Bob Iger, who served as Disney chief executive for 15 years, has replaced successor Bob Chapek after a rocky tenure that lasted just 33 months.
Mr Iger, who handpicked Mr Chapek as his successor only to see the relationship quickly sour, will serve another two years in the job that made him one of the world’s most celebrated business leaders.
Disney has spent billions – its content budget this year alone was $30 billion – as it competes with Netflix and other streamers for subscribers
In a statement, Disney said Mr Iger has “a mandate from the board to set the strategic direction for renewed growth”. He will also work closely with the board to find a successor.
Mr Iger, who delayed his retirement four times before leaving the company, said in a memo to staff on Sunday that he felt “a bit of amazement” that he was returning to the company as chief executive.
Disney’s shares have fallen more than 40 per cent this year amid growing investor concerns about the high costs of its streaming business. Disney has spent billions – its content budget this year alone was $30 billion (€29.2 billion) – as it competes with Netflix and other streamers for subscribers. Earlier this month, the company told employees that it plans to cut jobs and institute a hiring freeze as it attempts to halt the red ink at its streaming operations.
Mr Chapek also found himself at the centre of a culture war this spring over a Florida law regulating what teachers can say about LGBT+ issues. The messy fight with Florida governor Ron DeSantis generated negative headlines for weeks and upset LGBT+ staff members and their allies.
Despite the difficulties, the board renewed Mr Chapek’s contract this summer. The decision to bring Mr Iger back into the company marks a surprising reversal by the board chair, Susan Arnold.
This month, Disney shocked investors with news that operating losses from its streaming service had rocketed by $800 million to $1.5 billion
“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,” Ms Arnold said in a statement.
Rich Greenfield, an analyst at LightShed Partners, said the move was “strange in light of the board’s recent renewal” of Mr Chapek’s contract.
Mr Iger will take over the company as it seeks to staunch billions of dollars in losses in its streaming business – in part a legacy of his own decision to plunge the company headfirst into a streaming war with Netflix. Next month, Disney will introduce an advertising-based version of the Disney Plus service as the company aims for profitability in streaming by 2024.
This month, Disney shocked investors with news that operating losses from its streaming service had rocketed by $800 million to $1.5 billion, thanks to higher content spending and marketing expenses in the quarter ended October 1st. As a result, operating income at Disney’s media and entertainment group plunged 91 per cent to $83 million in the quarter.
Mr Iger has long been an investor favourite. During his tenure, he transformed Disney through a series of acquisitions – including of Marvel, Pixar, Lucasfilm and 20th Century Fox – that left it holding a collection of the most valuable franchises in the entertainment business.
Under Mr Chapek, Disney’s streaming services – which include Disney Plus, Hulu and ESPN Plus – have experienced blistering growth, reaching a combined 235.7 million subscribers – more than the 227 million that industry pioneer Netflix expects to have by the end of this year. He also oversaw the revival of Disney’s theme parks business, which he once ran, as Covid-19 restrictions eased.
Mr Chapek took the reins weeks before the onset of the pandemic in February 2020, and a few weeks later, he found himself shutting down the company’s theme parks and other operations. Soon, he and Mr Iger – who had remained on as chair – began to clash, with Mr Iger suggesting that he would take a greater role in running the company during the crisis. Mr Iger’s tenure as chair ended in January.
He also made decisions that upset the creatives at Disney – particularly when it came to streaming. He had a very public fight with Scarlett Johansson, who sued Disney over potential lost income due to its decision to release Black Widow on its streaming service at the same time the movie was in cinemas.
Mr Greenfield said he expected Mr Iger to overhaul Mr Chapek’s streaming structure. “It’s been clear that studio executives have become increasingly furious” about their loss of power, he said. – Copyright The Financial Times Limited 2022