Behind the stunning exit of Disney CEO Bob Chapek

Five months ago, Bob Chapek seemed to have everything firmly under control.

Walt Disney Co.’s board of directors in June renewed Chapek’s contract as CEO of the legendary company for an additional three years, noting that his leadership is key to “keeping Disney on the successful path it is on today.”

But on Sunday, Disney directors abruptly ditched Chapek and reinstated his widely admired predecessor, Bob Iger, to cheers from Wall Street and Disney supporters alike.

What happened?

Interviews with nearly a dozen Disney insiders, analysts, and people close to the board indicate that Chapek’s troubles had been mounting almost since the day he took over the reins of Disney in late February 2020.

In a matter of weeks, the economic environment had changed radically as health precautions for the COVID-19 pandemic forced businesses to close, including theme parks, cruise lines and movie theaters that had long supported the Burbank company. He was also trying to expand Disney’s streaming reach, a costly bet.

Even more debilitating, insiders said, was a series of miscalculations and missteps that eroded Chapek’s leadership and ultimately led to an unshakable loss of confidence.

Tensions came to a head on Friday when key Disney board members, including Chairwoman Susan Arnold, reached out to Iger and invited him back as chief executive, the job he had excelled at for 15 years, according to one with the matter trusted person not authorized to speak publicly.

According to two of the people with knowledge, Disney’s board of directors moved quickly over concerns that 71-year-old Iger was considering a position to run another entertainment company. Not to lose, the board quickly struck a two-year deal with Iger, who emailed Disney employees late Sunday to announce his return, shocking some, who said they had to double-check the email from Iger check to make sure it’s real.

The shuffle brought into focus the latest chapter of Disney’s long-running follow-up drama.

“Bob Iger’s footsteps were impossible to fill,” said Jeffrey Cole, director of USC’s Center for the Digital Future. “Chapek wasn’t as diplomatic or elegant or lithe as Iger. … He just wasn’t Central Casting’s vision of a CEO who would follow Bob Iger.”

Chapek was unavailable for an interview.

According to Bloomberg News, the short-term CEO is expected to leave Disney with at least $23 million. His contract, which expires in mid-2025, entitles him to receive a salary for the entire agreed term. Chapek will also collect his Disney pension — he worked for the company for almost 30 years — and if Disney’s stock recovers, he could reap even more.

Chapek, 62, rose through the ranks, working in the company’s home video division during the VHS tape era and rising to lead the consumer products unit and later the theme park business. While there, Chapek oversaw a number of major projects, including the opening of the company’s new theme park in Shanghai and the debut of Star Wars-themed lands in California and Florida. Several executives who worked for him also described him as – that is, focused on streamlining the company to thrive in a more challenging 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 of directors appointed Iger as executive chairman. Iger stated that he would hand over day-to-day operations to his former lieutenant and focus on working with creative types.

Then the pandemic struck.

Chapek had been in office less than two months when his authority was weakened. In April 2020, as the full ramifications of the COVID-19 pandemic became apparent, Iger told Ben Smith, then-media columnist for The New York Times, that he was still in the loop. Iger said he actively helps “Bob [Chapek] and the company to fight [the pandemic]especially since I ran the company for 15 years!”

The suggestion that Chapek needed “help” irritated Chapek and contributed to a frosty relationship between him and Iger that has lasted to this day, observers said.

Some insiders have criticized Chapek for harboring this grudge, saying he should have dutifully taken on the role of apprentice because it was Iger who picked him for the top job and it was Iger who transformed the company and took it from a $47 billion company turned into a $250+ billion giant. People close to Iger said the longtime boss simply wanted to be a resource for Chapek.

“But for Chapek, it seemed like Iger wasn’t going out of his way,” said a former manager.

Chapek also couldn’t shake the image that he was simply a theme park executive, one who lacked a broad understanding or appetite for the intricacies of running a creative venture that produces hits like FX’s “The Mandalorian” or “American Horror.” Story.”

The handling of the “Black Widow” row over Scarlett Johansson in July 2021 left many in Hollywood with a sour taste. Disney’s public statements suggested that one of the Marvel Universe’s few female stars was greedy after Disney decided to release the film on its Disney+ streaming service rather than in theaters, as was envisaged when the deal was signed.

Hollywood agents, producers and some company executives resented Johansson’s treatment and the ensuing legal battle, an embarrassment for a company that has long boasted of talent relationships.

“Bob Chapek is a very good guy, but he was overwhelmed,” said Jeffrey A. Sonnenfeld, senior associate dean at the Yale School of Management. “And he had a very slow takeover process that didn’t do him any good. The schedule for an insider is typically eight months. For an outsider, it often takes two years.”

“But Iger was still there, so that process was slow,” Sonnenfeld added.

Eager to restructure the company and streamline operations, Chapek devised a sweeping reorganization that centralized power in a longtime ally, Kareem Daniel. Daniel, a former head of consumer products, has been tasked with the global strategy for the company’s streaming services. He was also the gatekeeper for financial decisions made by creative executives, causing friction over priorities and budgets.

In his first move, Iger announced Monday that he would dismantle Chapek’s centralized structure. Daniel, said Iger, left the company.

Iger served as executive chairman of Chapek’s reign for 22 months. Even before Iger left in late December, several of his closest advisers announced their resignations, including communications chief Zenia Mucha and Disney general counsel and secretary Alan Braverman, who joined Disney in 1993.

Chapek brought in a former BP oil executive, Geoff Morrell, as his new head of communications and government relations. Morrell, a former Pentagon press secretary who also worked as a journalist at ABC News, also had a large portfolio. And he tried to direct the company’s response to Florida’s Education Parental Rights Act, which critics derided as the “Don’t Say Gay” law.

After weeks of silence on the legislation, Chapek reversed course and condemned the bill, giving Florida Gov. Ron DeSantis a victory. The governor has blasted Disney and said Florida would not bow to an “awakened” company. DeSantis requested that Disney’s special self-governing status near Orlando be revoked.

“He did something that very few people could have done. He managed to offend both the DeSantis MAGA crowd and the civil rights movement,” Sonnenfeld said. “It was so badly managed that it alienated both communities.”

Morrell only lasted three months.

Six weeks later, in an attempt to consolidate his power, Chapek called Disney’s powerful television executive Peter Rice into his office and fired him for saying he wasn’t a good fit. Rice had joined Disney as part of the 2019 acquisition of much of Rupert Murdoch’s Hollywood holdings, but Disney insiders said Chapek felt Rice had undermined him – he was frequently mentioned as a possible successor should Chapek get the boot .

Disney’s board of directors backed Chapek and gave him a new three-year deal — just days before Netflix announced a customer loss, a seismic shock to the industry. Suddenly, Wall Street was less than enthusiastic about the heavy losses media companies across the industry were suffering while building their own streaming services.

Activist shareholders began criticizing Chapek and his decisions, even suggesting that Disney sell ESPN.

The final straw came this month when Disney launched its fiscal fourth quarter earnings conference call with analysts touting the company’s marvels, only to reveal that Disney had made $1.5 billion in its streaming services, including Disney+, and the company could miss subscriber projections if a recession hits.

Chapek’s next move was to announce cost cuts and layoffs, which alarmed employees. “We literally heard from the press that layoffs were coming,” said an insider.

By that month, calls for change at the top had turned into a roar.

CNBC’s Jim Cramer broke down in tears and said Chapek must be fired.

“The board must have said, ‘We need someone like Bob Iger,'” said Cole. “And then they said, ‘Well, what about Bob Iger?'”

Times contributor Ryan Faughnder contributed to this report.

https://www.latimes.com/entertainment-arts/business/story/2022-11-21/bob-chapek-disney-ouster-bog-iger Behind the stunning exit of Disney CEO Bob Chapek

Sarah Ridley

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