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The Disney Case

Updated: Apr 16


TL;DR: World’s greatest entertainment company fires its CEO Bob Chapek over the weekend, why and who will take over?


Bob Chapek's departure as the CEO of Walt Disney has shocked spectators, especially since it came just five months after receiving an extension of contract by the Board. In his place, the Board reelected Robert "Bob" Iger, the former Disney CEO, to lead the company. This will be Iger's second term as the Chief Executive Officer of the Premier Entertainment Company, with his first term being 15 years long.




But how did this happen?

Chapek's dismissal came through "a series of missteps'' that took place during his three year tenure as CEO of Walt Disney.


His tenure started when he was handpicked by Iger as a "Successor" in 2020. However, the COVID-19 pandemic started soon after, which required him to lay off thousands of employees whom he had led for a very brief period. Although this was done to keep the company afloat during a crisis scenario, Chapek's lack of stance when Florida released its 'Don't Say Gay' Bill, infuriated employees tremendously. The Bill limits discussions on sexual orientation and gender identity in schools, and evidently dismissed the studies that showcase a higher suicide rate amongst LGBTQ+ students. While Disney employees and executives shared their outrage on social media, the company remained silent for too long.


Further, Chapek reorganized the management structure at Disney such that the production teams "no longer had authority over their work". This led to significant backlash amongst the senior executives such that Disney's Chair, Susan Arnold, who also got involved.




Resentment further grew amongst employees when Chapek responded to a $1.47 billion loss with a cost-cutting drive. The loss was experienced through the D2C business, led by its Disney+ streaming platform in the fourth quarter. As a part of his cost-cutting drive, Chapek “instituted a hiring freeze, hinted at several layoffs and told employees to avoid travel until strictly necessary". As a result, the production team that had worked tirelessly for the marketing campaign of Avatar 2, was sorely disappointed as they were unable to attend its Premiere in London. The loss also instituted a significant stock sell-off that led to a decline in share price.


At this point, CFO Christine McCarthy expressed her disapproval to the Board. The Trian Partners, who own a stake worth $800 million dollars in Disney, also sought changes. After reviewing all the complaints and possible successors, Susan Arnold contacted Iger with the proposition. The final contract agreed upon pays $27 million annually to Iger during his two year term. The contract was made effective immediately and Chapek was dismissed over the weekend.


Iger began his first day (Monday) by undoing Chapek's work. He promised to work with his co-Executives to redesign a corporate structure that will bring authority and decision-making capacity back to the production teams. Kareem Daniel, appointed by Bob Chapek as head of Disney's film and TV distribution business, was promptly fired.


The new allocation has been cheered on by many, including Former Disney CEO Michael Eisner, Adam Aron, Chief of AMC Entertainment Holdings Inc., the largest theater chain, and Jessica Ehrlich from Bank of America. Several tweets also stated that Iger should groom someone over his tenure to ensure a "better Executive pick" after he leaves.


Furthermore, Iger has brought a positive effect on Disney's share price, as the price picked up by 6.3% today, adding nearly $10 billion in market value.



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