Disney's big succession fail
The sudden replacement of Disney CEO Bob Chapek with his revered predecessor Bob Iger represents a shocking ending to a bitter power struggle that's been building between the two executives for the past two years.
Why it matters: The move marks one of the messiest corporate succession failures in recent memory. Iger's return may satisfy anxious investors, but eventually, Disney will need to find another CEO to run the company.
Details: In a statement Sunday evening, Disney said Iger will return to the company as chief executive, effective immediately, for the next two years and will work with the board to find a successor.
- “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,” said Susan Arnold, Disney's board chair.
- The announcement was particularly surprising since Disney's board voted unanimously in June to extend Chapek's contract for another three years.
The announcement sent shockwaves through Hollywood and Wall Street and was immediately lauded by investors who've grown frustrated with Disney's performance under Chapek.
- Disney’s stock saw its biggest drop in 21 years earlier this month after the company missed Wall Street expectations on revenues and profits for its final fiscal quarter of the year.
- Amid recession fears, investors have grown skeptical that Disney's linear television and parks divisions can offset widening streaming losses.
- Last week, Chapek announced layoffs, a hiring freeze and other cost-cutting measures. Similar efforts are underway at rival entertainment companies.
Catch up quick: Tensions between Iger and Chapek began to grow following a New York Times story published in April 2020 — just two months after Iger stepped down — that the veteran media mogul wanted to reassert control of the company, sources told Axios.
- The falling out between the two executives, which has been widely reported, became evident as Iger hesitated to publicly defend Chapek's early blunders.
- In February, Iger offered a firm stance against Florida's "Don't Say Gay Bill" publicly while Disney’s executive team struggled to address the crisis.
The big picture: Iger's return comes after years of confusing signals around his successor. Two executives, Tom Staggs and Kevin Mayer, both reportedly left the company after being passed over for the CEO role in 2016 and 2020, respectively.
- Chapek was a surprising pick, given that the longtime parks and resorts executive had little to do with Disney's biggest bet under Iger — streaming.
The bottom line: Iger had 15 years as CEO to groom the right successor. Now that the company's stock is languishing, Disney's board will give him another shot.