Walt Disney Names Robert Iger CEO, Replacing Bob Chapek
Iger returns to the entertainment company he left only late last year
Walt Disney Co. DIS 0.38% ’s board of directors on Sunday night replaced Chief Executive Bob Chapek with Robert Iger, the company’s former chairman and CEO who left the company at the end of last year, according to a company announcement.
“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,” said Susan Arnold, chairman of Disney’s board, in a statement.
“We thank Bob Chapek for his service to Disney over his long career, including navigating the company through the unprecedented challenges of the pandemic,” she added.
The change comes at a tumultuous time for Disney.
This month, the company reported weaker-than-expected fourth quarter financial results, killing the momentum built up over a strong year that saw record revenue and profits in multiple divisions, especially the one that includes theme parks. Disney’s theme park business has recovered strongly since the coronavirus pandemic shut down its venues across the world, but the division continues to subsidize widening losses in the streaming video business.
Mr. Chapek has said repeatedly that he expects the streaming business to be profitable by September 2024. In the most recent quarter, though, it lost $1.47 billion, more than twice the year-earlier loss.
The company also cautioned that its profitability target would only be met if there wasn’t a significant economic downturn, the first time it has added such a caveat. Disney shares fell 13% the day after the earnings report and are down more than 41% so far this year.
Disney has also faced pressure from multiple activist hedge-fund investors this year. Trian Fund Management LP earlier this month bought more than $800 million worth of Disney stock in the days following the company’s lackluster fiscal fourth-quarter earnings report, according to people familiar with the matter. The stake—under the 5% disclosure threshold—isn’t as large as Trian would like it to be and will likely grow, subject to market conditions, they said.
The activist fund, which was founded by Nelson Peltz, Ed Garden and Peter May, is seeking a seat on Disney’s board as it pushes the entertainment giant to make operational improvements and cut costs, according to the people. Trian has studied the business for a long time, they added.
Trian’s view is that Mr. Iger shouldn’t be back in control of the company, the people said.
Trian’s interest comes after activist investor Dan Loeb’s Third Point LLC said in August that it had taken a stake in Disney stock after having liquidated its position earlier this year. Mr. Loeb sent a letter to Mr. Chapek asking for major changes to the business. He called for Disney to spin off ESPN, refresh its board and cut spending, though a month later he backed off on the demand to change control of the sports channel.
In response to Mr. Loeb’s suggestions, the company appointed Carolyn Everson, a veteran digital advertising executive, to its board, and agreed to a standstill with Third Point.
In an email to employees Sunday night, Mr. Iger said he was returning to the company.
“It is with an incredible sense of gratitude and humility—and, I must admit, a bit of amazement—that I write to you this evening with the news that I am returning to the Walt Disney Company as chief executive officer,” he wrote in the email, which was viewed by The Wall Street Journal.
Several top Disney executives first learned the news that Mr. Iger was returning after they read his Sunday email, while some of them were together attending an Elton John concert at Dodger Stadium in Los Angeles that was streamed live on Disney’s flagship streaming service Disney+, according to people familiar with the matter.
Some of the people who were expected to attend the concert included Dana Walden, head of general entertainment content, Craig Erwich, head of content for the Hulu streaming service, Ayo Davis, head of Disney Branded Television and newly-appointed Disney+ President Alisa Bowen, the people said.
Mr. Chapek was also expected to attend the event and the company had planned for him to introduce Mr. John from the stage before the concert, according to two people with knowledge of the plans, though it isn’t clear if Mr. Chapek attended, they said. Other Disney employees said they were baffled by Mr. Iger’s Sunday email and immediately began asking if the message to employees was real or if it came from a hacked email account.
Negotiations between Mr. Iger and the board to return as CEO were initiated only in recent days, according to a person familiar with the talks. Mr. Iger has said publicly on at least two occasions over the last year that he isn’t interested in returning to Disney. In recent months, he has focused on investing in and advising startups, particularly in the technology industry.
Adding to the surprise, Mr. Chapek, who has served as CEO only since February, 2020, over the summer saw his contract renewed through the end of 2024. At the time, Ms. Arnold, the board chair, said that while the company was “dealt a tough hand by the pandemic,” Mr. Chapek “not only weathered the storm but emerged in a position of strength.”