Robert Iger, Chairman and CEO of The Walt Disney Company, speaks in Laguna Beach, California on October 22, 2019.
Mike Blake | Reuters
Bob Iger’s shocking return as DisneyThe chief executive officer of immediately challenges several key decisions made by outgoing CEO Bob Chapek.
Disney shares are down more than 40% this year, including the plunge on weak fourth-quarter results earlier this month. The Disney board’s decision to replace Chapek with Iger suggests they have more confidence that Iger will deliver better results. According to people familiar with the matter, Iger has disapproved of several of Chapek’s moves to Disney, despite picking him as his successor in early 2020, CNBC reported earlier this year.
The biggest bone of contention may be Chapek’s reorganization of the company, which created a new division called Disney Media and Entertainment, or DMED, and consolidated budgetary authority for Disney’s content and distribution divisions under Kareem Daniel. Undoing a complete corporate reorganization would be messy and time-consuming, but it’s hard to imagine Iger will keep Chapek’s organization running. Daniel’s position in the company is also getting weaker. He has close ties to Chapek.
Iger also believed that Disney+ should undervalue competitive streaming services to maximize its value-for-money perception among consumers. Chapek decided to raise the price of Disney+ to $10.99 starting in December without ads. 8, making it more expensive than other ad-free streaming services like Paramount+ and NBCUniversal’s Peacock. With Dec. 8 just weeks away, it might be too late for Iger to reverse that price increase — or the decision to price Disney+ with ads at $7.99 a month rather than a lower price — but it is possible.
The two leaders do not disagree on everything. Both have long championed the value of ESPN and Hulu, both of which are majority-controlled by Disney. Disney has an option to buy Comcast’s 33% stake in Hulu in January 2024. Chapek expressed a desire to advance this transaction. Given Iger’s support for a three-pronged streaming strategy of Hulu, ESPN+, and Disney+, it’s likely he would do the same.
However, Iger clashed with Chapek’s initial handling of Disney’s response to Florida’s controversial “Don’t Say Gay” legislation and privately expressed concern about how the Disney brand could be affected. It wouldn’t be surprising if Iger’s first task is to inject a sense of pride back into the corporate culture before he reverses any of Chapek’s structural changes or passes the spending directly to consumers.
WATCH: The strained relationship between Bob Chapek and Bob Iger