Five months ago, Bob Chapek seemed firmly on top of things.
Walt Disney Co.’s board of directors in June prolonged Chapek’s contract as chief executive of the legendary company for an extra three years, noting his leadership was key to “keeping Disney on the successful path it’s on today.”
But on Sunday, Disney’s directors abruptly ditched Chapek, reinstalling his widely admired predecessor, Bob Iger, which elicited cheers from Wall Street and Disney’s faithful.
What happened?
Interviews with nearly a dozen Disney insiders, analysts and other people near the board suggest that Chapek’s problems had been mounting almost because the day he took Disney’s reins in late February 2020.
Inside weeks, the economic environment had profoundly shifted as COVID-19 pandemic health precautions closed businesses, including theme parks, cruise lines and movie theaters, that had long buttressed the Burbank company. He also tried to expand Disney’s reach in streaming, a costly bet.
More debilitating, insiders said, was a series of miscalculations and missteps that undermined Chapek’s leadership and ultimately led to an unshakable lack of confidence.
Tensions got here to a head Friday when key Disney board members including Chair Susan Arnold approached Iger and invited him back as chief executive, the job he excelled at for 15 years, in line with an individual acquainted with the matter who was not authorized to comment publicly.
Disney’s board moved swiftly due to concerns that Iger, 71, was considering a position to run one other entertainment enterprise, in line with two of the knowledgeable people. Not wanting to lose out, the board quickly struck a two-year agreement with Iger, who late Sunday sent an email to announce his return to Disney employees, shocking some who said they’d to examine the Iger email twice to ensure that it was real.
The shuffle brought into full view the most recent chapter of Disney’s long-running succession drama.
“Bob Iger’s shoes were not possible to fill,” said Jeffrey Cole, director of USC’s Center for the Digital Future. “Chapek wasn’t as diplomatic or elegant or smooth as Iger. … He just wasn’t Central Casting’s idea of the CEO who would follow Bob Iger.”
Chapek was not available for an interview.
The short-tenured CEO is anticipated to depart Disney with a minimum of $23 million, in line with Bloomberg News. His contract, which had been scheduled to run to mid-2025, entitled him to gather a salary for the complete duration of his agreed-upon term. Chapek also will collect his Disney pension — he’s worked at the corporate nearly 30 years — and if Disney’s stock recovers, he could reap much more.
Chapek, 62, rose through the ranks, working in the corporate’s home video division in the course of the era of VHS tapes and rising to steer its consumer products unit and later its theme parks business. There, Chapek oversaw various major projects, including the opening of the corporate’s latest theme park in Shanghai, and the debut of the “Star Wars”-themed lands in California and Florida. Several executives who worked for him described him as well-meaning, focused on streamlining the corporate to achieve a tougher environment.
Executives interviewed for this story pointed to several key moments that they said helped seal Chapek’s fate.
When Chapek was named CEO in February 2020, Disney’s board elevated Iger to executive chairman. Iger indicated he would relinquish the day-to-day operations to his former lieutenant and give attention to working with creative types.
Then the pandemic hit.
Chapek was within the job lower than two months when his authority was diminished. In April 2020, as the complete ramifications of the COVID-19 pandemic were emerging, Iger told Ben Smith, then-Recent York Times media columnist, that he was still in the image. Iger said he was “actively helping Bob [Chapek] and the corporate contend with [the pandemic], particularly since I ran the corporate for 15 years!”
The suggestion that Chapek needed “help” irritated Chapek and contributed to a frosty relationship between him and Iger that continued to this present day, observers said.
Some insiders criticized Chapek for nursing that resentment, saying he must have dutifully filled the role of apprentice since it was Iger who had tapped him for the highest job and it was Iger who transformed the corporate, taking it from a $47-billion enterprise to a greater than $250-billion behemoth. People near Iger said the longtime chief simply desired to be a resource for Chapek.
“But for Chapek, it seemed that Iger wouldn’t get out of the way in which,” one former executive said.
Chapek also didn’t shake a picture that he was simply an executive from the theme parks division, one who lacked a broad understanding or appetite for the high quality points of running a creative enterprise that produces such hits as “The Mandalorian” or FX’s “American Horror Story.”
The handling of the Scarlett Johansson “Black Widow” dispute in July 2021 left many in Hollywood with a sour taste. Disney’s public statements suggested that one in all the few female stars of the Marvel Universe was being greedy after Disney decided to release the movie on its streaming service, Disney+, fairly than theaters, as envisioned when the contract was struck.
Hollywood agents, producers and a few executives in the corporate chafed at Johansson’s treatment and the lawsuit that followed, a humiliation for a corporation that had long prided itself for talent relations.
“Bob Chapek is a excellent guy, but he was in over his head,” said Jeffrey A. Sonnenfeld, a senior associate dean on the Yale School of Management. “And he had a really slow taking-charge process that didn’t serve him well. The timetable is normally eight months for an insider. For an outsider, it often takes two years.”
“But Iger was still there, so this process was slow,” Sonnenfeld added.
Desperate to restructure the corporate and streamline operations, Chapek designed a sweeping reorganization that centralized power in a longtime ally, Kareem Daniel. Daniel, a former consumer products chief, was put in control of global strategy for the corporate’s streaming services. He was also the gatekeeper for financial decisions made by creative executives, which caused friction over priorities and budgets.
In his first move, Iger announced Monday that he would unwind Chapek’s centralized structure. Daniel, Iger said, left the corporate.
Iger was executive chairman for 22 months of Chapek’s reign. Even before Iger exited at the tip of last December, several of his closest advisors announced they might retire, including communications chief Zenia Mucha and Disney general counsel and secretary Alan Braverman, who had joined Disney in 1993.
Chapek brought in a former BP oil executive, Geoff Morrell, as his latest communications and government relations chief. Morrell, a former Pentagon press secretary who also worked as a journalist at ABC News, also had a big portfolio. And he tried to administer the corporate’s response to Florida’s Parental Rights in Education law, which critics derisively nicknamed “Don’t Say Gay” laws.
After weeks of staying silent on the laws, Chapek reversed course and condemned the bill, handing Florida Gov. Ron DeSantis a win. The governor blasted Disney, saying Florida wouldn’t bend to a “woke” company. DeSantis moved to have Disney’s special self-governing status near Orlando revoked.
“He pulled something off that only a few people could have done. He managed to offend each the DeSantis MAGA crowd and likewise the civil liberties crowd,” Sonnenfeld said. “It was handled so badly that he alienated each communities.”
Morrell lasted just three months.
Six weeks later, in a move viewed as an effort to consolidate his power, Chapek summoned Disney’s powerful head of television, Peter Rice, to his office and fired him, saying he wasn’t an excellent fit. Rice had joined Disney as a part of the 2019 takeover of much of Rupert Murdoch’s Hollywood holdings, but Disney insiders said Chapek felt Rice had undermined him — he was steadily mentioned as a possible successor should Chapek get the boot.
Disney’s board supported Chapek and gave him a latest three-year deal — just days before Netflix reported a loss in customers, a seismic jolt to the industry. Suddenly, Wall Street was less enamored with the heavy losses media corporations industrywide were incurring to construct their very own streaming services.
Activist shareholders began criticizing Chapek and his decisions, even suggesting that Disney sell ESPN.
The ultimate straw got here this month when Disney began its fiscal fourth quarter earnings call with analysts touting the wonders of the corporate, only to disclose that Disney had lost $1.5 billion on its streaming services, including Disney+, and the corporate might miss subscriber projections if a recession occurs.
Chapek’s next move was to announce cost-cutting and layoffs, alarming employees. “We literally learned from the press that there could be layoffs coming,” one insider said.
By this month, calls for change at the highest had grown to a roar.
CNBC’s Jim Cramer went on a tear, saying Chapek needed to be fired.
“The board will need to have said, ‘We want any person like Bob Iger,’” Cole said. “After which they said, ‘Well, what about Bob Iger?’”
Times staff author Ryan Faughnder contributed to this report.
