Shulou(Shulou.com)11/24 Report--

Less than three years after leaving office and less than a year after retirement, Disney legend CEO is back. And this time, what kind of messianic role will he play?

With little warning, the Disney board suddenly announced a change of coach on Sunday night. CEO Chapec (Bob Chapek), who has been in office for only two years and nine months, was immediately dismissed. What's even more surprising is that his predecessor, CEO Robert Iger, who had been at the helm of Disney for 15 years, returned to the helm of the global entertainment media giant.

Chapek (left) was the successor chosen by Iger (right). Legendary CEO is back on the mountain. Perhaps no one knows Disney better than Iger. Iger is not only the legendary CEO of Disney, but also recognized as the best business leader in the media industry. He was originally president of ABC TV; when Disney bought ABC in 1996, Iger joined Disney and became president of Disney four years later. In 2005, he succeeded Eisner, who retired, as Disney's sixth CEO.

During his 15 years at the helm of Disney, Iger made some of the most important acquisitions in Disney's history: Pixar for $7.4 billion in 2006, Marvel for $4 billion in 2009, Lucasfilm for $4.06 billion in 2012, and 21st Century Fox for $71.3 billion in 2019. These sky-high acquisitions have greatly enhanced Disney's original production strength and content copyright reserves.

It is worth mentioning that it was Iger who persuaded Jobs to sell Pixar to Disney. As a result, Jobs became Disney's largest individual shareholder, holding about 7.3% of Disney at the time of his death, which is worth much more than his stake in Apple. But his widow Laurena significantly reduced her stake in Disney in 2017, reducing her stake to less than 5%.

During his 15 years as CEO, Disney opened theme parks in Hong Kong and Shanghai, expanding the Chinese and Asian markets, and its market capitalization grew sharply from US $48 billion to US $260 billion, making it the largest media and entertainment empire in the world. These achievements give Iger a high reputation within Disney.

His charisma also made him respected by the industry, and he even considered running for president of the United States. Of course, politics is a completely different path, and Iger himself admits that the chances of being elected are extremely slim. After Mr. Iger's return, Netflix CEO Hastings (Reed Hastings), Disney's biggest rival in the streaming industry, said he had always wanted Mr. Iger to run for president.

In February 2020, Iger handed over the Disney seal to Chapek, where he served as executive chairman and was responsible for completing the transition. On December 31 last year, Iger, who reached the age of 70, officially announced his retirement, ending his 25 years at Disney and leaving his nearly half-century media career. He wrote his career experience in his autobiography the Journey of a Life (The Ride of a Lifetime).

However, less than a year after his full retirement, Iger, who is in his twenties, has returned to Disney, facing a challenge even higher than when he first took office in 2005. But this time, he is clearly not old enough to lead the company for a long time; Disney's board signed a two-year contract with him in the hope that he can put the media giant back on the growth trajectory and find a suitable successor again. His annual salary will be $27 million, including a base salary of $1 million.

Has been living in the shadow according to US media reports, Disney chairman Susan Arnold contacted Iger on Friday night, hoping that the former chairman would come back to put out the fire. And Iger quickly made the decision to come out of the mountain. In a statement on his decision to make a comeback, he said he was extremely optimistic about Disney's future and was excited that the board had invited him back.

It is not clear why Disney's board of directors suddenly dismissed Chappeke. But on Sunday, Disney executives gathered for Elton Elton John's concert at Dodge Stadium in Los Angeles, while Chapek, who was scheduled to attend, did not show up, perhaps by then knowing he had been fired. Kareem Daniel, his longtime confidant and head of content distribution, also left abruptly before the concert began.

Arnold, Disney chairman, said in an official statement announcing the replacement of Chappeck that the board decided that Disney was in an increasingly complex period of industry transformation, and that Iger was best suited to lead the company through this critical period. Although she courteously thanked Chappec for his contribution, it was obvious that she was in such a hurry to change coach because she was dissatisfied with Chappec's performance. Chappec will receive $20 million in severance pay.

A sudden change of coach is rare for Disney, a company that is about to be a century old. Disney is not a company with a turbulent and chaotic leadership. In the past 35 years, they have only replaced three CEO. The first two CEO have been in office for 21 years and 15 years respectively, while the board has given Chappeke only two and a half years. Throughout Disney's 1999 history, Chapek's short CEO career ranked second from the bottom.

Chapek is not a foreign professional manager who is not accustomed to local conditions. Before becoming CEO, Chapek spent 27 years at Disney, where he was in charge of film and television content, retail and licensed products, and theme parks. During his five years as chairman of the theme park, Disney invested $24 billion in his business and opened a number of new parks and facilities around the world, including Shanghai Disneyland, which opened in 2016.

The success of the theme park business is the capital that Chappeke finally stands out from a crowd of executives and eventually succeeds Iger. But after he officially took office in February 2020, Iger moved to become executive chairman to continue to oversee Chappeke's work and postponed his retirement at the behest of the board. This more or less shows that the Disney board is not entirely at ease with Chappeke.

Chapec's road to CEO is not only always in the shadow of Iger, but also got off to a bad start. Just over a month after taking office, the COVID-19 epidemic spread around the world. Disney was forced to close its theme park, and other businesses were inevitably hit, with only the streaming business getting a chance to grow. During the 2020 epidemic, Iger, as executive chairman, still exerted great influence on Disney's business decisions.

Disney also ran into some public relations troubles during the two-and-a-half years when Cupac ran Disney: the partnership ended when the Black Widow film was released on Disney + and the box office was split between Scarlett Johansson (Scarlett Johansson), who publicly sued Disney last year. This year, Disney was forced to condemn the Florida government's anti-LGBTQ education bill under the pressure of public opinion, which worsened their relations with Florida's ruling Republicans.

It is worth mentioning that in the dispute against the LGBTQ Act in Florida, Iger also publicly expressed his support for LGBTQ rights. Although he spoke in his personal capacity at the time, Iger's statement, as an influential predecessor, CEO, prompted Disney employees to protest more angrily, eventually forcing Disney officials to condemn the bill, sparking a crisis in government relations. Disney's largest theme park is located in Florida, and they are also the largest employers in Florida.

Poor performance is the main reason that prompted Disney's board to replace him in less than three years, or Disney's share price and performance have been depressed over the past year. Disney shares have fallen more than 40% this year, the worst performance in the past 50 years. Although the US stock market has fallen sharply as the Federal Reserve continues to raise interest rates sharply, Disney's performance has clearly failed to satisfy investors.

Even if the time dimension is mentioned before Chapec took office in early 2020, Disney's share price has fallen by more than 22% during his tenure, and Disney's market capitalization is now only $160 billion, a far cry from nearly $260 billion when Iger handed over.

Over the past year, some hedge funds have continued to call on Disney's board to replace Cupac and make major changes to its current business. Billionaire Nelson Peltz and Dan Loeb, two active investors, played an important role in forcing the palace. However, they prefer Disney to a new coach, rather than bringing back Iger to play a transitional role.

Although investors have long been unhappy with Disney under Chappeke's leadership, the third-quarter results a week ago were the direct trigger for Chappeke's dismissal. Disney's revenue and net profit fell short of market expectations in that quarter, which is a rare situation in Disney's financial history. Affected by this factor, Disney shares fell 12% the next day.

Perhaps more to the dissatisfaction of Disney's board and Wall Street, Chappec shrugged off the current downturn and talked about unimportant business at an analyst meeting after the results were released.

It is worth mentioning that although the streaming business Disney + added 12 million users in the quarter, the loss widened sharply from $630 million to $1.5 billion. Chapek's response to narrow the deficit is to increase the monthly fee for Disney + from $8 to $11, and to launch a $8 package with advertising. A few days later, Chappec announced plans for layoffs and hiring freezes to cut costs.

Chapec's performance over the past half month may have finally made Disney insiders and outsiders impatient. Jim Cramer, the most influential financial commentator in the United States, is clearly extremely dissatisfied with Chapec's leadership. He said publicly on the show that Chapec does not have the ability to run a dreamy company. "We need to see a new face of Disney with a hell of a balance sheet."

Who will be the successor? Although Iger is encouraged by Disney when he comes out again, he is 71 years old and has expressed his intention to retire many times, so he doesn't seem to want to run Disney for a long time. The Disney board has only signed a two-year contract with Iger, whose biggest task is to stabilize Disney and find a new CEO, the equivalent of a firefighter.

Similarly, earlier this year, Starbucks legendary CEO Howard Schultz came out again after five years of retirement, leading the company to complete the succession. Schultz will retire for the third time next year as Starbucks finds a new CEO.

Perhaps choosing Chappec to take over was the biggest mistake of Iger's career. Over the past year, he has repeatedly euphemistically expressed his dissatisfaction with Disney under the leadership of Chapec. This time, he must find a more competent successor for Disney.

So, who would Iger choose to succeed Disney? When Disney appointed Chappeke, there were several potential successors-Kevin Mayer, the main maker of the Disney + business, and Peter Rice, the head of content. But as Chapek became Disney's CEO, they, once competitors, left one after another.

Meyer accepted a byte-beating invitation in May 2020 to become CEO of TikTok's US business, where he was responsible for leading TikTok through the looming regulatory crisis. But after the White House forced TikTok to sell with an executive order, Mayer abandoned ship. Rice was fired after a serious disagreement with Chappeke in June, when Disney's board chose to side with Chappeke. But within half a year, they regretted their decision at that time.

Whether Iger will invite the departing Chu Jun, or continue to promote senior executives from within, or look for new external professional managers, will be Disney's biggest attraction in the next two years. Perhaps possible successors are Dana Walden, the head of content production and news programs, and Tom Staggs, the former Disney CFO, who have long-standing relationships with Iger.

However, Iger has made the first choice: on the first day of his return, he kicked out Daniel, Chappeck's longtime confidant and head of the content distribution department. In June this year, Chapek adjusted the business structure of Disney, giving Daniel the authority to decide the annual content budget of Disney, directly weakening the authority of the heads of several major departments of Disney, and causing discord at the top of the company.

While purging Daniel, Iger tightened the budget authority of the content distribution division and appeased several core executives: Walden, head of entertainment, Alan Bergman, head of content film, James Pitaro, head of ESPN, and CFO Christine McCarthy. They could also be Iger's new successors.

Content production is almost certain that Iger will overturn Chappec's structural adjustment plan in June this year. "We will begin to adjust the organization and operation of the company in the next few weeks," he said in an internal email. I think we need to restructure the company, respect and honor creativity, which is the heart and soul of Disney. "

Iger also needs to re-establish respect for the content creative department within Disney. During his less than three years as CEO, Disney's content creative department has publicly "rebelled" several times, questioning the company's senior production decisions and ethics (involving the Florida Act incident), and Marvel President Kevin Feige began to question Chappeke's disregard for content.

In addition to the internal organizational restructuring, another major challenge for Iger is how to restructure the streaming business. At present, Disney owns three major streaming media platforms: Disney+, Hulu and ESPN. Although the user base is growing steadily, the loss continues to expand, and although Disney holds a majority stake in Hulu, it has not given real attention and investment, resulting in an awkward situation and limited competitiveness of the streaming platform, which has been started for many years.

During the Chapec era, outside investors have been calling on Disney to integrate Disney + with Hulu or to sell Hulu directly. This can effectively improve Disney's financial situation and reduce huge investment. Breaking up ESPN would also be an option, a streaming restructuring called for by active investors such as Dan Loeb and Bank of America.

In his previous retirement speech, Iger lamented, "in a world and industry where data is ubiquitous, it's hard to resist the temptation to answer all questions without data, but I hope Disney doesn't." In his first internal email since the handover, Iger reiterated his belief in Disney. "I always firmly believe that good storytelling is the driving force for Disney, which will be the core of our future business."

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