Can Bob Iger Fix Disney In Two Short Years?

In one of the wildest management shake-ups in history, Bob Chapek—who has been widely praised by insiders and investors for steering the Walt DisneyDIS
Company through the pandemic—has been ousted as CEO. His successor is equally surprising. He will be replaced by his predecessor Bob Iger, who was CEO of the company for 15 years, resigning last December.

Iger had put off retiring several times as the Board of Directors struggled to find a replacement, and he finally stepped down as CEO in 2020, remaining on as executive chairman for eleven months before retiring. He is working at the venture cap firm Thrive Capital and had also been working on a sequel to his “Ride of a Lifetime” book.

Prior to the 2020 race, he had at one point eyed running for President of the United States but was quickly shut down by his wife, Willow Bay, who said, “You can run for anything you want, but not with this wife.”

Chapek was chosen from within the ranks. He ran the company’s theme parks division until he was appointed CEO on February 25, 2020 and under his leadership shares in DIS rose 54% from $128.19 on his first day on the job to $197.18 less than a year later (March 12, 2021). However, the stock then collapsed in half to close at $91.80 on Friday. It opened Monday at over $100/share on the news of Iger’s return.

Bob Chapek signed a new three year contract just five months ago so the timing of his dismissal is odd given the fact the Board showed confidence in him recently—not to mention the huge severance package he will leave with, which is likely to be in excess of $100 million.

A statement put out by the Disney board on June 28 said in part “Bob is the right leader at the right time for The Walt Disney Company, and the Board has full confidence in him and his leadership team.”

Iger is widely believed to have been brought back to rescue the Disney+ streaming platform which he launched in 2019 and is currently bleeding a huge amount of red ink despite having high subscriber growth. It now has more global subscribers than NetflixNFLX
, but it has spent billions to get this market share.

“I am extremely optimistic for the future of this great company and thrilled to be asked by the Board to return as its CEO,” Iger said, in a statement which has appeased some investors.

The man who was spotted driving his car with a “Is there life after Disney?” license plate holder wrote an email to Walt Disney Employees over the weekend which said he will come back “with an incredible sense of gratitude and humility — and, I must admit, a bit of amazement.”

The announcement regarding Iger comes on the tail of news first reported last week by Jim Cramer of CNBC and then hit the front page of The Wall Street Journal today that Trian Fund Management LP has purchased nearly $1 billion in stock right after Disney reported disappointing fiscal fourth quarter earnings. And, they want a Board seat.

Although the purchase in dollar terms is big, it represents only 0.5% of the equity, a quantity the Board would likely see as too small to earn it a seat on the Board. Still, the Disney+ streaming service lost almost $1.5 billion in the last quarter—double what it lost in fiscal Q4 of last year and 38% larger than Wall Street forecast—so investors do have a reason to complain.

The first big major question looming is can Bob Iger fix the major red ink bleeding at Disney+ while buying out Comcast’sCMCSA
33% stake in Hulu in the two short years that he has agreed to return to Disney. The second will be who he will choose to be his successor. This person will have big shoes to fill given that Iger spent 47 years working at Walt Disney and also because his hand picked first choice Bob Chapek didn’t work out.