What Bob Iger’s Return Means for Disney and Chapek’s Decisions

Robert Iger, President and CEO of The Walt Disney Company speaks in Laguna Beach, California, October 22, 2019.

Mike Blake | Reuters

by Bob Iger shocking comeback like DisneyCEO immediately questioned some of the key decisions of outgoing CEO Bob Chapek.

Disney shares are down more than 40% this year, including a drop in weak fiscal fourth-quarter results earlier this month. The Disney board’s choice to replace Chapek with Iger shows that they are more confident that Iger will deliver better results. Iger rejected some of Chapek’s changes to Disney though choose him as his successor in early 2020, according to people familiar with the matter, as CNBC reported earlier this year.

The biggest point of contention may have been Chapek’s reorganization of the company, the creation of a new division called Disney Media and Entertainment, or DMED, and consolidated budgetary power for Disney’s distribution and content divisions under Kareem Daniel. Undoing a complete restructuring of a company would be messy and time-consuming, but it’s hard to imagine Iger keeping Chapek’s organization intact. Daniel’s position at the company also becomes more fragile. He has a close connection with Chapek.

Iger also believes that Disney+ should be priced below competition streaming service to maximize the perception of its value to consumers. Chapek decided to increase the price of Disney+ to $10.99 ad-free as of December 8, making it more expensive than other ad-free streaming services, such as Paramount+ and NBCUniversal’s Peacock. With just a few weeks until December 8, it may be too late for Iger to retract that price increase — or decide to price Disney+ with ads at $7.99 per month instead of lower — but it is possible.

The two leaders do not disagree on everything. Both have long defended the value of ESPN and Hulu, both of which are largely controlled by Disney. Disney has the option to buy Comcast’s 33% stake in Hulu in January 2024. Chapek expressed a desire to continue with that transaction. Given Iger’s backing of a three-pronged streaming strategy of Hulu, ESPN+, and Disney+, it’s likely he’ll choose to do the same.

But Iger conflicts with Chapek’s original treatment about how Disney responded to Florida’s controversial “Do Not Say Gay” law, privately expressing anger at how the Disney brand could be affected. It wouldn’t be surprising if Iger’s first business goal, before canceling any Chapek structural changes or reeling in direct-to-consumer spending, was to provide a sense of cultural pride. of the company.

WATCH: Bob Chapek and Bob Iger’s Tense Relationship

'Extremely awkward': Inside the rift between Disney's Chapek and Iger


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