In Hollywood stunner, Robert Iger returns to head Disney as Bob Chapek exits

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In a blockbuster development, Walt Disney Co.’s longtime chief Robert Iger is returning to lead the Burbank-based entertainment giant.

The Sunday night announcement by the Disney board — made shortly before Disney+ began its high-profile livestream of the Elton John concert at Dodger Stadium — stunned Hollywood.

The switch comes less than a year since Iger said his long goodbye after a storybook 15-year run as chief executive.

Disney's board said he had agreed to serve two additional years as chief executive. Iger takes over for his hand-picked successor, Bob Chapek, who suffered a number of setbacks during his nearly three years as chief executive.

Iger, in a statement, said he was "thrilled" to return to his longtime home.

It's not clear what triggered the board's decision, but directors were said to be increasingly impatient with the company's shaky financial performance and organizational changes Chapek made at the Mouse House, insiders said.

"The board came to the conclusion they were losing the heart and soul of the company," said one longtime Disney observer who was not authorized to comment publicly. "This may have seemed quick, but the creative community has been saying that it was just a matter of time. The situation just wasn't tenable."

Disney’s marquee streaming service has grown despite intense competition, but it doesn't make money.

The company recently disclosed that it had lost $1.5 billion in the July-September financial quarter on its streaming service business, including Disney+, and investors have been getting restless, driving down the company's stock.

Chapek declared that the fourth quarter represented the peak of Disney's losses in streaming as the company prepared to raise prices and add a Disney+ tier with advertising. Just days later, Chapek sent a memo to Disney leadership calling for cost-cutting measures, including layoffs and a hiring freeze.

Disney's stock has dropped more than 40% so far this year. It ended trading Friday at $91.80, after starting the year at nearly $160 a share.

The company is currently valued at $164 billion. Over his career as CEO, Iger, 71, grew the company's market capitalization from $48 billion to $257 billion.

Also unpopular was Chapek's reorganization of Disney in the fall of 2020 that consolidated power under a business executive, Kareem Daniel, and stripped away much of the financial decision-making by high-level creative executives.

The change fostered resentments because some of the executives felt their creative autonomy was taken away, according to several Disney insiders who were not authorized to speak publicly.

In fact, Iger and Chapek were feuding for much of last year with Chapek feeling that Iger's long shadow and extended farewell (he remained as chairman until December) was not allowing him to run the company as he saw fit, according to people knowledgeable of the situation.

“We thank Bob Chapek for his service to Disney over his long career, including navigating the company through the unprecedented challenges of the pandemic,” Susan Arnold, Disney's chairman of the board said in a statement. “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.”

Iger would have a "mandate" from the board "to set strategic direction for renewed growth" and to help the board to groom a successor who will take over in two years, the company said. The CEO shuffle was stunning because it came five months after the board extended Chapek's contract an additional three years, citing his strong leadership during the pandemic.

But the industry has become more tumultuous since last spring. Media companies throughout the industry are worried about a potential recession and advertising commitments have softened — a troubling harbinger for more choppy waters ahead.

A recession could deliver another blow to the company's sprawling theme park business just as it is mounting a comeback from the effects of the COVID-19 pandemic on tourism.

Chapek’s leadership had been under a microscope after a series of controversial moves and missteps, including a legal battle with star Scarlett Johansson in 2021, when she accused Disney of cheating her out of box office bonuses from Marvel's "Black Widow" by releasing it on Disney+ for a $30 charge at the same time as its theatrical debut.

The lawsuit was later settled, but the dispute brought unwelcome publicity to Disney and its leadership. Most contract disputes are resolved through negotiation or arbitration, not through litigation.

Then there was a public spat this year with Florida Gov. Ron DeSantis, which prompted the governor to target laws that favor Disney’s business in the state. Chapek also fired the polished head of Disney's vast television unit, Peter Rice, without providing a clear reason why.

Less than two weeks ago, Chapek signaled that deep cost-cutting was coming to Disney, further rattling the beleaguered troops.

An Indiana native, Chapek became chief executive after a long career at Disney overseeing divisions including home video, consumer products and theme parks.

"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," Iger said Sunday in a statement. “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 made his mark on the company with several key gambles that paid off handsomely. In 2006, Iger led Disney to buy Pixar Animation Studios from Steve Jobs in order to rescue Disney’s flagging animation business.

That was followed by the 2009 deal to purchase Marvel Entertainment, which has resulted in a virtually unbroken streak of box office winners produced by Kevin Feige. In 2012, Disney bought Lucasfilm from George Lucas and relaunched the “Star Wars” film franchise with a new trilogy.

"Disney and its incomparable brands and franchises hold a special place in the hearts of so many people around the globe — most especially in the hearts of our employees, whose dedication to this company and its mission is an inspiration," Iger said.

Iger may have departed as executive chairman at the end of 2021, but his presence continued to loom over the company.

The industry hung on his every word as he opined on the state and future of entertainment and media at industry conferences, making it seem that his retirement had never really taken hold.

Speaking at the Code Conference in September, Iger sent ripples through the TV business when he declared traditional cable and satellite TV "is marching towards a great precipice and it will be pushed off." He also gave a glum prediction for the theatrical movie business, saying he didn't think box office would ever return to pre-pandemic levels.

This story originally appeared in Los Angeles Times.