Here's Why Bob Iger Is Back At Disney, And Bob Chapek Is Out

Late last night, the entertainment industry was rocked by a shocking revelation. Bob Chapek, who became CEO of The Walt Disney Company in February 2020, had stepped down from his position effective immediately, with his predecessor, Bob Iger, returning to the post once more. While Chapek's tenure at the mega-company has been riddled with controversy, there's no denying that this announcement and its timing seemed bizarre. After all, why announce something this major on a late Sunday evening, days before your studio's latest animated feature ("Strange World") is released?

According to a report from The Wrap, this was all because the company wanted Chapek gone as soon as possible. Speaking to insiders on the matter, the decision reportedly came down to Disney's increasing debt and plummeting profits, all of which were overseen by the former parks executive. In addition to acquiring over $48 billion in long-term debt tied to its acquisition of 20th Century Fox, Disney has also experienced a massive dip in stock price since January of this year — it has dropped by 41 percent throughout 2022, with profits only increasing by 30 cents a share on a revenue stream of $20.15 billion. In simple terms, Disney became wildly less profitable under Chapek's management, and it appears they will be course-correcting as quickly as possible.

'I felt like the tide had turned against Chapek'

There are two important aspects of this case that make Chapek's departure so damning. Firstly, Disney's Board of Directors chairman Susan Arnold thanked the executive for his contributions to the company in the statement released last night. However, she remained vague as to why exactly he was leaving in the first place, only talking about how Iger was the right choice for a new direction the company wanted to go in.

"The Board has concluded that as Disney embarks on an increasingly complex period of industry transformation, Bob Iger is uniquely situated to lead the Company through this pivotal period," wrote Arnold.

The second critical aspect is how Chapek's resignation and Iger's appointment were effective immediately. Typically, major executive decisions do not go into effect until at least a week before they are supposed to start — take, for instance, the hiring of James Gunn and Peter Safran as co-heads of DC Films, which was announced a week before their tenures began after a months-long search. To have Iger thrust back into the position of CEO and Chapek ousted from that same position as soon as possible is unprecedented for Disney. It seems as if the Board of Directors wanted Chapek gone immediately due to the faulty business decisions he had overseen. This goes back to the company's most recent earnings call, which an insider for The Wrap recounted.

"After the last earnings call, I felt like the tide had turned against Chapek," the source said. "The tone shifted."

A tale of two Disneys

As for the reason why Iger is back as Disney CEO, the answer seems pretty clear. Throughout his initial tenure at Disney, he helped increase the company's market cap from an already hefty $48.5 billion (only one million more than the $48.4 billion in debt the company has acquired) to a staggering $240 billion, according to Variety. He helped to oversee critical aspects of the company, including overseas theme park expansion, the acquisitions of Pixar, Marvel, and Lucasfilm, and direct-to-consumer streaming options. By all accounts, Iger was responsible for making Disney the massive company it is both praised and derided as today.

If Iger had planted the seeds for Disney's future, then it can be argued that Chapek had failed to take care of them properly to eventually reap their rewards. One major project that started under Iger's tenure, the streaming platform Disney+, is losing nearly $1.5 billion and is expected to become profitable in late 2024. According to Statista, none of the company's highest-grossing movies in the United States and Canada have been released during Chapek's oversight. While this could be due to the COVID-19 pandemic commencing almost immediately after he took the job, the flip-flopping release of Disney movies during this time period certainly contributed, as well. Theme parks have also delivered questionable results, having seen an increase in 72 percent revenue (via Deadline), but still failing to meet lofty company expectations. It also doesn't help that Chapek seemingly lied about his previous reveal that Disney would no longer be acquiring new assets, as the massive debt the company has taken under his leadership will not make such acquisitions possible. 

What comes next

Surely, the vibe at The Walt Disney Company today is likely awkward at best. According to Variety, the vast majority of staffers, including senior executives, were unaware of the decision to oust Chapek and bring on Iger before the news became public. However, what is known is that Iger plans to make sweeping and immediate changes to the company's structure, which could result in other executives getting the boot. Chapek allies, such as Media & Entertainment head Kareem Daniel, are also likely to leave the company as Iger cleans house.

It's not clear what exactly Iger intends to do now that he has taken back the reins of Disney. After all, immediate change is not realistic for a company of this immense stature. However, it seems as if this move has been received extremely well by investors, as Variety reports that company shares have increased by more than 8 percent following the announcement. If it means anything, Iger himself also seems eager to get the company back on track, however that may happen.

"I am extremely optimistic for the future of this great company and thrilled to be asked by the Board to return as its CEO," he wrote in a statement. "I am deeply honored to be asked to again lead this remarkable team, with a clear mission focused on creative excellence to inspire generations through unrivaled, bold storytelling."