Disney CEO Chapek under pressure, at odds with ex-boss Bob Iger
Bob Iger and Bob Chapek (Disney)
Charley Gallay | Getty Images; Patrick T. Fallon | Bloomberg | Getty Images
April 12, 2020. This is the date former Disney CEO Bob Iger met his successor. DisneyBob Chapek CEO, started to crumble.
Iger had stunned the world inHe resigned from his position as chief executive at Disney in February 2001. Chapek was elevated by Iger, who had seen him as an internal front-runner due to his decades of operational experience at Disney. Iger would stick around as executive chairman and direct the company’s “creative endeavors”This will assist you in your transition.
There was no better time to make a decision about the CEO of Disney, perhaps the biggest entertainment company in the world. Just weeks after Iger stepped down, Disney began closing its theme parksAround the globe during the Covid-19 quarantine initial stages.
Chapek and Iger seemed ready to face the pandemic together.
Iger said, “I don’t know of any better person to replace me in this position.” said March 11, 2020This was taken at the annual shareholder meeting of the company, just a few days before closing its parks.
Chapek reaffirmed his optimism
“I watched Bob. [Iger]Chapek stated that he led the company to new heights and that he had learned a lot from it.
Ben Smith was the then-New York Times media editor one month after these comments. Everyone was at home. published a story after reaching Iger by email. He said that Iger was not going to make Chapek a wolf while the world was crumbling. Smith was told by Iger that he’d stay on to run the business.
“A Disney-related crisis of this scale and its effects on Disney would result in me actively supporting Bob.” [Chapek]It is a problem that the company has to deal with, particularly as I was the CEO of the company for over 15 years.” Iger wrote in his email.
According to three sources familiar with the matter, Chapek was angry when he read the story. Chapek had not indicated a desire or need for additional help. Iger had postponed his retirement as CEO three times already. According to those who know Chapek’s thoughts, Chapek believed he was doing it over again. This left him feeling like a second banana. Chapek, however, was reporting already to Iger the chairman of the board.
According to people, Disney’s board didn’t seem interested in starting an argument, considering the financial state of both the company and the rest of the world. Disney was founded three days following Smith’s article. accelerated its timeline and named Chapek to its board.
Bob Iger with Mickey Mouse during Mickey’s 90th Spectacular at The Shrine Auditorium, Los Angeles, October 6, 2018, 2018.
AFP | AFP | Getty Images
According to one person familiar with Chapek’s reactions to Smith’s interview, “It was an important turning point moment.”
According to people who know the story and spoke to CNBC, Iger Chapek has not been able repair their relationship ever since. People asked for anonymity because it is private and confidential.
In the months that followed, Chapek began making key decisions about Disney’s future — including a dramatic reorganization of the company and outing actress Scarlett Johansson’s salary following a dispute over her Marvel movie “Black Widow” — without Iger’s input. It was not uncommon for both men to communicate their business strategies internally, and it soon became apparent that they weren’t talking with the same voice.
The public narrative is centered largely around Iger’s “long goodbye” — he departed as chairman in January — Chapek, 61, has actually been firmly in control of Disney for more than 18 months.
Normal working hours would have enabled Iger to collaborate more with Chapek. The two executive directors rarely spoke to one another. Chapek has a small circle of close confidants with whom he makes major decisions — longtime right-hand man Kareem Daniel, chief of staff Arthur Bochner, and, to some degree, Chief Financial Officer Christine McCarthy, whom Iger promoted to the role in 2015, according to people familiar with the matter.
Iger is not a part of this circle.
Iger hosted a go-away party for himself in December just days before he resigned as executive chairman. More than 50 guests were invited to his Brentwood home, which is located in a suburb of Los Angeles. In front of the audience, he spoke out about his experiences at Disney. According to partygoers, Chapek was present, however, there wasn’t much interaction between them. Guests — including veteran Disney executives and on-camera talent, such as broadcasters Robin Roberts, David Muir and Al Michaels — sat at two long tables at Iger’s house.
Chapek and Iger sat opposite each other at the tables. Chapek sat next to several of his direct employees, including Daniel. Iger sat beside Steven Spielberg (film director). Iger spent only 10 minutes publicly praising his former coworkers, but didn’t mention Chapek.
A guest described the experience as “extremely awkward”, but asked to keep his anonymity due to the private nature of the event. The tension was palpable.
Chapek, Iger, and Chapek refused to speak about their romantic relationship.
Shadow of Iger
Chapek’s move to Iger was a bold decision. But it put him up against Disney icons, including Iger, who happened to also be his chairman. a large shareholder. He has also not been able benefit from all the relationships Iger built over decades at Disney.
It was going to be difficult for anyone succeeding Iger who had served as Disney’s CEO from 2005. Iger was generally beloved by Hollywood and highly respected as a CEO, particularly after orchestrating a series of intellectual property acquisitions — of Pixar, Marvel and Lucasfilm — which will likely go down in media history as three of the smartest deals ever. Iger, 71, has even flirted with running for president of the United States.
Chapek, meanwhile, has a harder exterior and at times, according to colleagues, struggles with emotional intelligence — which happens to be Iger’s strength.
Bob Chapek and Bob Iger, right.
Chapek’s time has shown that there are differences between executive styles in leadership.
Disney’s Public Spat last yearJohansson and Johansson discuss compensation for “Black Widow”, which was streamed simultaneously on Disney+ during the pandemic embarrassed IgerHe was known for his smooth dealings with top-notch talent.
Chapek’s is the featured restaurant this month public acknowledgementThat he let Disney employees down by not fighting harder against Florida’s “Don’t Say Gay” legislationChapek’s leadership at Disney has served as another warning to Iger fans. Weeks before, Iger took a public stance against the legislation.
Disney workers were furious at the sloppy execution. Deadline reported it spokeDozens of longtime Disney employees said so Chapek’s handling of the situationIt was “the most difficult week of their lives” at work. Two people who are familiar with this matter say that several Disney employees have called Iger over the past few weeks to vent their frustration at Chapek. Chapek met earlier in the month with Disney creative executives to discuss their concerns regarding his handling of the bill. CNBC previously reported.
Perhaps the biggest division between Chapek and Iger was a more mundane one — Chapek’s decision to remove so-called profit-and-loss, or P&L, power from many of Disney’s veteran division leaders and consolidate all of that control under Daniel.
Public controversies are a big news story, but it is likely that Chapek will make his mark as Disney’s CEO by implementing internal change and how well they succeed.
Disney Leadership – Centralization
Chapek resigned as CEO of the company in October 2020. It was eight months since he assumed that role. announced Disney was strategically reorganizing its media and entertainment businesses.Disney had completed its second major reorganization within three years. Here’s the main point:
“The new Media and Entertainment Distribution group will be responsible for all monetization of content —both distribution and ad sales — and will oversee operations of the Company’s streaming services. It will also have sole P&L accountability for Disney’s media and entertainment businesses.”
These two sentences changed the way Disney did business for many decades. Daniel, who is the chief of the Media and Entertainment Distribution group (also known internally as DMED), was given one of most valuable jobs in history. According to sources familiar with the matter, the decision caused instant polarization and anger among veteran Disney employees, who lost control of the budgets in their respective divisions.
Chapek hopes to simplify Disney, so content decisions can be made across all platforms simultaneously. Instead of division heads running their own fiefdoms, Chapek and Daniel can steer Disney by controlling the budgets of each group and deciding where content ends up — streaming or cable or broadcast or movie theaters. Chapek, Daniel can direct executives to make content, sell ads or build streaming technology. In the past, Disney TV, ESPN or Hulu would manage their entire companies.
Although Chapek’s concept isn’t that far from Iger’s, it’s not all that dissimilar to what Iger started to implement with Disney+. People familiar with the meeting say that Iger met Robert Kyncl at Google’s YouTube in 2018. Kyncl worked seven years for Netflix as a content partnership manager before joining Google.
Robert Kyncl (global head of content, YouTube Inc.
Bloomberg | Bloomberg | Getty Images
Kyncl told Iger if he wanted Disney to start trading at Netflix-like multiples — which were, at the time, orders of magnitude higher than Disney’s — Iger needed to run operations like a technology company. Google had its content and distribution sections separated. The Disney model of distributing roles in small groups was not sustainable.
Kyncl refused to speak to CNBC regarding the meeting.
Iger knew that Disney needed to consolidate power around Disney+ if it wanted its streaming service to be seen as the key growth driver in digital-first society. Two sources familiar with the meeting claim that Iger requested Kevin Mayer (then head of strategy at Disney) to come back from Las Vegas to show Mayer a new organizational structure. Mayer was shown the plan on paper. Mayer was to become Disney’s head of its new direct-to consumers unit. He would also be responsible for the streaming services of Disney+ and Hulu. Disney officially reorganizedIn March 2018.
Power struggles followed. Mayer and Peter Rice, the Disney TV studio chief, fought over who was in charge of deciding which Disney+ shows to air. Rice was concerned that Disney+ content executives couldn’t have direct conversations or tell Hollywood talent whether Disney will make the show. Rice was concerned that Disney would lose greenlight authority, which could have a negative impact on their relationship with Hollywood. The studio executives who didn’t have power to approve projects would lose their credibility quickly with creators. They wouldn’t want to discuss this with people from Disney.
Detail of the Disney+ icon on an Apple iPhone 12 Pro smartphone’s screen.
Future Publishing | Future Publishing | Getty Images
Iger needed to make control decisions and solve disputes on the spot. Mayer won the main argument — he would have greenlight power for Disney+. Mayer, who was appointed CEO of TikTok in February 2020 by Chapek after Iger had chosen Chapek for the CEO position at Disney, left Disney in 2020.
Rice and Mayer declined to comment on this story.
Although Chapek did not consult Iger regarding his Oct 2020 reorganization plan, he did mention many of the principles Kyncl discussed with Iger in 2018.
Chapek explained that managing content creation separately from distribution allows us to be more productive and agile in making sure consumers get the content they want, delivered in the manner they prefer,” in a statement. announcing the changes.
Chapek was promoted to CEO and went on an executive listening tour. Both content and distribution executives told him that the existing arrangement was no longer working.
Chapek reversed Iger’s decision that greenlighting authority should be with the chief of streaming services. He gave that power back to content heads, who have more money than ever before to make programming — Disney plans to spend a record $33 billionOn content for fiscal 2022. This has largely satisfied Disney’s content leadership, who are now able to tell creators direct whether Disney will cooperate with them. According to those familiar with this matter.
But with Daniel getting P&L control, long-term Disney executives also lost the ability to run the businesses of their own divisions. Some creative leaders did not mind. They preferred to concentrate on creating content, rather than working with advertisers or negotiating wholesale distribution deals with pay-TV providers. Some didn’t like the loss of budget control.
Kelly Campbell decision to leave her job running Hulu to lead NBCUniversal’s Peacock in OctoberA person who knew her thought said that she was partially motivated by her need to exercise more control than Disney gave her over her business.
Campbell did not respond to this report.
One film executive told CNBC that Disney operated smoothly when Alan Bergman, chairman of Disney Studios, and Alan Horn, former chief creative officer of Disney Studios, were in charge of the studio’s P&L. Standard facts were known by film producers, including the marketing budget of a movie and its release date. With Daniel at the helm, in this new world it’s harder to discover answers, because creative point personnel don’t necessarily know what they are doing, said the person.
Others saw Chapek’s restructuring as simply pushing the envelope on a trend Iger already started —making it clear to Wall Street that streaming was the company’s new priority. Chapek can more effectively steer Disney towards the same goal by having Daniel take charge of budgets of all kinds. You could make quicker decisions.
Disney+ is now streaming “Turning Red”, the new Pixar movie, directly to their website. Three people involved in discussions say that the Iger structure would have made it take “months”. The division heads and their knowledge of the market could have hindered the decision. However, instead of weeks-long debate, Pixar executives agreed to send the movie first to Disney+, according the people. “Turning Red” is the No. Based on how many hours were logged in the first 3 days of viewing, this is the No. 1 movie premiered on Disney+ worldwide to date.
The results will prove the case, as with all corporate restructurings. Disney targets 230m to 260m global Disney+ subscribers before 2024. This compares with the current 130 million Disney+ subscribers. If Disney can get there, Chapek and Daniel can claim success — assuming they also revive the company’s shares, which have fallen about 30% in the past 52 weeks, even as crowds have returned to Disney’s theme parks around the world.
Daniel’s P&L oversight for all movie, TV and film distribution, advertising, sales, technology and other divisions — jobs that used to be done by a cadre of Disney employees with 20 or 30 years experience each — gives him one of the most powerful jobs ever created in media. Disney has an estimated market capitalization around $240 billion. Its revenue for fiscal 2021 was $67 billion. Disney routinely outspends all other global companies by billions of dollars a year on entertainment content.
Source: Business Wire
Iger did not agree with Daniel having so much power. Because of the complexity and diversity within Disney, the former CEO thought that stripping budget heads from their divisions wasn’t the best structure.
Daniel is an imposing figure in the eyes of his colleagues.
Five of his former coworkers and current colleagues describe him as intelligent, hardworking, and friendly. He earned an MBA at Stanford and studied electrical engineering. Three people claimed that he is a jerk and can be a bit rude to people outside of work. The people stated that he is demanding of his employees and holds them responsible.
Daniel Black is an exceptional rarity in the ranks of primary media executives. His report is the first Black top executive in Disney’s history to be directly reported to him. It is an honorable position for some employees. They respect the significance of having a minority leader such a high-profile job.
Daniel worked with Chapek in various Disney units such as studio distribution, consumer product, gaming and publishing, Walt Disney Imagineering, corporate strategy, and Walt Disney Imagineering. Chapek is his close friend of over 20 years. In 2002, he was an MBA intern. Chapek worked again with Daniel in corporate strategy when he moved into that field. He worked under Chapek in distribution for Walt Disney Studios in 2009, when he was part of the M&A team that bought Marvel Entertainment, before following him to consumer products in 2011.
According to someone familiar, Chapek was impressed by Daniel’s focus on the consumer when they worked together to reduce the theatrical window to just three months.
But some of the same people who note Daniel’s strengths also told CNBC the job may be too big for him — or almost anyone.
One former colleague said that “he arguably has Walt Disney’s most important job, other than CEO,” and that he had almost zero experience in running businesses previously owned by decades-of-experienced people.
According to Chapek’s sources, he disagrees with this assessment. Although the job is large in scope, Chapek feels Daniel can handle it because of his diverse experiences at Disney. He was president of games and consumer products at Disney and also president of operations at Walt Disney Imagineering.
Daniel has not given any interviews published or broadcast since October 2020’s promotion announcement. This story was not published.
Chapek hopes that consumers will experience an improved digital experience. DisneyExperience, regardless of whether you’re logging in to Disney+, purchasing merchandise online from Disney Store or managing your theme park experience with Disney’s Genie serviceDigital concierge, also known as. Some employees speak informally about this grand challenge, which is to unify Disney technology and experience as “One Disney.”
Getty Images| Getty Images Entertainment | Getty Images
Chapek & Daniel hope to speed up Disney’s digital transformation. Chapek will be in January established company goals to “set the tone for our next century” and guarantee that Disney’s next 100-years are just as successful. Innovation and breaking down silos were two of the key themes.
Disney, by nature and history, isn’t a technology company, even though it’s trying to restructure itself to be like one. The employees at Disney don’t possess the same technological expertise as those employed by Apple. Google.
For a company looking to trade with technology-driven multiples, this is a problem. According to a person familiar with the matter, Disney has struggled to build back-end technology to sell advertising on all of its streaming services — Hulu, Disney+ and ESPN+ — and traditional distribution channels. BAMTech is a spinoff from MLB Advanced Media that provides streaming infrastructure for Disney+ and ESPN+. that Disney bought in 2017.Hulu is its own entity.
Chapek’s and Daniel’s efforts to improve the organisational structure are ongoing. Disney has a number of people who market or sell ads to its streaming services. These include ESPN, ABC and Disney Entertainment Cable Networks. This includes some employees from 21st Century Fox’s acquisition. These jobs are often duplicated and can hinder a Disney experience.
Chapek is a frequent visitor mentioned Disney building its own metaverseHe hasn’t explained what it means. Chapek elevated Mike White, a veteran executive to the position of president. Disney’s senior vice president in charge of “next generation storytelling.“In a memo seen by CNBC last monthChapek explained that White’s ultimate goal is “connecting both the digital and physical worlds” in relation to Disney entertainment.
Chapek will have to also make decisions about Disney’s existing assets. LightShed’s Rich Greenfield is one of the media analysts who believes that Disney would benefit from spinning off ESPN. combining it with a digital sportsbook. Chapek has not made this Chapek’s top priority. ESPN is dependent on the traditional TV affiliate fee. and it may not be strategically aligned with Disney’s direct-to-consumer ambitionsPeople familiar with the matter said that although the network is being sold, it has not been spun off. ESPN has considered licensing its nameAccording to people, Disney isn’t interested in purchasing one of these sports betting firms.
Chapek is going to need to take time to demonstrate to shareholders and his employees that he’s trustworthy enough to reach the goals he sets. Nearly all interviewed said Chapek is a competent and focused operator, despite not being a people person. Disney’s first quarter fiscal results blew away analyst estimates on earnings per share, revenue and total Disney+ subscribers.
Many current Disney executives pointed out that Chapek was their No. 1 priority — setting up Disney for a digital world where streaming dominates and legacy distribution models fade away — is exactly what Iger believed in. It adds an extra layer to Iger’s broken relationship. Both men have similar ends.
Chapek may be able to get the Disney staff and wider entertainment and media world used to his style of leadership over time. Chapek is clearly not Iger. But, perhaps the biggest challenge for him will be to convince everyone that it’s okay to be different.
Chapek’s contract expires at February 2023.
One person stated that Iger regretted the way in which control was lost. He’s not going back to Disney. told Kara Swisher in a January interview.
Iger declared, “I have been CEO for quite some time.” “You cannot go home again. I’m gone.”
Disclosure: CNBC is owned by NBCUniversal.
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