Senior executives at Walt Disney have led a rebellion against Chief Executive Bob Chapek in recent weeks, resulting in his ousting and replacement by his predecessor Bob Iger, according to people familiar with the matter.
The covert campaign to oust Chapek, which began this summer, came after the outgoing chief executive lost the trust of some members of his top team during a tumultuous 33 months at the helm of the media empire.
“A lot of people were approaching the board, Iger loyalists who felt marginalized,” said a person with knowledge of the talks.
Shares of Walt Disney rose 6.3% on Monday as investors bet that Iger, one of America’s most famous media executives, could boost morale and boost returns for the expensive unit of company streaming. By Monday afternoon, Iger had fired Kareem Daniel, a trusted Chapek ally who ran the group’s streaming strategy.
Disney executives began approaching the board, chaired by Susan Arnold, a few months ago to express concerns about Chapek’s leadership. Christine McCarthy, chief financial officer, was among the executives who complained, three of the people said. Disney declined to comment.
“[The board] didn’t know what to do,” one person added.
The straw that broke the camel’s back was Disney’s deadly November 8 earnings release, in which Chapek announced that the company’s streaming business had lost $1.5 billion over the of the last trimester. Three days later, Chapek announced job cuts, telling staff in an email: “We’re going to have to make some tough and uncomfortable decisions.”
Iger, who led Disney for 15 years before leaving in 2021, stunned Hollywood on Sunday night by agreeing to replace Chapek. Iger had picked Chapek as his successor after winning praise for his stewardship of Disney’s theme park division.
The changes at the top come after the company’s shares fell nearly 40% this year as Disney and others spent heavily to compete with streaming, an expensive and less profitable business than cable TV or streaming. movie theater.
Relations between the “two Bobs” quickly deteriorated as Iger bristled at Chapek’s handling of Disney’s creative output and his executive shakeup, which introduced more centralized decision-making and strengthened the allies of Chapek.
The Arnold-brokered decision to reinstate Iger came less than six months after Disney renewed Chapek’s contract for another three years, stifling speculation about a potential exit. People close to Chapek say he learned of the action taken against him a few weeks ago but was caught off guard by the speed of events.
The abrupt dismissal will entitle Chapek to a large payment. Under his old contract, at the end of 2021, he was entitled to approximately $54 million in cash and stock if terminated early. The company has not released full details of its latest contract.
Iger, 71, agreed to stay for two years to help stabilize the ship and choose another successor.
Iger, who delayed retirement four times before finally leaving the company, said in a memo to staff on Sunday that he felt “a bit of amazement” about returning to the company.
As recession fears grow, investors are increasingly concerned about high streaming costs, which are weighing on the valuations of all major U.S. entertainment companies this year.
MoffettNathanson analysts expect Iger to “re-examine” Disney’s streaming strategy.
Wells Fargo analyst Steven Cahall said: “While the announcement does not solve all of Disney’s problems, we believe investors will accept it as it puts perhaps the best media leader at the helm with on a mandate to make things happen.”
Additional reporting by Christopher Grimes in Los Angeles
*This story has been edited to clarify the timeline of Arnold’s contact with Iger