Bob Iger’s 15 years at the helm of the Walt Disney Company were so notable, so transformative, at least one observer was inspired to refer to him as “the Babe Ruth of media executives.”
During his tenure, Iger boldly acquired Lucasfilm, Marvel, and, most recently, Fox in a $71 billion acquisition. Under Iger, Disney grew fivefold into the largest entertainment conglomerate in the world, with a leading positions in movies, TV, theme parks, leisure industries, consumer products, and more.
Through multiple contract extensions in recent years, the 69-year-old heavy hitter had increasingly been under pressure from investors to anoint a successor, who it was assumed would take over when Iger’s current contract runs out at the end of 2021.
Instead, it was a huge shock to Hollywood and Wall Street on Tuesday when, with 22 months left on his contract extension, Iger announced that he would step back into a role as chairman of the board while 27-year company veteran Bob Chapek, 60, most recently in charge of theme parks, would become CEO.
Bob Iger: *Resigns as Disney CEO*
— Sad Kylo Ren (@KyloIsSad) February 25, 2020
Wall Street investors, who don’t like surprises, reacted by dropping the value of Disney stock by 4.8 percent Tuesday afternoon. it fell another 3 percent in the after-market, to $125.15 per share. The stock was already down 11 percent this year.
The quick change in Disney leadership raised questions, especially since no successor was immediately announced to replace Chapek running parks.
“It’s a huge surprise,” Laura Martin, stock market analyst for Needham & Co., told Bloomberg news. “The suddenness of it—the fact that it’s as of today and they don’t have a new parks head yet—makes it feel like it’s all very sudden.”
“The timing of the announcement, just weeks after an upbeat earnings report, created an air of mystery around a transition that has been frequent parlor talk in Hollywood,” the Bloomberg article continues.
Iger, who made over $47 million for the past year, downplayed the suddenness, and positioned it as a smart move that will allow him to be there to help Chapek until his ultimate retirement on December 31, 2021.
Speculation that Iger would retire has increased in the past couple years, during which he mulled a run for president in 2017 (before convincingly saying he would never run for office), and this year after Iger was quoted widely while promoting his best-selling memoir (and business self-help book), The Ride of a Lifetime.
Why now? As Vox explains, “Iger’s for-the-record logic [on a call with investors]…was that after buying much of Rupert Murdoch’s 20th Century Fox and then launching his company’s big move into streaming last year, the major structural changes he wanted to make have been made. Now, he said, he has decided that ‘I should be spending as much time possible on the creative side of our business…because that becomes the biggest priority.'”
Iger said he couldn’t do that while running the complex company on a daily basis.
Iger said among areas where he will focus on are the creative side of Disney’s two streaming services, Hulu and Disney+, which had one of the fastest rollouts in history, signing over 28 million subs in three months.
“My goal is that when I leave here [Chapek] will be as steeped with all matters creative at the company as I am today,” Iger said.
Chapek, who started his career in advertising, has worked his way up through the company serving at times as head of film distribution, home video, and consumer products before being tapped to run parks five years ago. He was seen as one of two likely successors, the other being TV streaming chief Kevin Mayer.
The biggest challenge for Disney ahead, Chapek says, is “how do we continue to have a leg up on competition and understand when the market’s changing and stay ahead of that, so we’re proactively transforming instead of in any way reacting?”
The challenges include expected losses from China and the Chinese. Disney’s $5.5 billion Shanghai park, which opened in June 2016, is being impacted by restrictions placed on travel and public gatherings in the wake of the Coronavirus outbreak. That is also expected to hurt Chinese tourism, which impacts Disney’s U.S. parks.
At parks, Chapek is also credited with overseeing the launch of an Avatar-themed land at Disney World in Orlando and Star Wars-themed attractions at both Disney World and Disneyland in Anaheim.
He also came up with the scheme to raise park ticket prices during the busiest times of the year, which helped keep profits up even as attendance last year was flat.
Chapek is full of optimism as he becomes only the seventh CEO of Disney since it was founded by Walt Disney in 1923.
“Iger has built Disney into the most admired and successful media and entertainment company, and I have been lucky to enjoy a front-row seat as a member of his leadership team,” said Chapek. “I share his commitment to creative excellence, technological innovation and international expansion, and I will continue to embrace these same strategic pillars going forward.”
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