Disney’s new CEO is its old CEO: Bob Iger, who ran the company for years and turned it over to his lieutenant Bob Chapek in 2020, is back and Chapek is out.
This news is very exciting for people working in Hollywood and Silicon Valley, and normally I’d tell you that if you’re not in tech and media, it doesn’t mean anything to you. But this one is different. It’s an executive move that tells you a lot about the state of the media industry, which is trying to figure out how to adapt to technology’s seismic shift in the way we consume media.
There are plenty of theories as to why Chapek was booted, all of which may have a degree of truth. The two reportedly had a strained relationship throughout Chopek’s brief tenure; Chapek upset Hollywood by publicly fighting with Marvel star Scarlett Johansson over money; Perhaps most importantly, he clumsily discredited Disney employees for directing attacks on the company by Florida Governor Ron DeSantis. (Also there were plenty Iger is scratching his head when he leaves A couple of years ago.)
But the most important thing to understand about Iger’s return has less to do with the specifics of Disney than with the media industry in general: When Iger left Disney, everyone in media was trying to be Netflix — fast-growing, all-in on streaming, and big piles of money to make it work. Willing to get burned — because Wall Street wanted them to be.
Now Wall Street has changed its mind. That’s why Disney stock — along with most major media companies, including Netflix — has plummeted. Disney was worth about $200 a share in spring 2021; Now it goes for half of it, and that investors gave it a quick push this morning after Iger’s return was announced.
“It’s a very different landscape than it was 18 months ago,” an executive at one of Disney’s competitors texted me. “Hopefully he can figure out the model. No one has yet.”
New, theoretical model: Figure out how to build a streaming service people will pay for, but not burn a gazillion dollars — In the past nine months, Disney has lost $2.5 billion on streaming, and it’s losing another $1 billion a year Before — while supporting existing businesses like cable TV, which make a lot of money but are permanently in decline
So on the one hand, Iger will find himself in the same boat as the rest of the industry. Comcast, Warner Bros. Discovery, and Paramount are all grappling with the same problems and the same investor skepticism.
On the other hand, there is some poetic justice here, since he is the man who launched the boat. In 2017, Iger announced that instead of selling his content to Netflix, which Disney had done for years, he would create a Netflix competitor. He then doubled down by buying most of Rupert Murdoch’s 21st Century Fox, under the theory that he would need a lot of movies, TV shows and their related intellectual property to compete with Netflix.
Investors cheered all of it, even when Iger told them it would lose billions. And Disney’s competitors all tried versions of the same playbook. Iger launched Disney+ in the fall of 2019, to rapturous applause. A few months later he left, declaring that he was done.
Now it appears Iger has a lot more work to do, though we’re still guessing what kind of work it will be. Maybe he needs to help the troops, while sweet-talking Wall Street, which adores him — “We believe investors will value transparency and give Disney some of its long-lost magic back with a strong narrative that pushes the stock higher again,” the analyst said. Michael Nathanson wrote in a note this morning. Maybe he’ll figure out how to change Disney’s content, which might be some welcome after Marvel, Star Wars, and Pixar products dominate global culture.
Or maybe there’s a big, flashy, structural move in the works, one that will either transform the company or make people think it’s transformed. Maybe there’s something else to buy – for example, Netflix. (Note: “Disney or Apple or somebody should buy Netflix” is one of the media industry’s favorite narratives, no matter how big or small Netflix is right now. Mash notes from Netflix founder Reed Hastings to Iger on Twitter last night.)
A note of caution on this: While Iger has been rightly praised for the three acquisitions he’s made that transformed the company — Pixar, Lucasfilm and Marvel, all of which diverged within a few years of each other — that’s no guarantee of future performance.
It’s quite reasonable, for example, to argue that Iger dramatically overpaid for the Fox assets he acquired, which have yet to offer much benefit beyond removing a competitor. And Iger came very close to buying both Vice and Twitter — two moves that would guarantee a lot of headaches and quite possibly real losses.
And while the media industry loves Iger — in my version of Twitter last night, people fell over themselves to describe how excited they were about his surprise return — that in and of itself is a risk. If Iger had come clean about Disney, everything that happened to the company could be blamed on the failure of his successor (never mind that Iger chose that successor). Now, if he doesn’t figure out how to fix a problem he helped create, some of his own reputation may be at stake.