🔰The Inside Story Of Disney And Bob Iger's Succession Chaos

There's no question that Bob Iger enjoys being the CEO of Disney. Bob Iger has a stellar track record as CEO, at least up until recently. For about 15 years in his first run as Disney CEO from 2005 to 2020, Disney shares rose about 425%, that far outpaced the S&P 500. In many ways, he is the standard, the pinnacle of American CEO. He has really struggled with the issue of succession. Did finally step down as CEO in 2020 and handed the reins over to Bob Chapek, and that did not go well. Bob Chapek was Bob Iger's hand-picked successor. And when Bob Iger initially picked Chapek, these two men had worked together for more than 20 years and had never had a disagreement, I was told. So on paper, it kind of seemed like this would work. Bob Iger would be the chairman, Bob Chapek would be the CEO, and these two men would work hand-in-hand. Then, just weeks after the announcement, the pandemic hits the United States. The Disney parks are shut down, and there's an April New York Times article where, without telling Bob Chapek, Bob Iger emails the reporter and says, look, given the nature of this crisis, you could only imagine that I would come back into a more hands-on operational role and run this company, given the fact I've been running it for the last 15 years fairly well. That really irritates Bob Chapek, and I think that catches Bob Iger off guard. Bob Chapek calls Bob Iger and kind of lays into him. You know, Iger feels like he's kind of never been spoken to this way, at least in a corporate environment before. The relationship doesn't really heal from that point on. So Bob Iger has told people privately that the damage done from the Bob Chapek regime has been the main thing that he has tried to undo for the last nine months or so that he's been on the job. In Iger's mind, Chapek did enormous damage to the Disney culture, the Disney brand, Disney as an investment, various decisions such as reorganizing the company and his stance with the Don't Say Gay legislation in Florida. The Bob Chapek defense would argue that he had a mission, and his mission was to transition Disney into a modern media company. He reorganized the company around streaming, around Disney+, around Hulu. At this point, I would say that strategy is very much in doubt. Disney is struggling right now, and I don't think all of that can be blamed on Bob Chapek. And in fact, even in the nine months since Bob Iger has returned, I can't really point to any particular one of those areas where I could say, oh yeah, Disney is stronger today than it was even a year ago. In fact, I would argue that Disney is probably weaker today. There are weaknesses throughout Disney's media businesses, whether you look at the linear TV business. We're talking, I guess, ABC, the network, the stations, but then the cable networks as well. Yes, correct. FX, Nat Geo. Is it possible you would look to sell them? We're going to be expensive. I think you can interpret what that word means. We're just getting at that work, but we have to be open-minded and objective about the future of those businesses. Meaning that they're not core to Disney? That they may not be core to Disney, yeah. There's clearly creativity and content that they create that is core to Disney, but the distribution model, the business model that forms the underpinning of that business and that has delivered great profits over the years is definitely broken. On the movie side, it just has not had the same level of hits from Star Wars. I mean, the last big Star Wars movie was a few years ago now. Pixar used to be just this dominant giant. Even Marvel, which had been this juggernaut, it has been much more stale in recent years than what it was a few years ago. The one asset that has long been a crown jewel for Disney is ESPN. And that, too, falls back into the bucket of linear TV networks losing subscribers as more and more Americans cancel cable TV every year. Now, Iger has talked publicly about finding strategic partners for ESPN. I'm told a full spin-off of ESPN is still on the table. If they can't find any partners... If they come to the table with value that enables ESPN to make a transition to direct a consumer offering, then we're going to be very open-minded about that. One by one in all these media assets, there's trouble brewing, and Iger's going to have to figure out a way out.