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Has Bob Iger Lost the Magic?
Disney’s legendary CEO came out of retirement to save the company—right in time for its 100th birthday. Nothing has gone his way.
October 10, 2023 at 4:00 AM CDT
“
Barbenheimer” aside, it was the summer from hell for Hollywood executives, and none more so than Bob Iger. In July he and fellow moguls Gulfstreamed to the jagged green mountains of Sun Valley, Idaho, for their annual retreat, where between power lunches and tandem bike rides they debated media deals and the impact of
artificial intelligence. But the big reveal was that Iger, who in November emerged from retirement to temporarily lead Walt Disney Co., would be
extending his contract. Disney was worth $160 billion—or less than half what it had been when he left in 2021—and the company’s problems seemed to be getting only worse. Iger was burning through his two-year agreement with no clear successor in sight, and Disney’s board chose the elite confab to announce that the man who had once made the company unstoppable had agreed to stay on until 2026.
Investors barely had time to cheer before the news was overshadowed by an Iger gaffe on the eve of
actors joining writers in a strike, the first time both unions had banded together in 60 years. Iger had a long-earned reputation as a dealmaker and diplomat, having played a major role in thawing the ice between studios and scribes at the height of the Writers Guild of America strike in the late aughts. But when asked by CNBC about the actors’ demands, which include better payment from streaming services and job protections against AI, Disney’s chief executive officer said: “There’s a level of expectation that they have, that is just not realistic.”
I have managed to procure the full story for this article:
Has Bob Iger Lost the Magic?
Disney’s legendary CEO came out of retirement to save the company—right in time for its 100th birthday. Nothing has gone his way.
October 10, 2023 at 2:00 AM PDT
“
Barbenheimer” aside, it was the summer from hell for Hollywood executives, and none more so than Bob Iger. In July he and fellow moguls Gulfstreamed to the jagged green mountains of Sun Valley, Idaho, for their annual retreat, where between power lunches and tandem bike rides they debated media deals and the impact of
artificial intelligence. But the big reveal was that Iger, who in November emerged from retirement to temporarily lead Walt Disney Co., would be
extending his contract. Disney was worth $160 billion—or less than half what it had been when he left in 2021—and the company’s problems seemed to be getting only worse. Iger was burning through his two-year agreement with no clear successor in sight, and Disney’s board chose the elite confab to announce that the man who had once made the company unstoppable had agreed to stay on until 2026.
Investors barely had time to cheer before the news was overshadowed by an Iger gaffe on the eve of
actors joining writers in a strike, the first time both unions had banded together in 60 years. Iger had a long-earned reputation as a dealmaker and diplomat, having played a major role in thawing the ice between studios and scribes at the height of the Writers Guild of America strike in the late aughts. But when asked by CNBC about the actors’ demands, which include better payment from streaming services and job protections against AI, Disney’s chief executive officer said: “There’s a level of expectation that they have, that is just not realistic.”
Within hours, Iger went from being the champion of creatives to an avatar for everything wrong with the entertainment industry in 2023. “There he is, sitting in his designer clothes and just got off his private jet at the billionaires’ camp, telling us we’re unrealistic when he’s making $78,000 a day. How do you deal with someone like that who’s so tone-deaf?” railed Fran Drescher, president of SAG-Aftra, which represents 160,000 actors. On picket lines, Sean Gunn, an actor in Disney’s
Guardians of the Galaxy series, said, “Bob Iger makes 400 times what his lowest worker is making, and I think that’s a f---ing shame.” Nearly a month later, he was still being held up as the villain. “To hear Bob Iger say that our demands for a living wage are unrealistic?” actor and writer Billy Porter said in an interview about selling his house because of lost income during the strikes. “I don’t have any words for it, but: F--- you.”
Iger’s first run as CEO of Disney was one of the most celebrated tenures in corporate history: He oversaw the acquisitions of Pixar, Marvel Entertainment, Lucasfilm and 21st Century Fox. He pulled those intellectual-property powerhouses off Netflix to
build Disney+, which signed up an extraordinary 10 million customers on its first day. He launched new cruise ships and opened a theme park in Shanghai. By the time he
stepped down from the CEO role in early 2020, Disney’s market value had grown fourfold since he first took the job in 2005.
And then Bob Chapek took over, and everything seemed to go sideways. A margins-obsessed executive unknown in Hollywood circles, Disney’s former parks head managed to alienate virtually everyone, from the company’s creatives to the stars of his movies to theme park visitors who felt nickel-and-dimed. When the board finally
ousted Chapek late last fall,
Iger came back a conquering hero, supposedly the only person qualified for the job. “Of 8 billion people, they got the person who has the greatest chance, greatest capability to actually solve these problems,” Jeffrey Katzenberg, the former head of Disney’s studio division and a co-founder of DreamWorks, said at the time.
But Iger has suffered more setbacks in 11 months than he did during his first 15 years at Disney’s helm, with some problems unforeseen and others years in the making. Disney is now a business saddled with a dying TV division that Iger all but put on the block in that CNBC interview, declaring it “may not be core” to the company’s future. Disney+ has lost the company more than $2 billion so far this year and is
bleeding subscribers as it tries to
raise prices. Setting aside last year’s
Avatar: The Way of Water (which is now the subject of a breach-of-contract suit filed by the film’s financier), its movie division is suffering from a string of box-office bombs that call into question its most prized franchises. Even Disney World in Florida is reporting lower attendance. Iger blamed the humidity. “For Bob, leaving Disney was like a father abandoning his favorite child,” says a current Disney executive close to Iger. “The good news is Daddy’s back, but the bad news is that the house is on fire.”
Like Apple’s Steve Jobs and Starbucks’ Howard Schultz, Iger was a star CEO whose identity had become indistinguishable from the company he helped build. But his second tour is looking less like a Jobsian triumphant return than a Schultzian descent into financial mediocrity and employee acrimony. Disney declined to make Iger available for an interview, but members of his inner circle and current and former Disney employees, who declined to be named as they aren’t authorized to speak publicly, describe him as overwhelmed and exhausted.
It’s not just Disney’s fate that hangs in the balance, but Hollywood’s, too. As Iger’s rivals merge, attempting to survive the transition to streaming, Disney was supposed to be the one company with the resources to compete with Silicon Valley interlopers Netflix,
Amazon.com and Apple. Iger, once an empire builder, now finds himself attempting a
yard sale of Disney assets, basing his strategy on whatever offers might trickle in. Blair Effron, whose Centerview Partners investment bank has recently been helping Iger chart Disney’s future, disagrees with this characterization. “Bob is approaching this incredibly strategically,” Effron says. “There’s a very deliberate plan over a deliberate timetable.” Yet the stock market has erased all trace of Iger’s laurels: Investors would be worse off today if they’d bought Disney shares when he first became CEO on Oct. 1, 2005, than if they’d put their money in the S&P 500.
Iger, who used to savor his time in Hollywood, doesn’t seem to be enjoying the town that made him. After sailing the Amalfi Coast in early August, he made a 48-hour pit stop at Disney headquarters in Burbank, California, to deliver another subpar earnings report, then flew straight back to the Mediterranean to spend more time on
Aquarius, his 184-foot yacht. In September, while the company’s channels went dark for millions of Spectrum customers amid a
bitter dispute with
Charter Communications Inc. and Disney’s shares fell to their lowest price in a decade, he was laid up at home recovering from hip surgery. At times, when friends have asked about his return to Disney amid the barrage of negative headlines, he’s wearily joked: “Why did I come back?”
“No other company we’ve covered has seen that kind of decline. How did previous management not see this coming?”
Although he stepped down as CEO in February 2020, Iger didn’t officially cut ties with Disney for another year and a half, when he finally resigned as executive chairman. He immediately regretted it and informed the board he wished to be reinstated as CEO, but directors advised him to give Chapek a chance, according to people familiar with the events. (A Disney spokesperson disputes this account and says Iger didn’t ask for his job back.) Even with an annual $2 million consulting fee to be on call, he missed the stature and the reverence from fans and filmmakers. His iPhone no longer rang, he told friends despondently.
He weighed what to do with himself. He bought a private jet and commissioned a second, bigger yacht. He ruled out running for president after his family shot down the idea, but he remained open to serving in Joe Biden’s administration, maybe as ambassador to China. Nothing materialized. He’d planned to sail the world with his wife, Willow Bay, but she was too busy running the University of Southern California’s journalism school. He sold almost all his Disney stock, say people familiar with his finances, and invested portions of his nine-figure fortune in the bobblehead toymaker Funko and the graphic design startup Canva Inc. The values of both companies ended up plummeting. He invested in a 3D-printed rocket company, but its first rocket suffered an engine failure after blastoff and failed to reach orbit. He became an adviser to Josh Kushner’s Thrive Capital venture capital firm and, according to people familiar with his plans, started talking about a role at a private equity firm focused on media and sports.
But this was all just filler: Iger wasn’t over Disney, a company he’d been with for about two-thirds of his life. A workaholic raised in New York City with early dreams of becoming a news anchor, Iger rose to run the ABC network, which Disney acquired in 1996. He became Disney’s president and chief operating officer under Michael Eisner, who rehabilitated the struggling animation business in the 1990s. During Iger’s first term, he moved quickly to dismantle Eisner’s strategic planning group, which put centralized power over major decisions into the hands of management consultant types, and gave control to creative leaders.
Iger, like Eisner, transformed Disney—in his case, turning it into an indomitable colossus fit for a new media era of online video and caped-crusader blockbusters. And, like Eisner, he struggled to let go. Iger raised the hopes and later broke the hearts of all but one of his successors-in-waiting. There was Jay Rasulo, who ran Disney’s parks business before being promoted to chief financial officer, but resigned when Tom Staggs became Iger’s new favorite. Staggs, who had been CFO, was elevated to COO but left Disney at the same time the company announced it was expanding its succession process to consider “a robust slate of candidates.” As the stars of Iger’s subordinates rose and fell, he postponed his retirement four times before finally choosing Chapek to replace him in 2020. (The move eventually pushed out Iger’s last overlooked successor, Kevin Mayer, a longtime deputy who’d persuaded him to build Disney+.)
Iger handed over his duties to Chapek at the
worst possible time, just weeks before pandemic lockdowns plunged
theme parks and theaters into crisis. Chapek had delivered outsize profits running Disney’s parks, but current and former Disney executives say Iger thought he’d found a stable if uncharismatic leader who posed little risk of outshining him. Iger tethered his reputation to the strategy he’d laid out for the company—to transform itself into a streaming giant to compete with Netflix—and he expected Chapek to simply execute under his supervision as executive chairman. Chapek, eager to run Disney as he pleased, grew infuriated as Iger effectively kept overseeing vast swaths of its creative apparatus, including its film and TV studios. Three months after Iger resigned as CEO, he angered his successor, telling the
New York Times that the pandemic was a crisis of a magnitude that would still require him helping Chapek, “particularly since I ran the company for 15 years!” (Chapek declined to comment.)
Two years later, Chapek botched
Disney’s response to a Florida billbanning teachers from discussing sexual orientation with students. Chapek had refused to condemn it publicly, triggering a walkout by Disney employees in March 2022; days later he reversed course, thrusting Disney into a
high-profile culture war with Ron DeSantis, Florida’s Republican governor. Iger swooped in again, coaching Chapek from the sidelines, then began sitting for interviews in which he said the bill was a matter of “right and wrong.” He dismissed rumors of his return to Disney as “ridiculous,” but began telling confidants he feared Chapek’s reign was destroying the company’s soul, say current and former Disney executives and friends.
Where Iger had been sentimental about and protective of the brand, Chapek had a much higher risk tolerance. He envisioned loading Disney+ with horror films and other adult content, talked up ESPN’s potential in sports betting and raised park prices. He also made fast enemies of stars and agents by disclosing the salary of actress Scarlett Johansson (who’d claimed she wasn’t being
paid enough) and releasing movies on Disney+ the same day they arrived in cinemas. He embraced the metaverse fad and envisioned transforming Disney into a sprawling data aggregator with its own membership platform, in the style of
Amazon’s Prime, where he could track viewing habits on Disney+ and park spending habits. He restructured the company into two divisions, one to house all of Disney’s entertainment properties and the other for Disney’s parks, cruises and everything else. He promoted acolytes and marginalized many creative executives, who missed Iger and had begun mounting a revolt, say current and former Disney executives.
Disney CFO Christine McCarthy ultimately rallied those executives and the board to oust Chapek after the company disclosed a $1.47 billion quarterly loss in its streaming business. On Sunday, Nov. 20, 2022, hours before Chapek was due to attend an Elton John concert broadcast on Disney+,
he was fired. An email went out to Disney employees late that evening informing them that Iger was back as CEO effective immediately. Some colleagues already at their desks in Asia stood up to clap and whistle. Disney’s shares soared. A sign that hung on the pump house at
Castaway Cay, Disney’s private island in the Bahamas, that read “Bob Chapek, Master Ship Builder,” was quickly replaced with one bearing Iger’s name.
At first, Iger still seemed to have his touch. Nelson Peltz, an activist investor who held close to $1 billion worth of Disney shares, opposed Iger’s comeback and was agitating for cost cuts and the resumption of dividend payments, which hadn’t been paid since 2019. By February, after months of crisscrossing the world to meet with Disney’s regional leadership teams, Iger appeared to successfully wind down Peltz’s campaign by
announcing plans to cut 7,000 jobs and shrink the company’s annual costs by $5.5 billion. Iger got rid of Chapek’s metaverse division and consolidated the engineers working on the company’s various streaming products. Ike Perlmutter, the chairman of Marvel Entertainment, who owned about $2 billion worth of Disney shares he’d received as part of the deal for his comics empire more than a decade ago, was fired after lobbying for Peltz to join Disney’s board. (Iger said the dismissal wasn’t related to his supporting Peltz.)
Then Iger restructured Disney into three new pillars—Entertainment; Parks, Experiences and Products; and ESPN—a move he believed would restore autonomy to Disney managers, particularly the creatives. He also played his hand flawlessly with DeSantis, who tried to strip Walt Disney World of its self-governing privileges; instead, Iger retained them through a legal maneuver and
sued DeSantis, claiming retaliation. (DeSantis, now running for president, has since said that he’s “basically moved on” from the feud and that Disney should drop the lawsuit. Disney has not.)
But the company was in worse shape than Iger realized, he’s said publicly. Disney+ was losing hundreds of millions of dollars every quarter, and he needed the business to be in the black by 2024 to honor a pledge the company made to Wall Street. The cost of making shows had soared, and all the streamers were dealing with shareholders no longer interested in subscriber gains at all costs. In Disney’s case, the losses were exacerbated by Iger’s own actions years earlier, when Disney acquired BAMTech, the streaming technology that would eventually run Disney+, for $3.8 billion. The technology, it turned out, was more expensive and less efficient than those operated by rivals, according to current employees. Because of a contract Iger had agreed to in his first term, Disney was also on the hook to acquire the one-third of the Hulu streaming service it didn’t own, from
Comcast Corp. The deal valued the entire Hulu business at no less than $27.5 billion, though the actual value Disney would gain from owning it was unclear.
The movie division, the envy of Hollywood during Iger’s first term, was also in distress. Earlier in his career, Iger had long favored a strategy of fewer, bigger films that had the potential to become hits. But in his later years the ambition to feed Disney+ fatigued fans with too many sequels and spinoffs. The majority of Disney’s big-budget movies over the past two years have failed in theaters. While other studios had successes—including Warner Bros.’
Barbie, which became the highest-grossing film of the year, and Universal Pictures’
Oppenheimer, among the highest-grossing R-rated movies in history—Disney’s summer was a washout. Its remake of
Haunted Mansion and an
Indiana Jones sequel failed to earn back their budgets, while
The Little Mermaid barely broke even. That followed a string of disappointments from Disney’s animation business, which includes Pixar, with the
Toy Story prequel
Lightyear and
Strange World together losing more than $100 million. Even Marvel showed signs of losing steam: The February release of
Ant-Man and the Wasp: Quantumania sold far fewer tickets than past installments from Disney’s comics division, leading Iger to question the need to churn out more films based on any one character.
Meanwhile, Iger seemed blindsided by the state of the TV industry. Disney’s TV division, which includes the Disney Channel, ABC, FX and
National Geographic networks, was fading into obscurity as viewers shifted to streaming. Iger’s swan song deal for Fox in his first term—which cost him close to $20 billion more than he’d originally planned after a bidding war with Comcast—saddled him with a bunch of undesirable channels. Meanwhile, ESPN, the world’s largest sports network, was in desperate need of a transformation from a shrinking cable operation into a streaming service. Disney, on the hook to acquire Hulu, could hardly afford to do that.
Before the pandemic, the TV business generated more than a third of Disney’s revenue and more than half its earnings. But Iger now has few choices but to spin it off to private equity firms that can ride its last years of profitability. MoffettNathanson says the TV profit could fall by about $2 billion in 2023 and says Disney should have curtailed spending years ago. “No other company we’ve covered has seen that kind of decline,” says Michael Nathanson, a media analyst at MoffettNathanson. “How did previous management not see this coming?”
A rumor that’s been circulating in media and tech circles for months is that Iger has an exit strategy: selling Disney to
Apple Inc. Back in April, even Disney execs thought their boss was dropping them an unsubtle hint when he gifted 30,000 of the company’s employees physical copies of Jobs’ posthumously published collection of speeches and notes,
Make Something Wonderful. Iger had served on Apple’s board for almost a decade and idolized his good friend for setting the once-ailing company on the path to eventually become the world’s most valuable. In Iger’s own memoir,
The Ride of a Lifetime, he even speculated that Disney and Apple would have merged if Jobs were still alive. When Tim Cook was under pressure early in his tenure, Iger was interested in pursuing a deal, hoping he would run the combined Apple-Disney, according to people familiar with his thinking at the time.
Now, if he could offload the TV business—or even separate the studio from parks and break Disney up into two businesses, as some advisers are pushing him to consider—he could sell a slimmer version of the company to Apple, which would gain an unparalleled trove of content to support its streaming ambitions. At Apple’s June developers conference, Iger seemed to drop another hint when he showed up to reveal Disney content on Apple’s new
$3,499 mixed-reality headset. But by August it seemed that escape hatch had closed. He softly talked down the prospects of a merger on Disney’s earnings call, saying that anybody speculating about one would have to consider the tough regulatory environment.
Instead, Iger is patching together incremental fixes. In June he pushed back the movie release calendar, postponing some films by as long as three years, delaying production and marketing costs while buying time to fix the middling output. Fans of
Star Wars, who haven’t seen Jedis duel Sith Lords on the big screen since 2019, won’t get another film until at least 2026;
Avatar, one of the few bright spots, won’t return until 2025, a year later than originally scheduled. To offset streaming losses, Iger is removing films and TV series from Disney+ and doubled its unsustainably low $6.99-per-month price, resulting in Disney slashing its subscriber targets.
A couple of offers have been floated for Disney’s TV assets— Byron Allen texted Iger a $10 billion bid for ABC and its other TV channels, while
Nexstar Media Group Inc. was in exploratory talks for the news network—but neither deal is likely to go through. ESPN agreed to a sports betting deal with downmarket casino operator
Penn Entertainment Inc. that will pay Disney as much as $1.5 billion over a decade. For years, Iger insisted Disney couldn’t get into gambling because of reputational concerns; now it seems like one way to plug holes. Iger’s deputies are pushing him to consider a bolder transformation of Disney from gaming licensee to gaming giant through, say, an acquisition of Electronic Arts. But, as with everything else, he’s been noncommittal.
Iger’s headaches have persisted into the fall. The Hollywood writers who’d lambasted him finally agreed to a new deal in September, but only after the studios had hired a crisis communications firm to handle the fallout from his comments in July. In the 11th hour of negotiations, Iger showed flashes of his former swagger before getting flustered and walking out, only to return and accede to virtually every one of the scribes’ demands. Former employees who allege Iger’s layoffs earlier this year disproportionately affected women of color are joining a lawsuit against Disney that claims the company has systematically underpaid female workers to the tune of $150 million since 2015. (A Disney spokesperson says the company follows “robust review processes to ensure any restructuring is done consistent with our commitment to equal employment opportunity and our diversity and inclusion values.”)
Visual effects artists at Disney and Marvel, who’ve long complained of burnout and difficult working conditions, were also planning to vote to unionize. The Charter deal finally came together hours before a
Monday Night Football blackout, but it was hardly a win: The cable operator’s customers would get an ad-supported version of Disney+ for free. Peltz, the activist investor, had more than doubled his stake in Disney to roughly $2.5 billion and was now
seeking multiple seats on the company’s board, according to people familiar with the matter. (A spokesperson for Peltz declined to comment.)
Iger now finds himself increasingly isolated, not unlike his predecessor, Eisner, in the twilight of his reign. Many of Iger’s allies left when he did the first time around: Alan Horn, the studio mastermind who led Disney’s years of unparalleled success at the box office, now consults for
Warner Bros. Discovery; Zenia Mucha, the architect and former keeper of Iger’s carefully curated public image, is running communications for TikTok; Alan Braverman, Disney’s general counsel and an Iger confidant since the 1990s, has left, too. More recently, CFO McCarthy—the last of the old guard—
resigned weeks before Iger extended his contract, followed by Disney’s chief diversity officer and chief information officer.
Iger trusts few of his own managers, so he’s tapped former successors-in-waiting Mayer and Staggs as advisers to
help him sell parts of the business, according to Disney executives. (A Disney spokesperson disputed the notion that Iger doesn’t trust his managers.) When Iger was a no-show at the
D23 superfan event in Orlando this summer, where costumed Disney worshippers get to hear directly from studio and parks execs, thousands of attendees and livestream viewers roasted him in the feed’s comments section. One fan even posited that Chapek had just been a fall guy all along.
In mid-September, only weeks before Disney’s 100th anniversary, Iger did show up at Walt Disney World to host an investor gathering. Wall Street analysts have consistently lowered their prospects for Disney since Iger’s return, a bearish view that seemingly came to life when an actual bear showed up in the park hours before the bankers were due to arrive. Half the park had to be shut down until the bear was finally caught later that day, to be relocated to nearby Ocala National Forest. But by the following morning, Disney’s stock had plummeted below where it was in Chapek’s final weeks. —
With Lucas Shaw
