Bob Iger (The Magic) returns to Disney, replacing Bob Chapek as CEO

Xmas came early for Disney investors. Disney’s beloved Bob Iger is returning as CEO after “retiring” just 33 months ago.

How big is the news? One analyst compared this to the return of Steve Jobs at Apple.

Chapek wasn’t a crowd-pleaser

In 2020, Bob Chapek (handpicked by Iger) replaced Bob Iger as Disney’s CEO. But the tension between Chapek and Disney employees quickly built up:

• Employees weren’t happy with how Chapek handled Florida’s education bill.
• Per WSJ, Chapek reportedly never won over creative execs (a.k.a. Imagineers) across the film, TV and theme park divisions.

Chapek and Iger had very different management styles and personalities:

But at the end of the day, investors focus on earnings and stock performances to make decisions.

And Chapek missed on both marks

Disney’s stock (down 36%) has been crushed this year — far underperforming the S&P 500.

• Disney recently reported its disappointing earnings report — showing its streaming service burning heaps of cash.
• Disney+ lost $1.47B in the recent quarter — double the loss from a year earlier — but is expected to be profitable in 2024.

Gotta give him cred: Disney+ subscribers more than tripled to 164M under Chapek. But the losses and culture clash was too much for investors to handle.

Investors: Magic isn’t free

Like every other company, profitability has become the main focus for Disney. $DIS jumped 6% yesterday as analysts cheered for Iger’s comeback.

How’s the market reacting to the change (MW)?

• Needham’s Laura Martin: “Iger’s return aids shareholder value in many ways.” The change would bring back a stronger focus on profitability and stop top talent from leaving.
• Wells Fargo’s Steven Cahall: Iger is “perhaps the best leader in media” — “Iger is considered popular among the creative ranks within DIS and Hollywood — an area where Chapek was not embraced.”

But don’t expect Iger to be Disney’s long-term solution. He is only staying as CEO for two years, and eventually, Disney will have to find a proper successor.