disney ousts ceo chapek and reappoints iger

The Walt Disney Company just announced a surprising leadership shakeup as Bob Chapek, the firm’s Chief Executive Officer, will be immediately replaced by the company’s long-tenured former boss Bob Iger.

Less than three years have passed since Chapek was named successor of Iger, who hand-picked him for the position after spending 15 years as the head of the entertainment business.

The Board of Directors said in a press release published today that Iger has agreed to serve as CEO for two years, a period during which he will have to appoint a new successor. In addition, the Board has commanded Iger to “set the strategic direction for renewed growth” at a point when Disney is investing heavily in the development of new businesses such as video streaming.

Why Was Bob Chapek Suddenly Ousted?

Bob Chapek had a hard task from the get-go as he navigated the company through the troubled waters of the pandemic. During this period, the firm’s theme parks remains shut down for several months and were progressively reopened, closed down, and reopened again based on how the virus behaved.

However, a lot of expectation has been put on Chapek in terms of his ability to live up to Disney’s ambitious media-focused strategy including the growth and success of the Disney+ streaming platform.

Earlier this month, the company’s shares suffered a strong setback as they dropped by more than 13% following the release of the firm’s financial results covering the fourth quarter of the 2022 fiscal year.

This sharp drop came as the company’s profitability came in significantly below what analysts were expecting while revenues also fell short of Wall Street’s estimates for the quarter.

The development of Disney+ is currently weighing heavily on the company’s bottom-line performance as the direct-to-consumer unit of the business produced operating losses of $4 billion during the 2022 fiscal year.

During this tenure, Chapek made the service available for international customers and launched an ad-supported subscription tier with the expectation of attracting more and more users to the streaming platform.

By the end of 1 October, Disney+ had 235 million subscribers. Chapek’s goal was to achieve profitability for this segment of the business as of 2024. However, it appears that the Board may not have been satisfied with the performance of the business and that is reflected by their decision to reappoint Iger to find another successor.

Iger Appears to Be Surprised by Disney’s Decision to Bring Him Back

“The Board has concluded that as Disney (DIS) embarks on an increasingly complex period of industry transformation, Bob Iger is uniquely situated to lead the Company through this pivotal period”, commented Susan Arnold, the Chairman of the Board of the entertainment giant.

The Board’s decision took Iger by surprise as reflected by an e-mail he shared with Disney’s employees right after he was reappointed. “It is with an incredible sense of gratitude and humility — and, I must admit, a bit of amazement — that I write to you this evening with the news that I am returning to The Walt Disney Company as Chief Executive Officer”, said a communication shared with the firm’s staff that was obtained by CNBC.

Chapek’s departure comes only a few months after he abruptly fired the head of the company’s TV division, Peter Rice, in a move that many deemed as a surprising power move that failed to live up to the standards of Disney’s corporate culture.

In addition, the ex-CEO’s rather ambiguous reaction to the approval of the so-called “Don’t Say Gay” bill in Florida was another disappointment for employees within the LGBTQ+ community as they believe Chapek was not supportive enough as he abstained from making public comments about his disagreement with the approval of the local law.

Finally, a leaked employee memo from Disney recently revealed that Chapek was taking steps to lay off a meaningful number of workers at the entertainment company in response to what could be the beginning of a recessionary cycle in both the US and overseas.

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