In a shake-up that stunned even the fiercely scrutinising Hollywood community, Disney announced the return of Bob Iger as chief executive, less than three years after installing his handpicked successor.
With Iger — who oversaw the entertainment giant's rise to historic dominance during a 15-year span beginning in 2005 — the Disney board is attempting to restore the company to a 21st-century golden age that may be slowly slipping away.
Investors cheered the news, powering Disney stock up more than 6 percent on Monday. But the move is far from a sure thing. The business climate is very different from the one Iger left: The streaming market has cooled, the theatrical business is flirting with crisis, some of Disney's big franchises are in flux, and an ever-worsening social polarization imperils Disney's brand of broad apolitical entertainment where all can feel welcome.
"I think in the short-term, Iger returning as CEO is a safe move that should allow confidence among stakeholders and fans," Josh Spiegel, an online commentator and leading expert on Disney, said in a message to The Washington Post. "The long-term plans are a lot hazier."
And Iger may need to confront a recession that could prompt consumers to rethink and potentially restrict their entertainment spending habits.
Iger replaces Bob Chapek, who had a rocky tenure after being promoted to chief executive in February 2020.
Chapek, who was in charge of Disney's theme-park division before ascending to the top job, led the entertainment giant throughout the pandemic and had received a three-year contract extension in June.
But creative gatekeepers both inside and outside Disney increasingly questioned whether he could manage relationships with key talent, an essential Hollywood skill, as well as his predecessor did, according to three entertainment business veterans who spoke on the condition of anonymity because they did not want to appear critical of a public figure. Reports from Business Insider and Puck said Iger was asking the same questions.
Chapek also grappled with multiple public-relations challenges, such as changes to Florida's education policy on LGBTQ discussions. As it tried to navigate the issue, Disney managed to anger people on both sides and eventually drew the ire of Republican Florida Gov. Ron DeSantis.
The decision to reinstate Iger comes just days after Chapek reportedly outlined plans in an internal memo for a hiring freeze, layoffs and cost cuts following disappointing results, according to Reuters. Disney, in the most recent quarter, missed Wall Street analysts' expectations as it recorded sizable losses from Disney Plus, which features a hefty number of shows including the Star Wars and Marvel Cinematic Universe franchises.
The company's board chair, Susan E. Arnold, in a statement late Sunday described Iger as "uniquely situated to lead the company" as the industry changes.
Part of Iger's new mandate is to select a successor, the company said. Iger said in a statement that he was "extremely optimistic for the future of this great company."
A Disney spokesman did not reply to a request for further comment from Iger or the company.
Iger's lengthy first tenure as chief executive was an aggressive expansionist period that saw the company acquire Pixar, Marvel, Lucasfilm and 21st Century Fox, turning a middle-of-the-pack studio into a global powerhouse. Box office returns hit new heights. The company's market capitalization increased fivefold.
In 2019, Iger presided over the launch of Disney Plus, an attempt to strike back against streaming upstarts like Netflix. Its popularity quickly skyrocketed.
But in February 2020, just weeks before the pandemic began to inflict its global economic damage, Disney abruptly announced that Chapek would replace Iger. The executive, who had waffled for years on naming a successor and delayed his own retirement several times, would instead become executive chairman in charge of creative endeavors as Chapek brought himself up to date on that side of the business.
Coronavirus restrictions would soon shut down theme parks as well as the movie theaters on which Disney's juggernaut studio relied, thrusting Chapek into the deep end. The pandemic took an outsize toll on the bottom line: Total profit after taxes during the 2020 holiday period, for instance, cratered to $29 million from $2.1 billion the year before.
And after Disney moved a number of theatrical films to streaming, Chapek and the company endured blowback from Hollywood's talent community, including a lawsuit from star actress Scarlett Johansson over her "Black Widow" pay.
Chapek's tenure also saw Disney's missteps over Florida's policies spark fury from Disney's LGBTQ employees. DeSantis, meanwhile, used that turmoil as a launchpad for his boldest confrontation yet with corporate America, spearheading a successful push to strip Disney of a decades-old tax district, criticizing the company on Fox News and fundraising off the clash, The Washington Post reported previously.
But within Hollywood and particularly Disney, Chapek's most consequential move may have been a massive reorganization that essentially stripped marketing and distribution power from the executives at each creative unit and placed them with Kareem Daniel, a Chapek corporate deputy who worked apart from the divisions.
The move, which was questioned throughout Hollywood, was seen by the targeted executives as both an ego blow and a business limitation, according to two people at the company at the time who spoke on the condition of anonymity because they were not authorized to talk to the press. Disney said Monday that Daniel would be departing the company.
In a memo to staff Monday announcing the departure, Iger said it was "my intention to restructure things in a way that honours and respects creativity as the heart and soul of who we are."
Lloyd Greif, a prominent Los Angeles-based investor who tracks the entertainment business, likened Chapek's ousting to a "palace coup."
"Clearly there's a lot of dissent within the organization over his leadership," he told The Post. "You can only take so many knives in the back before you die."
Chapek's missteps led to his downfall, Greif said. But he added that filling Iger's shoes was no easy task, especially because Iger became Disney's "golden boy" and stayed on as the company's executive chairman until December 2021.
Iger's "long shadow" will make finding a successor difficult, Greif said.
"In some respects, it chills the marketplace," he added. "No one wants to be in a position where they fill Iger's shoes knowing that Iger is waiting in the wings to come back again."
When Iger passed the torch to Chapek in 2020, Disney already faced some challenges that started before the pandemic, including waning cable subscribers and uncertainty over its movie business. At the time, some analysts suggested that Iger sensed the head winds and wanted to step out on top, The Post has reported.
Those winds remain and may be gusting even stronger. Box office revenue this summer was down 20 percent compared with 2019. While the company has some Marvel beachheads, its future with other franchises remains uncertain.
And now Disney Plus presents a challenge. Though Iger said in 2019 that the service probably would not be profitable until 2024, Wall Street was still surprised this month when the company reported $1.5 billion in quarterly losses for the division that includes the streaming service.
"The shakiness of streaming as a viable business option, the cloudy futures for both Marvel and Lucasfilm, and the Fox acquisition that has basically led to nothing else of value, make Iger's return a sure thing, (if) only for a good PR boost to wrap up the year," Spiegel said.
Avatar: The Way of the Water
The company has also been fighting criticism from activist investor Dan Loeb, with whom it finally struck a deal this fall. Loeb had offered a slew of changes, including spinning off ESPN and appointing new board members.
One key test for Iger will come right away with the release next month of "Avatar: The Way of Water."
The James Cameron sequel was one big reason Disney bought 21st Century Fox — with some $3 billion in worldwide box office sales, the original "Avatar" is the highest-grossing film of all time — and the new release's performance will reveal a lot about both the health of the theatrical business and Disney's place in it.