Will the swapping of Bobs help Disney come back from its massive debt?
Last week, recent reports alleged that Disney unceremoniously dispatched Bob Chapek as CEO in an attempt to make Disney+ appear more profitable by shifting the budgets of various projects. Sources with ties to the company tell the Hollywood Reporter that many of the board members had been building to the point of discontent and were considering replacing Chapek in June 2022.
The decision to remove Chapek was one based on numbers. The Wall Street Journal reports that “people familiar with the matter” shared that the performance of Disney+ was not as investors expected, and people were losing money.
While some shows intended to be billed, and are billed, as Disney+ originals were aired on other networks like Disney Channel to save on production and marketing costs for the streaming service, Chief Financial Officer Christine McCarthy, who was reportedly one of the voices behind Chapek’s removal, was “concerned about this strategy.”
McCarthy had a right to be concerned.
Why Did Chapek Resign from Disney?
Chapek had a lot riding on the success of Disney. He promised investors that Disney’s streaming division, which includes Hulu and ESPN+, would be profitable by 2024.
Unfortunately, Disney+ has only gained roughly two-thirds of Netflix’s current number of streamers since 2019, and $30 billion invested in content in 2022 alone hasn’t been enough to see any return of profit in the last four quarters.
The streaming division has lost more than $8.5 billion since 2019, and the number keeps getting bigger.
Chapek also had a few other strikes that made him less than desirable for the position at Disney, including public conflict over Scarlett Johansson’s compensation for Black Widow, Chapek’s flip-flop on Florida’s “Don’t Say Gay,” his off-handed remarks on animation which angered both Disney and Pixar’s animation departments, and his abrupt firing of Peter Rice, a respected executive.
The tipping point rested on a recent earnings call and a subsequent note to staff regarding a hiring freeze, layoffs, and other cost-cutting that set a ripple of anxiety within the company. On Nov 20, 2022, Disney confirmed that Chapek would be stepping down after less than three years on the job, and would be replaced by Bob Iger, Chapek’s predecessor.
The returning executive, who held the top job at Disney for 15 years, disapproved of Chapek at a board meeting in December 2021 before he left the company. In the meeting, the Hollywood Reporter states that Iger told the board “that the culture of Disney could be transformed negatively and rapidly.”
We could be feeling changes in the industry from Disney almost immediately. Iger is reportedly already undertaking a reorganization to undo Chapek's decisions.
With things going back to the way they were before Chapek stepped into the scene, I am curious to see what new direction Disney will take to make its streaming services profitable. The streaming service bubble might be ready to burst.
Let us know what you think of this major shake-up in the industry in the comments!