Disney recently announced that they have replaced CEO Bob Chapek, with his predecessor Bob Iger. The move has surprised many, including Chapek, whose contract was recently extended by 3 years after Disney’s board unanimously voted to extend his contract until July 1st, 2025. At the time of this contract extension, Disney board chair Susan Arnold praised the work Chapek had done since moving into the role in 2020:
Disney was dealt a tough hand by the pandemic, yet with Bob at the helm, our businesses — from parks to streaming — not only weathered the storm, but emerged in a position of strength. In this important time of growth and transformation, the Board is committed to keeping Disney on the successful path it is on today, and Bob’s leadership is key to achieving that goal.
Susan Arnold, Disney board chair
The last two years have not been an easy time for Chapek, who had to drive Disney through the pandemic. The pandemic severely impacted film ticket sales and theme park attendance. However, the establishment and immediate popularity of Disney+ helped highlight the strength of the Disney brand.
Controversies
On top of the pandemic, it has not been a smooth run for Chapek, with some big missteps since he took over. Probably the most public happened earlier this year and resulted in a number of Disney employees walking off the job. In March 2022, Florida passed a law that prohibits classrooms of kindergarten to third-grade-aged children from discussing sexual orientation and gender identity.
Referred to as the ‘Don’t Say Gay’ law by critics, many companies condemned the move. When questioned about it, Chapek refused to make any public statement, stating that any public statements are “often weaponized by one side or the other to further divide and inflame.” This refusal upset a number of Disney employees, with many joining a walkout in support of the LGBTQ+ community.
By contrast, Iger often publicly addressed key political situations. After President Joe Biden condemned the bill, Iger tweeted “I’m with the President on this! If passed, this bill will put vulnerable, young LGBTQ people in jeopardy.” In 2019, Iger said it would be difficult for Disney to continue to film in the state of Georgia after the state passed a law blocking abortions.
The Rise And Challenge Of Streaming
Iger, Disney CEO role for 15 years before stepping down, has established an almost mythical status for his leadership. During his time, Iger was instrumental in building Disney from a major media player to the dominant media empire it has become. Under Iger’s leadership, Disney acquired Pixar, Marvel, and Lucasfilm, including Star Wars. These acquisitions helped to build out the content strategy that has led Disney to numerous box office successes.
In addition, Iger helped finalise the purchase of 21st Century Fox, now 21st Century Studios. This became the event that helped launch Disney into the streaming space. Through this acquisition, Disney got access to a huge library of content, and platforms like Hulu. Under Chapek, Disney+ became a major focus for the company. Subscriber numbers have already positioned it as one of the biggest streaming platforms in the world.
Despite already being one of the biggest players in the space, and seeing an additional 12.1m subscribers join in Q3 2022, Disney+ recorded $1.54b in losses over the quarter. This is not unique to Disney, as most streaming services have been struggling. As streaming reaches market saturation, numerous competitors, and subscription fatigue hits consumers, it is a tough time for streaming companies.
As Disney+ is shifting to an ad-supported model, it puts it directly in line with all of its competitors. Innovation is challenging in the streaming space, and content becomes key. The main focus is on giving consumers a reason to join, or stay, with Disney+. This is likely the real reason that Iger has been brought back in. Iger is a key driver in acquisitions that can help benefit the company.
However, Disney already represents a large portion of content production. With their acquisition of Fox, Disney made up 38% of the US box office in 2019. Given its existing extensive library of content, there is not much more Disney can easily buy. Partnerships, and potential acquisitions, could be on the way though, for solutions that can make it easier for consumers to access Disney+. A company like Roku, for example, who develops hardware for accessing digital media, could be a perfect fit for Disney.