This is the third post discerning the issues between Iger and Chapek at Disney. (Here are links to Part 1 [Friday] and Part 2 [Monday] discussions.)
As of now, Bob Iger has probably placed James Pitaro, the Chair of the Entertainment and Sports content at Disney, on a very short leash. Iger has proffered some caustic remarks lately about “linear tv” (by which he means the ABC Networks and ESPN operations).
While ESPN has been the cash cow for Disney for nigh three decades, the sports environment is rapidly becoming hostile. Skyrocketing sports-rights fees, shallow advertising budgets, and consumer cord-cutting (which means way lower cable/satellite TV revenue) is hollowing the pot of gold that stood at the end of the ESPN rainbow.
Then, there’s the Disney theme parks. You know the ones that had to be closed during the pandemic. Which is terribly unfortunate, since these units account for some 2/3 of Disney’s operating income and between 38% and 45% of corporate profits (the rest is from the media operations). Compounding the shutdowns during the pandemic, there have been slews of unplanned park closings under Chapek. Ride hiatuses due to other malfunctions. Let us not forget that Hurricane Ian devastated Florida (and DisneyWorld/EPCOT) in September. All the while raising the daily and pass fares to the park. And, removing certain perks for those who are routine visitors to the parks.
And, then there’s the whispering. The scuttlebutt was that it wouldn’t be unusual to hear Iger make negative comments about Chapek’s actions at the various LA area haunts. Or Iger’s claims that he was taking key decision- making positions in the firm when interviewed on local media outlets.
So, it wasn’t really surprising that Susan Arnold (Board Chair of Disney) proffered Bob Iger the CEO position a week or so ago. Disney had heard rumors that Iger was about to join a competing entity soon- and wanted to keep him in their stable.
All of which demonstrate that there is a vital difference between Success and Succession. It’s why many management consultants believe the board and not the CEO which should decide upon the next generation CEO leader. (David Larker, Director of the Stanford University Corporate Governance Research Institute, [along with SA Meyers and B Tayan] found that most of the CEO handpicked successors of large firms simply underperformed the S&P 500 [from 2000 to 2011.]
Let’s see if this boomerang CEO, Bob Iger, can adjust to the changed financial and creative environment, now that he is once again empowered to lead Disney.
