CNBC on Chapek & Iger’s falling out

[MillauFr]

It is a bit hard to push back against the cost cutting bean counters when attendance is through the roof. People either need to stop complaining or put their money where their mouth is and stop coming. It is that simple. There is a limit on how much people will take but we don't seem to be anywhere close to that.

 

[Jwaire]

From the CNBC article,

"Perhaps the biggest division between Chapek and Iger was a more mundane one — Chapek’s decision to remove so-called profit-and-loss, or P&L, power from many of Disney’s veteran division leaders and consolidate all of that control under Daniel."

"Instead of division heads running their own fiefdoms, Chapek and Daniel can steer Disney by controlling the budgets of each group and deciding where content ends up — streaming or cable or broadcast or movie theaters. Executives can then focus on making content, or selling ads, or building streaming technology, with direction from Chapek and Daniel. Historically, the heads of Disney TV or ESPN or Hulu or film would run their entire businesses."

For a company the size and diversity of Disney it's pretty wild to consolidate all budgets under one guy. The Disney+ content we are currently seeing was created under Iger's management. Iger had the approach to let the content creators create content. Lucasfilm, Marvel, Pixar, Disney Animation, ABC, etc. have always had the big budgets to create whatever they wanted. It'll be interesting to see what happens to the next Marvel and Star Wars streaming content under Chapek. Will the quality go downhill? Less known actors? Only popular IPs?

While the article doesn't particularly mention the parks, there's no doubt there's pressure on D'Amaro to reduce costs. They'll continue to milk the tourists at Walt Disney World in order to prop up the parks division that's under stress because of the continued closure of the international parks and financial fallout from the extended closure of Disneyland.

It's kind of sad Walt Disney World is the only park that's profitable, yet it gets the shaft and has to prop up all the other parks.

Will Paris or Hong Kong ever make the company any money? What about Shanghai? And poor Disneyland has a huge hole to dig itself out of.

 

[Anthony Vito]

shor

Short term stock goals do not make a legacy company……

Unfortunately, Wall Street doesn't care about making a legacy company. Constant growth until a company can no longer grow any more, then merge/buyout. Until corporate officers owe a duty to more than the shareholder, this won't change. A CEO may answer to the press, customers, etc., to some degree, but the fiduciary duty owed is to the shareholder.

 

[BrianL]

If I've said it once, I've said it a million times...Bob C. tells you directly what he wants for Disney and the fan base is upset (understandably) but they give Bob C. no credit for his honesty. At least Bob C. tells us to our faces that Disney is going to deep dive for our wallets. Bob I. never had the courage to be honest with us about that. Bob I. was too busy schmoozing with the Hollywood insiders.

I only fear Josh D. is going to be Bob I. on steroids because folks seemingly fawn over Josh D. I hope I'm wrong.

Also, now we know when (approximately) Bob C. is signing his contract extension, in about 6-9 months.

Sincerely, the unofficial Bob Chapek Apologist.

The thing is though that Iger was still delivering a better product than Chapek has been. Sure, Iger was definitely money-minded, but he was at least smart enough to let his creatives create and deliver the product. He wasn't perfect by any means, but he was 10 times the CEO that Chapek is.

 

[AvidDisReader]

The one thing that I have to keep reminding myself that even if I do not like Chapek's style, the man has spent his entire adult life working for Disney. It would be crazy not believe that he does not absolutely love Disney. As the article pointed out he is guiding the company to get it into the digital age. Many of the changes in the parks have been rumored for years, but the pandemic gave management an excuse to implement quicker than they probably originally intended. He just is not personable, which is in stark contrast to Igor. In the end that could be his downfall, for in the end it is the interpersonal relationships that make or break a leader.

 

[BrianL]

The one thing that I have to keep reminding myself that even if I do not like Chapek's style, the man has spent his entire adult life working for Disney. It would be crazy not believe that he does not absolutely love Disney. As the article pointed out he is guiding the company to get it into the digital age. Many of the changes in the parks have been rumored for years, but the pandemic gave management an excuse to implement quicker than they probably originally intended. He just is not personable, which is in stark contrast to Igor. In the end that could be his downfall, for in the end it is the interpersonal relationships that make or break a leader.

I can agree with that. I don't think he sees his actions as damaging the brand, but perception can vary a lot. I do think he's convinced of his own "correctness" in his actions though and dismisses other opinions, which is a problem. And, you are absolutely right that he is far less affable than the very savvy and likeable Iger. Fans will lament anything that they see as a cut or "penny pinching" but that fact is that does need to be done to some extent - the financials are important to the company. There is a balance though that Chapek has not struck well. In my opinion, Iger did that much better.

 

[lowlight]

Now if only the Board and Chapek would have a falling out.

Does the Disboard count?

 

[OKW Lover]

While the article doesn't particularly mention the parks, there's no doubt there's pressure on D'Amaro to reduce costs.

Or more precisely, to increase profitability. Reducing costs is only one way to do that.

 

[popy]

Never has been a bad since I can remember
everybody is feed up with most everything about Disney anymore ,
always more for less, never to get better.
Chapek keep’s going Disney won’t be
worth 2$ a hundred.

 

[gottalovepluto]

While the article doesn't particularly mention the parks, there's no doubt there's pressure on D'Amaro to reduce costs. They'll continue to milk the tourists at Walt Disney World in order to prop up the parks division that's under stress because of the continued closure of the international parks and financial fallout from the extended closure of Disneyland.

If the articles is accurate it looks like he’s not even in charge of his budget so there is no pressure to reduce costs because it’s not his call… Explains why the CFO cited reducing portion sizes in theme parks as a potential cost saving measure. The CFO is diving into cost cuts at the theme parks division? Why is she concerned with minutiae? Red alert right there that budget decisions were not coming from division heads.

 

[DduzDis]

If the articles is accurate it looks like he’s not even in charge of his budget so there is no pressure to reduce costs because it’s not his call… Explains why the CFO cited reducing portion sizes in theme parks as a potential cost saving measure. The CFO is diving into cost cuts at the theme parks division? Why is she concerned with minutiae? Red alert right there that budget decisions were not coming from division heads.

I wonder if this is why there seems to be a staff shortage. Perhaps they just don't have the budget to hire the numbers needed to service the number of people attending the parks.

 

[popy]

Or more precisely, to increase profitability. Reducing costs is only one way to do that.

No, sell more! More you make. How you do that ? Make it more attractive . Better deals, better product.

 

[gottalovepluto]

The one thing that I have to keep reminding myself that even if I do not like Chapek's style, the man has spent his entire adult life working for Disney. .. He just is not personable, which is in stark contrast to Igor. In the end that could be his downfall, for in the end it is the interpersonal relationships that make or break a leader.

Because he was there forever Iger should have had the brains to know this man's lack of "emotional intelligence" means he belongs nowhere near the court of public opinion. But Iger didn't. And the board didn't. And here they all find themselves giving the business world a real life lesson on what happens when your CEO isn't a people person.

 

[Karin1984]

They need a creative CEO, not a business minded one. But therein lies the issue, when the board is mostly concerned with returns it's difficult to make that change.

They should go back to two captains on the ship, like Walt was the creative and Roy was the business minded. You need both qualities for this company, but to find that in one, is extremely rare. Even more rare is finding two that can work together like clockwork without ego getting in the way.

 

[Mrs~Incredible]

He’s the worst.

the old philosophy was to build an incredible product, and the people (and money) would come.

they have lost sight of that (at WDW park) in all the worst ways.

 

[Liquidice]

The scary part of this article to me is it sounds like Chapek has surrounded himself with people that are not creatives and instead surrounded himself with finance people as his close confidants (Kareem Daniel and Christine McCarthy). They also seem like people who are like-minded to Chapek.

Good leaders surround themselves with people who can give them differing and opposing views and also help cover their weaknesses.

I get the sense from this article that Chapek is basically ensuring people will listen to him and push his agenda and has removed most people's control to ensure that he gets what he wants.

In the article it says that Iger started to try to re-organize to be more like a big tech company - but what Chapek has done doesn't seem to reflect that. At least in my experience working for a big tech company, organization is usually optimized for smaller more agile decision making where innovation can flourish and definitely not having 1 person in charge of everything. Pushing decision making down as far as possible allows for agility and innovation, the CNBC article makes it sound like Chapek is concerned with 1 thing above all else - optimization of costs and ensuring the largest profits. Which is probably great for the short term, maybe even smart for the pandemic - but if it continues this way, it is worrying.

I also worry that Disney will start to lose many of their creative folks. This article sounds like it may not be a good environment for the creative employees - mostly focused on the movie / TV side of the house, but would it be any better on the parks side?

Think of all of the history of Disney imagineering where things are passed down from your more senior imagineers to the newer imagineers. If the senior people leave, you lose a lot of that knowledge.

Profits may be up in the short term - but I worry a dark age of creativity and innovation may be coming for Disney and replaced with rising prices for consumer and cutting costs. Companies won't continue to profit without any investments and innovations.

I hope at some point there is a turn around, perhaps with a change in leadership or a change in the market that forces Disney to re-consider their current plans. Most of what you see in progress today was planned for years before Chapek was in charge.

BTW- Extra Magic Hours was eliminated and replaced with the current Early / Evening Extended hours during the pandemic, so it was totally under Chapek's (and not Iger's) and Josh's leadership. I don't give Josh a pass, he's just as responsible for the BS going on in the parks right now.

Iger isn't perfect like some may make him out to be, but Disney parks have always been about offering a great customer experience even if it was expensive, many (myself included) felt like you got a lot of value out of it.

I'm sure some of it is due to the pandemic - but today prices are still going up yet I think you get a lot less value.

 

[xipotec]

Unfortunately, Wall Street doesn't care about making a legacy company. Constant growth until a company can no longer grow any more, then merge/buyout. Until corporate officers owe a duty to more than the shareholder, this won't change. A CEO may answer to the press, customers, etc., to some degree, but the fiduciary duty owed is to the shareholder.

This is exaclty why America is in so much trouble right now. That attitude was not always the way.

Until we hold companies responsible for their ethics and they way they treat their employes and those they serve, our country will contiune to be doomed.

Wall Street is now just a profit taking machine. Every ten years or so, those in power loot our 401k with risky greedy business practices, to enrich themselves without ever facing consequences.

 

[xipotec]

l

I wonder if this is why there seems to be a staff shortage. Perhaps they just don't have the budget to hire the numbers needed to service the number of people attending the parks.

Laughs in billion dollar profits….

 

[DLgal]

This guy has no business being a CEO. His lack of emotional intelligence is shocking.

 

[New Mouse]

Iger was terrible for domestic parks and resorts but his legacy was his acquisitions.