May 23, 2024

Brighton Journal

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Disney reinstates Robert Iger after Chapek is fired as CEO

Disney reinstates Robert Iger after Chapek is fired as CEO

Mr. Iger said in a statement Sunday night that he is “extremely optimistic about the future of this great company and delighted that the Board of Directors has asked him to return as CEO.”

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Mr. Chapek did not respond to requests for comment.

Mr. Iger’s shock reinstatement and Mr. Chapek’s ouster come on the heels of a disastrous earnings announcement on Nov. 8. $1.5 billion in losses in the fledgling broadcast division, up from $630 million the previous year. Mr. Chapek said rising production, marketing and technology costs for Disney+ contributed to the “peak” losses.

In all, Disney made $20.15 billion in revenue in the three months that ended Oct. 1, up 9 percent from the previous year. But analysts expected $21.3 billion. Total profit was $162 million, or 9 cents a share, roughly flat compared to the prior year. Excluding items that affect comparisons, earnings per share for the most recent quarter was 30 cents, much less than analysts had expected.

It is almost uncommon for Disney to miss forecasts on both revenue and earnings per share.

Disney shares fell 12 percent the next morning, in part because investors — and many people inside Disney — were struck by Mr. Chapek’s happy tone while discussing the earnings report on a conference call with analysts. Mr. Chapek’s behavior struck many as tone-deaf, particularly when he began talking incoherently about how great the response was to Mickey’s Not So Scary Halloween party, a relatively insignificant event at Disneyland. At least one advisor had warned Mr. Chapek ahead of time that his prepared remarks were inappropriately sunny.

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Immediately, CNBC host Jim Cramer began calling for Chapek’s firing during commentaries on his show. On Friday, Mr. Cramer said Mr. Chapek is “incapable of running a great company” and “we need someone new at Disney.”

“The balance sheet is the balance sheet from hell,” added Mr. Cramer.

Mr. Cramer’s comments reverberated among senior Disney executives, who became increasingly irate, with some telling each other that they had lost faith in Mr. Tchapeke’s ability to pull Disney out of its doldrums. Shares of Disney are down 41 percent since January, to about $98. Much of the compensation for Disney’s top creative leaders comes in stock options.

Mr. Chapek was appointed CEO in February 2020, succeeding him Mr. Egger. The delivery did not go smoothly. The coronavirus pandemic has forced Mr. Chapek to close most of the company. This year, Mr. Chapek has faced one crisis after another, some of his own making.