Bob Iger named Disney CEO in shocking development

[brentm77]

Chapek's presence has made little to deter the growth in the parks and resorts division (which includes DCL). In fact, revenues in that division have been pretty solid considering COVID.

Anyone celebrating in this specific forum won't see much of a change under Iger.

It's the media and studio divisions that have really struggled under Chapek. Disney+ content has become meh, and the big blockbusters are far and few in between. There's a whole lot more competition as well. Chapek was an easy head to roll, but bringing back Iger isn't a solution. It's a stop gap at the moment.

You are absolutely right that, on a balance sheet, the parks were not the problem for Disney, and that Iger's focus will be on the entertainment/Disney+ side. However, here are my arguments for why the change will be good for the parks and even a little for the DCL side:

1) The company culture is set from the top down, and Chapek was setting the wrong culture for Disney to be successful. Namely, his approach was one of cost cutting to increase profits. It started with him and flowed down through the entire company. Disney isn't the type of company where you can cut your way to huge profits.

2) Chapek made a few critical missteps, including his attempt to move the creative divisions to Orlando, causing the loss of key talent and unhappiness among many employees who work on projects related to the parks and cruise line. Furthermore, Chapek wasn't even able to fully execute the move, which means they took a huge loss for nothing so far. He also potentially damaged WDW with the looming loss of its self-governance.

3) Iger is widely described from insiders as someone who was interested in the creative side of the company, while Chapek wasn't. That lack of caring bleeds down to the parks and even shows up in how the parks handle problems and initiatives, since the only thing that matters is the bottom line.

4) The employee reception to Iger coming back seems to be widely positive, which can only help improve the customer service experience, and the quality of employees it retains and recruits.

5) Iger seems to care about the perception of the Disney brand, Chapek not so much. I genuinely think Iger was very proud of Disney and his association with it in a way Chapek never was. That has to give Iger some interest in the parks and the negative feedback coming from both media and customers. I think Iger also appreciates the synergies between the parks and entertainment, which aren't good when your customers are hating the park experience.

All that said, I agree that it won't be his focus. I think it is more of the idea that he will have a positive effect on the company as a whole and it signals the company will go in a different direction. Admittedly, it could all be wishful thinking and confirmation bias. Iger certainly made some major missteps, including what he paid for Fox and the drag that is causing the company.

 

[happycamper47]

DIdn't see this mentioned, but apparently some upper echelon were going to quit if Chapek stayed.

For months, some of Disney's top creative and business leaders told the board that they would consider leaving if Chapek stayed as CEO, Insider's Claire Atkinson reported, citing a senior Disney insider.

The Disney insider said the board realized Chapek wasn't fit for the role after receiving the complaints, and that he was making decisions without having all of the information, according to the report.

 

[Elijah Abrams]

Will Disney continue with owning/launching the Golden Dream ship they acquired, despite Iger coming back and Chapek leaving?

 

[brentm77]

Will Disney continue with owning/launching the Golden Dream ship they acquired, despite Iger coming back and Chapek leaving?

I had the same thought, but the contract is signed and getting out of it would be very costly. Some companies decide the cost is worth breaking a contract if they completely change their minds, but I don't see that happening here.

 

[brentm77]

Well, not that I'm sympathetic but Chapek had less than two years in pandemic times to manage what Iger had 15 years. Walking around the office was frowned upon for much of that. It's entirely possible even with that time he wouldn't have learned the names of the folk in Imagineering, but who is to say he wouldn't have also hit his groove and had more time to do things like that. The board was fine with him as recently as June or they wouldn't have extended his contract another three years at that point. Based on the graph above you could already see how badly he was underperforming compared to the S&P 500 so I'm not entirely convinced that is all that happened.

Unfortunately for Chapek, stockholders only give you so long of a leash for recovering after the pandemic. I also think he has had more than enough time to get to know the imagineering department since work at home requirements ended (not to mention the common use of teleconferening in business).

If you look at the chart I posted, DIS had a recent steep decline, while the rest of the market was going up, because of its last terrible quarter/fiscal year. It was that earnings report (and a not great earnings call) that was the final nail in the coffin. The recent media coverage of Chapek has been really bad for him too. It is much more critical than back when the board renewed his contract.

 

[Intr3pid]

You are absolutely right that, on a balance sheet, the parks were not the problem for Disney, and that Iger's focus will be on the entertainment/Disney+ side. However, here are my arguments for why the change will be good for the parks and even a little for the DCL side:

1) The company culture is set from the top down, and Chapek was setting the wrong culture for Disney to be successful. Namely, his approach was one of cost cutting to increase profits. It started with him and flowed down through the entire company. Disney isn't the type of company where you can cut your way to huge profits.

2) Chapek made a few critical missteps, including his attempt to move the creative divisions to Orlando, causing the loss of key talent and unhappiness among many employees who work on projects related to the parks and cruise line. Furthermore, Chapek wasn't even able to fully execute the move, which means they took a huge loss for nothing so far. He also potentially damaged WDW with the looming loss of its self-governance.

3) Iger is widely described from insiders as someone who was interested in the creative side of the company, while Chapek wasn't. That lack of caring bleeds down to the parks and even shows up in how the parks handle problems and initiatives, since the only thing that matters is the bottom line.

4) The employee reception to Iger coming back seems to be widely positive, which can only help improve the customer service experience, and the quality of employees it retains and recruits.

5) Iger seems to care about the perception of the Disney brand, Chapek not so much. I genuinely think Iger was very proud of Disney and his association with it in a way Chapek never was. That has to give Iger some interest in the parks and the negative feedback coming from both media and customers. I think Iger also appreciates the synergies between the parks and entertainment, which aren't good when your customers are hating the park experience.

All that said, I agree that it won't be his focus. I think it is more of the idea that he will have a positive effect on the company as a whole and it signals the company will go in a different direction. Admittedly, it could all be wishful thinking and confirmation bias. Iger certainly made some major missteps, including what he paid for Fox and the drag that is causing the company.

I think these are some very valid arguments, and the reasons - and their sources - are very much relatable by many.

But, like I said, they are also a bit misdirected. It's the not parks division where the problems are. Sure, we can discuss customer service and nickel-and-diming, but the evidence suggests that parks are full. In fact, that team did an excellent job bringing them to life in the middle of a pandemic. Hotels and airlines are going through a surge only this year, while Disney parks have been at it since 2021.

And as a shareholder, I don't want them to throw good money at the wrong problem. Let me be more objective.

There is more spending needed on the creative side. The content side. The story-telling side. Which will also require incentivizing talent. Just look at the top billed actors until Phase 4 of MCU, and almost no recognizable name now. There is also very little coherent story telling happening to pull the audience into the TV series and movies. This is affecting the network ad spend.

Disney's IT systems too need a major overhaul. That's one area to have a halo effect everywhere - including parks and DCL. The Disney brand is comparable to Apple's, and Apple owes its to years of delivering a seamless premium experience. Why? Because it has never shied away from keeping its IT backend state of the art.

Conversely, I don't think Iger - at the twilight of his career - is the right person to do it. He's much better suited to serving on the board instead. Bringing him back as a CEO makes everyone look bad - including the good guys. Now that he is back, his job should be set up proper governance and incentive system and then find someone else.

 

[brentm77]

I think these are some very valid arguments, and the reasons - and their sources - are very much relatable by many.

But, like I said, they are also a bit misdirected. It's the not parks division where the problems are. Sure, we can discuss customer service and nickel-and-diming, but the evidence suggests that parks are full. In fact, that team did an excellent job bringing them to life in the middle of a pandemic. Hotels and airlines are going through a surge only this year, while Disney parks have been at it since 2021.

And as a shareholder, I don't want them to throw good money at the wrong problem. Let me be more objective.

There is more spending needed on the creative side. The content side. The story-telling side. Which will also require incentivizing talent. Just look at the top billed actors until Phase 4 of MCU, and almost no recognizable name now. There is also very little coherent story telling happening to pull the audience into the TV series and movies. This is affecting the network ad spend.

Disney's IT systems too need a major overhaul. That's one area to have a halo effect everywhere - including parks and DCL. The Disney brand is comparable to Apple's, and Apple owes its to years of delivering a seamless premium experience. Why? Because it has never shied away from keeping its IT backend state of the art.

Conversely, I don't think Iger - at the twilight of his career - is the right person to do it. He's much better suited to serving on the board instead. Bringing him back as a CEO makes everyone look bad - including the good guys. Now that he is back, his job should be set up proper governance and incentive system and then find someone else.

Good points. Reflecting on the park openings right after the pandemic closures, you are right that they did an excellent job. They were creative and we had several really good trips during that time. It's probably why it was so hard to see things shift so far in the other direction recently.

I still hold out hope that some of the low hanging fruit at the parks will be fixed, if anything, because of likely changes in some of the ranks below the CEO spot.

I completely agree on the weakness on the entertainment side and the need to fix IT. Investing it better IT would be money very well spent.

I'm less bothered than you that they chose to bring back Iger. I feel like it was an appropriate stop gap after the company's recent spiral and that it will buy them some time to find the right replacement. Investors seem to generally like the move too.

 

[goofy4prez]

Conversely, I don't think Iger - at the twilight of his career - is the right person to do it. He's much better suited to serving on the board instead. Bringing him back as a CEO makes everyone look bad - including the good guys. Now that he is back, his job should be set up proper governance and incentive system and then find someone else.

I agree with this, but I also think that Disney and Iger also agree with this. This move in my opinion was made to bridge the gap over the next two years so that Bob Iger can find the heir apparent to lead Disney into the future. I'm of the opinion (like you) that this replacement of Eisner so soon after his contract renewal is a bad image for Disney and looks awkward. There must have been something behind the scenes that has not come to light yet. In sports, if the coach loses the support and confidence of the team the morale becomes low, and the players stop playing with heart, they just go through the motions. I think that Chapek lost the team. There is not a lot of love for him in Disney. The stakeholders of Disney are not happy with him. I'm one of them and not happy. I know a few cast members and their opinion and morale have been at an all-time low. His perception among the public has been low. And we all know that the opinion of so many of us loyal and dedicated Disney fans is at an all-time low. I know mine is that currently, I have no desire for the park experience in its current format. So while this does look ugly, I think in the long run it is going to be the best thing for Disney.

 

[insureman]

Is this sign still at Castaway Cay?

 

[BK2014]

I don't understand why people are excited for Iger to spend two years, in part, picking the next CEO when people believe he failed so miserably in hand-picking Chapek in the first place. What makes anyone think he will get it right this time around.

Beyond that, I don't see significant improvement in the park going experience happening in that time.