The unexpected appointment of Bob Iger as Disney’s CEO instantly calls into question a number of significant choices taken by outgoing CEO Bob Chapek.
Disney stock has dropped more than 40% so far this year, with the most recent decline occurring earlier this month following disappointing fiscal fourth-quarter data. The decision by the Disney board to replace Chapek with Iger shows that it has more faith in Iger to produce superior results. Despite handpicking Chapek as his successor in early 2020, Iger has disapproved of several of Chapek’s changes to Disney, according to people familiar with the situation, as CNBC reported earlier this year.
The company’s restructure under Chapek, which created a new division called Disney Media and Entertainment (DMED) and centralised financial authority for Disney’s creative and distribution divisions under Kareem Daniel, may be the main source of dissatisfaction. It would be difficult and time-consuming to undo a thorough reorganisation of a business, so it’s unlikely Iger will maintain Chapek’s structure. Additionally, Daniel’s standing inside the organisation deteriorates. His ties to Chapek are strong.
In order to maximise its price-value perception among customers, Iger thought Disney+ should price itself lower than competing streaming services. Disney+ will now cost $10.99 per month without commercials beginning of December 8 due to Chapek’s decision, making it more expensive than competing ad-free streaming services like Paramount+ and NBCUniversal’s Peacock. Given that Dec. 8 is only a few weeks away, it might already be too late for Iger to reverse the price increase or the choice to charge $7.99 per month for Disney+ with ads rather than a lower price.
There are several issues where the two leaders agree. Both ESPN and Hulu, which are both mostly owned by Disney, have long been defended as valuable services. In January 2024, Disney has the option to purchase Comcast’s 33% stake in Hulu. Chapek declared that he wanted to carry out such transaction. It’s likely that Iger would decide to follow suit given his support for a three-pronged streaming strategy that includes Hulu, ESPN+, and Disney+.
Iger, however, had disagreements with Chapek’s initial management of how Disney responded to Florida’s contentious “Don’t Say Gay” law, privately expressing concern about how the Disney brand may be impacted. It wouldn’t be unexpected if Iger’s first order of business is to restore a sense of pride to the workplace’s culture before undoing any of Chapek’s structural changes or reining in direct-to-consumer spending.