Disney- The Past, Present, and Future with the Ouster of Bob Chapek

Snarf Zagyg

Notorious Liquefactionist
(This was originally going to be posted in this thread, but I ended up writing a lot)

So, what really happened with Bob Chapek and Bob Iger at Disney?

As a threshold issue, and I mean this in the nicest possible way- if your youtube algorithm/facebook feed/googling for news sources is providing you information like Bob Chapek was canned because he was about to uncover the GRAND DISNEY/FTX CONSPIRACY ... please please please start getting better news sources. To even explain why this conspiracy theory is stupid would require spending an inordinate amount of time explaining why water is wet.

So... what happened at Disney? Why did Bob Chapek get forced out, and Bob Iger return? Let's break this down in a few steps-

1. Was the firing of Chapek a surprise?
No. Not at all. It's been rumored for some time. The timing was a surprise. But rumors had been swirling for quite a while, and he had been given the dreaded "vote of confidence" from the Board in June, along with the two-year extension. That last bit is important, because the standard extension is three years. They had waited on the extension, and then announced it as a three-year extension ... but his contract had run through 2023, and they extended his through 2025. So they could announce a three-year while also signaling there was something up.


2. What was the deal with Iger, anyway?
Great question! If you don't follow Disney, or the corporate world, you might not understand why people care about this Bob or the other one. Iger is a bona fide rockstar in the corporate world- roughly equivalent to a Steve Jobs or the prime GE Jack Welch. Does he deserve all this praise? Probably not! But ... during his 15-year tenure, succeeding Michael Esiner, Disney went from a $48 billion company to a $257 billion behemoth, and he is the reason the House of Mouse owns all ur bases (Pixar, Marvel, Star Wars, and Fox). He is a media superstar.

His one biggest problem was that he really wasn't great at grooming a successor. In fact, whenever any rising executive became too powerful, they were often forced out of the company. Others left of their own accord when Iger kept postponing his retirement. Most importantly, and this is the true irony of this story ... Chapek was Iger's hand-picked successor.


3. Wait ... Iger hand-picked Chapek?
Yep! Which makes what happened afterwards even stranger. Almost immediately afterwards, Iger turned on Chapek, hard. There have been multiple stories about this, but the general consensus is that Iger expected that Chapek would lean on Iger (and consult him) at the beginning; instead, Chapek went out of his way to ignore Iger and to replace Iger loyalists with Chapek loyalists. Regardless, it was obvious to the press that not only was Iger not supporting Chapek, he would badmouth him in private to his many powerful friends.


4. But what did Chapek did that was that bad? Why was he fired as CEO?
Let me start by repeating something I heard someone say, which I think accurately sums things up- Chapek was a perfectly fine, even good, conventional CEO. If he was in charge of Acme, Inc., making widgets ... he'd be doing a bang-up job! In addition, he was put in a tough position- Chapek literally started as CEO when the pandemic started (park closures) and had to deal with the massive acquisition of Fox (debt, etc.). That said ... while he did fine on the financials, everything else was a disaster. To quote Mad Men, Not great, Bob. But most importantly, he never had the charisma or the vision to make people think anything would change or be different.

If you had to sum up all of this, the general idea is that he lost the backing of every major stakeholder. He alienated the creatives who make Disney's products. He alienated the castmembers (employees) at Disney's parks. He alienated the Disney superfans who dutifully go and spend thousands (and tens of thousands) of dollars every year. He alienated the stockholders who saw the value of the stock plummet during his tenure. And finally, he alienated the Board of Directors. And while all of this was happening, his predecessor was constantly undermining him. But let's look at some of the lowlights of his tenure-

1. Disney wobbles on human rights in Florida.
Nothing sums up Chapek's disastrous tenure as much as his disastrous series of decision on Florida's "Don't Say Gay" bill. To briefly recap (and keeping in mind that we do not do politics on this board), Florida passed a bill popularly referred to as "Don't Say Gay." Chapek initially kept Disney out of it, and then doubled down on this position that Disney wouldn't be involved. Disney has substantial park operations (and growing overall operations) in Florida, but also has its traditional headquarters as well as its creative base in California. This bill was incredibly unpopular with many Disney employees, especially its creatives (the actors, writers, Pixar employees) as well as the rank-and-file. Eventually, Chapek retreated from this position and came out against the "Don't Say Gay," bill, which led Disney to become a target both in Florida and nationally- somehow, Chapek managed to anger everyone by handling this incorrectly from the start.

2. No, really, Florida?
Some people love Florida! Other people consider it the waiting room for the afterlife. Regardless of your opinion, Chapek spearheaded efforts to move operations from California to Florida ... including moving a lot of California employees to Florida. Quite literally- Chapek was requiring them to move to Florida. Did you see (1), above? That's right. Chapek was developing additional headquarters in Florida, making California employees move there, while Florida was in the news for reasons that made the California employees refuse to move there (many retiring or finding ways to remain in California) and angering Florida (who has been looking at ways to punish Disney .... and giving Disney reasons to maybe not want to put more eggs in that basket).

3. Disney angers creatives, part 1. Scarlett Johansson.
Disney chose to get involved in public litigation with Scarlett Johansson over money from Black Widow when Disney released the movie directly on to Disney+. This was a terrible idea- Hollywood runs on three things- relationships, creative accounting, and self-delusion, and this was a clear signal that Chapek didn't understand the importance of relationships. You don't go scorched-earth (and issue press releases claiming someone is selfish!) on your talent. If anyone doubted that Chapek wasn't a "media guy," there was no doubt now.

4. Disney angers creatives, part 2. Peter Rice.
Chapek fired Peter Rice. Now, most of you might say, "Who?" or, "Why should I care?" Well, Peter Rice was the chairman on entertainment and programming, and incredibly well-liked in the industry. Chapek firing him was bad enough (people believe he felt threatened by Rice). But his cardinal sin was the way he did it- you don't publicly announce this type of firing, especially when you just want them gone for personal reasons. No ... you let them go with a production deal or something ... or the "spend time with family." Again, the signal was clear to the industry that Chapek didn't know what he was doing.

5. Disney angers parkgoers, part 1. Standards fall.
If you've gone to a Disney Park, the one thing you have noticed in the past is that they almost always maintain high standards. The happiest / most magical place on earth (Disney Land and Disney World have different phrases ....) have long used rules about castmembers (employees), where trashcans are located, the frequency of things being cleaned, and so on to ensure a consistent and customer-centric experience. During the pandemic and park closures, many castmembers were laid off, some of them finding other jobs. As things returned to normal, Disney ran into the same problems that other businesses had- not enough people wanted to work for the low Disney wages. So they compromised- lowered standards for hiring, and lowered standards for the parks. And people noticed. You want surly employees and overflowing trashcans and rides that aren't clean? Go to Six Flags .... and pay Six Flags prices. But Disney was starting to ask for Disney prices for what was, increasingly, a Six Flag experience.

6. Disney angers parkgoers, part 2. Prices rise and MAXIMUM EXTRACTION.
Post-pandemic, people wanted to travel. They wanted to go places. And Disney was one of those places ... it was a license to print money. Thing is ... Chapek wanted that money. So instead of just printing all the money, he began devising new ways to extract even more money from the people that were coming. You couldn't just buy a ticket- you had to get a reservation. There was surge pricing for Genie+ (the equivalent of the previously free Fast Pass) so that there would be an additional surcharge of up to $30, per ticket, per person, per day if you wanted to actually ... you know ... ride anything. Unless it was a popular ride, in which case you had to pay additional amounts for that ride. And for parking, even if you were staying at a Disney hotel. And no more bus from the airport- that's on you now. And so on, and so forth.

Disney was never a relaxing trip, exactly. But now it was some type of hellscape of people waking up at 6:30 in the morning in order to try and pay lots of money just so that they could get on rides, with the rules and prices constantly changing. Which was great for extracting more money from the parks right now, but was making it so a lot of people were not interested in return visits. The short-term profits were doing a lot of damage to the long-term brand.

7. Disney angers parkgoers, part 3. What's the plan, Bob?
Most Disney superfans will forgive a lot, if you can give them hope for the future. What was most distressing about Chapek's brief time as CEO is that not only was he not speaking Disney lingo (he made numerous gaffes that fans recognized and pounced on), there wasn't any real plans for the parks other than trying to extract more money out of them. Given that Universal was building a giant new park in Orlando (Epic Universe), this lack of plan was notable.

8. Chapek's lack of streaming plan.
This was probably the biggest factor in all the unease. Chapek didn't seem to have any clear idea of what he was doing (memorably, after Facebook pivoted to the whole "meta idea," Chapek began claiming that Disney was going into the metaverse because why not?). There was no clear long-term plan, instead Chapek appeared to simply want to borrow from Peter (theme parks) to pay Paul (streaming) with the idea that the future would end in profit, but without any clear idea of the damage he was doing to Peter or when Paul would be profitable.

There's more, but that's a pretty good start right there. But all of this was well-known. What was the final straw? What was the last knife in the back (or the front?) of Chapek?

A CEO can survive a lot of things. But there was all that background, and the collapsing stock prices, and Iger working the wings, and then, on November 9, 2022, Bob Chapek gave the Q4 Earnings Call heard around the world.

Look, companies can have brutal earnings calls. But when you're getting on the earnings calls to announce that your streaming division (ahem, Disney+) lost $1.5 billion in the quarter, you need to be able to reassure investors. Just as importantly, all of that extraction he was doing from the theme parks ... well, profitability was down. And Chapek went into the call and basically ignored all of this, didn't give a plan for the future, and tried to explain these things as positive with platitudes. To say that the earnings call was delusional would be to mock actual delusional people who sometimes have a point. Afterwards, numerous people with Wall Street credibility began loudly advocating for Chapek to be forced out. The CFO of Disney reportedly told the Board that he needed to go.

That was the end. Right there.

And there you have it. That's why Chapek is gone. It's like Hemingway remarked-
How did Bob Chapek go?
Two ways. Gradually and then suddenly.



Bonus- What is Iger doing again?
So a fun fact- Iger is supposed to be doing two things in the next two years. The first is restore confidence and stability in Disney. I think he will be able to do that. The second is he will be bringing in a new CEO for Disney. Now, given that Iger's singular failure at Disney was his inability to groom a successor .... that's kind of funny. If I was a betting man, I might bet that Iger will stay on past the two year mark ... for reasons.
 
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Bob Chapek's appointment may have been like the equivalent of slapping tape on a hole and hoping everything works out for the better.

Although he did enter into the role with a lot of hard stuff in a tough environment, his short term aggressiveness was a poor substitute for long term vision.
 

Snarf Zagyg

Notorious Liquefactionist
As an addendum to the above, what is interesting to the majority of people here is what it means for Disney IP in terms of movies and streaming.

The good news is that Iger is widely considered a visionary and leader in media; at a minimum, he will undo some of the reputational damage inflicted by Chapek and rebuild some of the important relationships.

But he comes back at a very different time in terms of the economics of the industry. What killed Chapek, in the end, was the disastrous earnings. Iger will be given a lot of rope ... but this isn't the halcyon days of yore when a company's stock was pushed into the stratosphere by subscriber growth alone.

If you read behind the lines of his silvery words at his Town Hall, its seems obvious. He is talking about a focus on creativity- on more quality, less quantity. And on cost structures.

Translation- go back to making profits before streaming (release to theaters, then window, then streaming ... and maybe longer delay for streaming). And start making fewer shows ... and probably concentrate on "quality" (aka, shows that drive viewership) on Disney+.

In other words, expect the firehose of content to be dialed down.
 

Lidgar

Legend
Great summary and analysis Snarf. I agree with many of your points. As a share holder, D+ subscriber, and frequent park visitor, the last couple of years have been a bit rough. Our last visit to the park (CA) in particular was pretty disappointing, even putting aside all of the price gouging (which I really can't).

Here's hoping you're right that a) Iger will leverage his relationships for the betterment of the firm, and b) focus once again what Disney does best: Imagineering.
 

billd91

Not your screen monkey (he/him)
I've never been a frequent Disney park visitor, but the times I went, Disney hospitality was always first rate - and yes, much better than Six Flags (which is closer and has, you know, real roller coasters so it's not all in Disney's favor). For us, if there was any stress, it was 1) getting there (we drove) and 2) just general crowd stress, particularly making sure we had dinner reservations. Everything else was easy. Buses from the resort to the parks, buses between parks, even fast passes - everything was geared toward us having a pretty good time with the least fuss on our part.
Given points 5-7 above, I'm surprised they didn't defenestrate Chapek.
 

Staffan

Legend
All I can think of regarding Bob and Bob is:

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GreyLord

Legend
I went to Disney this year. I enjoyed it...BUT...there were some REALLY BIG downsides I would change about it if I could...

1. YOU HAVE to HAVE a reservation to eat almost ANYWHERE unless you want hamburger and fries for every meal. YOU HAVE to get your MEAL RESERVATION IN by 8 AM...probably before 7:30 AM or 7:15 AM. After that, everything is reserved out. YOU WILL NOT EAT at a decent place.

This is me...on vacation...having to get up BEFORE 7 AM (remember...on vacation) JUST TO BE ABLE TO EAT. What's worse is this hurts spontaneity. You have a location and an hour where you will need to be in order to eat at that place at that time. This...this is dumb.

2. YOU HAVE TO RESERVE YOUR PARK. This is done weeks in advance. I had park hopper. We had to reserve which parks we wanted to go to that day. You were sort of restricted to TWO parks. You could ONLY go to the second park AFTER 2PM. This kills spontaneity. See #1 above. You basically are planning your day out three weeks in advance before you ever get to the park!

3. Disney is now very hostile to the disabled. We had an individual with a disability with us. They needed a wheelchair. Disney really does not help accomodate these needs. They have it contracted out with someone outside the parks to let you use wheelchairs at the hotels...BUT...now get this...at the PARK you will need to get your own wheelchair rented from the park itself. And if you switch parks...well...now we get into the entire boondogle. And no, they get to stay in line with everyone else sooooo...

Every try getting someone in a wheelchair up the stairs at a ride? I couldn't even believe this. I felt sure Disney HAD to follow the ADA...but apparently Disney is immune to having to follow these laws these days.

4. I actually liked Genie+ as it worked well for us. I suppose this is fine for those who have money. I didn't mind the extra cost as it worked faster than Fastpass. The DOWNSIDE. So there is this Avatar ride. You need to pay extra (I think it was something like $14 to $17...yes...that's for a single ride...once again...not to bad if you have the money to do it) to get on that...BUT...you'll ALSO need to reserve your time and space you want to ride on it. You better get that reservation in before 8AM (see a pattern here) or you are screwed. Hopefully you can pair it up with all the other reservations you are having to make at the same time....

5. And if that wasn't enough...the system LAGS when you are making reservations. There is nothing so infuriating as trying to make reservations and getting kicked off because everyone and their dog is doing the same thing at the same time at 7AM in the morning.
 

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