UPDATED with Bob Iger’s full memo and pre-market trading:
Bob Iger has replaced Bob Chapek as Disney’s CEO, a shocking turn of events for the world’s largest media company that has been in turmoil ever since Iger stepped down as CEO in February 2020.
The shakeup that caught the entertainment industry and Wall Street mostly by surprise was confirmed by Disney’s board of directors late Sunday. There had been rumblings of a shakeup in the C-suite but the prospect of Iger returning to the CEO job still seemed far-fetched. The turnabout recalls a situation a generation ago at Apple in 1997 when Steve Jobs returned to the helm of the company he co-founded after 12 years in the wilderness. Iger was out of power as CEO for a little under three years.
Disney stock jumped 8% in pre-market trading to $91.80/share early Monday morning in response to Iger’s stunning reinstatement. It comes less than two weeks after the company reported its lowest closing price for Disney shares in more than two years as the media conglomerate’s quarterly results fell short of Wall Street expectations.
“We thank Bob Chapek for his service to Disney over his long career, including navigating the company through the unprecedented challenges of the pandemic,” said Susan Arnold, chairman of Disney’s board of directors. “The Board has concluded that as Disney embarks on an increasingly complex period of industry transformation, Bob Iger is uniquely situated to lead the Company through this pivotal period.”
The news came as a shock to even the most senior Disney executives, industry sources said. Staffers learned of the stunning reversal in the press release emailed by Disney’s corporate communications team. The first reaction from a number of employees reached by Variety was skeptism that it was a some kind of phishing scam or internet hoax. The shock was even greater as the news was confirmed and the stranger-than-fiction reality sank in.
A number of top Disney leaders were attending a pre-show reception at Dodger Stadium tonight for Elton John’s farewell show, which aired as a live stream event on Disney+, as the news broke around 6:45 p.m. PT. Disney and ABC executives were also out in force at the Microsoft Theater in Hollywood for ABC’s live telecast of the American Music Awards. Anecdotal reports indicated that there was an exodus of top brass from the cushy seats at Dodger Stadium and the AMAs around the time the email landed in the inboxes of Disney’s 190,000 employees worldwide.
Chapek’s ouster comes on the heels of a third-quarter earnings report that spooked Wall Street as spending on content and marketing for Disney’s direct-to-consumer platforms hit its projected peak of $1.5 billion in fiscal 2022. Even though the Disney had previously guided Wall Street to losses of that scale, and even as Disney+ posted subscriber growth for the quarter, the river of red-ink still took a toll on Disney’s stock price. Shares fell well below the $100 mark, to $90, on Nov. 9, the day after Disney’s after-market earnings report.
Iger’s stealthy return to the top adds a dramatic finish to the soap opera that has captivated Hollywood for the past few years. Iger, given his storied 15-year run that transformed Disney through acquisitions and great ambition, would invariably cast a large shadow over his successor. But in this case, there were reports of Iger vs. Chapek tussles almost from day one.
“I am extremely optimistic for the future of this great company and thrilled to be asked by the Board to return as its CEO,” Iger said in a statement. “Disney and its incomparable brands and franchises hold a special place in the hearts of so many people around the globe—most especially in the hearts of our employees, whose dedication to this company and its mission is an inspiration. I am deeply honored to be asked to again lead this remarkable team, with a clear mission focused on creative excellence to inspire generations through unrivaled, bold storytelling.”
In a memo to staffers issued late Sunday, Iger elaborated on his own sense of “amazement” at returning to his old captain’s chair (read full memo below).
“I know this company has asked so much of you during the past three years, and these times certainly remain quite challenging, but as you have heard me say before, I am an optimist, and if I learned one thing from my years at Disney, it is that even in the face of uncertainty—perhaps especially in the face of uncertainty—our employees and Cast Members achieve the impossible,” Iger wrote.
Chapek could not immediately be reached for comment. The 30-year Disney executive who had experience running theme parks, consumer products, home entertainment and distribution was seen as the perfect insider to keep Disney’s complex global operations humming. But Chapek hit some early missteps amid unprecedented pandemic times. He also inherited a strategy of betting the farm on the growth potential of Disney+, ESPN+ and Hulu. As the growth potential global streaming sector has clearly come down to earth, Chapek’s regime had the unenviable task of delivering numbers to Wall Street. Last week, Jim Cramer called for Chapek’s replacement, citing Disney’s “balance sheet from hell.”
In September, Chapek presided over Disney’s D23 fan event that demonstrated the breadth of content under Disney’s roof, from Marvel and Lucasfilm to National Geographic, Pixar, ESPN and ABC.
“The Disney of the next 100 years will be more expansive than the Disney of the first 100 years,” Chapek told Variety on Sept. 10. “The brand’s elasticity is amazing – the capital D Disney. Each of the components of our company — whether it’s Marvel, Lucasfilm, Pixar, ESPN, ABC — they have their own identity. But they all play into a much more expansive view of what Disney is. And the ultimate arbiter of what Disney can and can’t be is the fan, the viewer, the guest. They are the ultimate arbiter.”
Chapek faced unprecedented times as Disney leader, guiding the company through the abrupt shutdown of its theme parks around the world, as well as dealing with other disruptions closures that affected every aspect of the company’s business. But he also stumbled into a high-profile fight with Scarlett Johansson and CAA over Disney’s decision to send her feature film “Black Widow” to Disney+ given that movie theaters were still largely shuttered. The fact that Disney engaged in a brief war-of-words and litigation with Johansson shocked the creative community.
Earlier this year Chapek was also forced under pressure to issue a public apology to Disney employees for the company’s handling of lobbying efforts and political donations in Florida tied to the state’s recent anti-LGBT legislation. The situation and the degree to which Chapek was held to account was a harsh example of the PR and talent relations dexterity required of the leader of the Walt Disney Co. Iger’s mastery of those skills was only underscored by the timing of his departure, in February 2020, as the reports of a new and highly contagious disease emerged out of China.
Despite these missteps, Disney’s board of directors renewed his contract for three years in June.
“Bob (Chapek) is the right leader at the right time for The Walt Disney Company, and the Board has full confidence in him and his leadership team,” Arnold said in June.
Here is Iger’s full memo:
Dear Fellow Employees and Cast Members,
It is with an incredible sense of gratitude and humility—and, I must admit, a bit of amazement—that I write to you this evening with the news that I am returning to The Walt Disney Company as Chief Executive Officer.
When I look at the creative success of our teams across our Studios, Disney General Entertainment, ESPN and International, the rapid growth of our streaming services, the phenomenal reimagining and rebound of our Parks, the continued great work of ABC News, and so many other achievements across our businesses, I am in awe of your accomplishments and I am excited to embark with you on many new endeavors.
I know this company has asked so much of you during the past three years, and these times certainly remain quite challenging, but as you have heard me say before, I am an optimist, and if I learned one thing from my years at Disney, it is that even in the face of uncertainty—perhaps especially in the face of uncertainty—our employees and Cast Members achieve the impossible.
You will be hearing more from me and your leaders tomorrow and in the weeks ahead. In the meantime, allow me to express my deep gratitude for all that you do. Disney holds a special place in the hearts of people around the globe thanks to you, and your dedication to this company and its mission to bring joy to people through great storytelling is an inspiration to me every single day.
(Matt Donnelly and Michael Schneider contributed to this report.)
From Variety US