Disney has reappointed Bob Iger as chief executive in a surprise move after the entertainment company fired his handpicked replacement, Bob Chapek, after less than three years on the job.
During Iger’s acclaimed 15-year reign, Disney made a number of major acquisitions, including the Marvel film franchise, the Pixar animation studio and the Star Wars film franchise.
He stepped down as CEO in 2020, having delayed his exit several times to guide the company through the early stages of the coronavirus pandemic. He was replaced by Chapek, who previously ran its theme parks division but remained as executive chairman until late last year.
Iger is returning to the CEO role effective immediately and will serve for two years, Disney said in a statement late Sunday. The company highlighted a fivefold increase in market value under his leadership, adding that he had a “mandate from the board to set the strategic direction for renewed growth” as he once again searched for a long-term successor .
Michael Antonelli, market strategist at Baird, a US asset manager, said Iger’s return was “probably the most significant piece of corporate upheaval since [Steve] Jobs returned to Apple” and the news sent Disney shares up more than 8%, or nearly $14 billion, when Wall Street opened Monday.
“We applaud the Disney board for the courage to make this change,” said Michael Nathanson, senior analyst at MoffettNathanson. “We have never hidden our affection for Mr. Iger and the work he did to make Disney the global powerhouse it has become.”
Chapek had overseen a difficult period for Disney, with disruptions from the pandemic, which forced the closure of its theme parks, followed by concerns about the profitability of its streaming service, Disney+. The platform is competing in a crowded field and has spent billions of dollars creating new content as it battles rivals Netflix and Amazon Prime Video. While Disney+ has rapidly grown subscriber numbers, it has incurred heavy operating losses.
Disney has also faced pressure in Florida, home to its Walt Disney World theme parks, over its public opposition to the state’s “don’t say gay” laws that prohibit classroom discussion of sexual orientation and gender identity to certain degrees.
The company publicly opposed the laws, which many activists and teachers saw as repressive, prompting right-wing Florida Gov. Ron DeSantis to try to strip it of its privileges in the state.
The company’s market value has fallen more than 40% through 2022, far worse than the 17% drop in the S&P 500 index of large US companies.
News of Iger’s return prompted the highly respected MoffettNathanson to raise his price target on Disney shares to $120, which had been trading below $100, his first upgrade on the stock since early 2020 .
Susan Arnold, president of Disney, said: “We thank Bob Chapek for his long service to Disney, including navigating the company through the unprecedented challenges of the pandemic. The board has concluded that , as Disney embarks on an increasingly complex period of industry transformation, Bob Iger is uniquely positioned to lead the company through this crucial period.”
Iger said, “I am extremely optimistic about the future of this great company and am thrilled that the board has asked me to return as CEO.” Disney did not release a statement from Chapek.
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His return comes weeks after Disney’s share price took a hit after it reported a rare loss in revenue and profit, and a doubling of losses in its streaming business to $1.5 billion in the quarter to October 1.
To date, Disney has spent about $9 billion on loss-making Disney+ and about $30 billion a year on content from Hollywood blockbusters and big-budget TV shows to NFL football in its TV businesses and streaming, which include ESPN and ABC.
The company said its streaming business had reached “peak loss” and that Disney+ remains on track to be profitable in fiscal 2024, when it will likely be bigger than Netflix, although it has lowered expectations of subscribers between 215 and 245 million. globally
To achieve that goal, Disney is pushing price increases of up to 38% in the US, with regions like Europe likely to see increases in the near future, and will launch an ad-supported subscription tier starting in the US on December 8.
Analysts expect Iger to implement cuts in areas such as content spending on Disney+ and pay-TV sports network ESPN.