often vented to Iger about the state of the company.

On one occasion, Walden asked Iger whether he’d return to the company.

Iger’s simple reply was, “I might. But they’ll never ask me.” He was wrong.

Return of the King

A still petulant Iger wasn’t about to make the first move, though. And he wanted an apology for how he’d been treated.

Walden asked whether Iger would call Arnold. Like a melodramatic teen, he replied, “If she wants to talk to me, she knows how to reach me.”

Desperate and seeking to repair a friendship, Arnold did just that.

Within 15 minutes, Arnold had quickly apologized, and Iger had agreed to return to Disney.

For his part, Chapek spent one of his last few days at Disney as a guest at Peltz’s mansion.

The activist investor pushed for change at Disney, an idea Chapek liked. Thankfully, he’d never have the opportunity to implement anything.

On Sunday, November 20^th, Disney’s Board unanimously voted to fire Chapek and restore Iger as CEO.

When informed of the decision, Chapek had the temerity to ask, “Why?” Arnold’s simple response was, “We lost confidence.”

To this day, Chapek believes that Iger had undermined his successor at every step.

Ever the politician, Iger had assassinated Chapek in plain sight, and nobody at Disney did anything to help the deposed CEO.

For his part, Iger couldn’t believe the state of disrepair he discovered at Disney when he returned.

In the days that followed, Iger maintained that he needed a full year to clean up Chapek’s various messes.

Some would argue Iger is still cleaning. But Disney fans don’t care. They never warmed to Chapek, who refused to follow Iger’s path.

In that regard, Chapek was complicit in his own assassination, as Iger returned as King of Disney.

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