According to a company announcement, the board of directors at Walt Disney Co. DIS 0.38%increase; green up pointing triangle replaced Bob Chapek as CEO on Sunday night with Robert Iger, the firm's former chairman and CEO who departed the company at the end of last year.
As Disney enters a period of increasingly complex industry upheaval, the board has agreed that Bob Iger is uniquely positioned to lead the company through this important period, said Susan Arnold, Disney's chairman of the board, in a statement.
She also said, “We thank Bob Chapek for his contribution to Disney over his lengthy career, including guiding the company through the unprecedented challenges of the epidemic.”
The transition occurs during a time of upheaval for Disney.
Mr. Chapek has said many times that he thinks the streaming business will be profitable by September 2024. But in the most recent quarter, it lost $1.47 billion, which is more than twice as much as it lost a year earlier.
The company also said that its goal of making money would only be met if there wasn't a big economic downturn. This was the first time it had said something like this. The day after the earnings report, Disney shares dropped 13%, and they are down more than 41% so far this year.
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This year, Disney has also had to deal with pressure from several activist hedge-fund investors. People who know about the situation say that Trian Fund Management LP bought more than $800 million worth of Disney stock in the days after the company reported disappointing earnings for its fiscal fourth quarter. The stake, which is below the 5% disclosure threshold, isn't as big as Trian would like it to be, but they said it will probably grow depending on how the market is doing.
People say that the activist fund, which was started by Nelson Peltz, Ed Garden, and Peter May, is trying to get a seat on Disney's board to pressure the entertainment giant to improve its operations and cut costs. They also said that Trian had studied business for a long time.
People said that Trian thinks Mr. Iger shouldn't be in charge of the company again.
Trian's interest comes after activist investor Daniel S. Loeb Third Point LLC said in August that it had bought some Disney stock again after selling it earlier this year. In a letter to Mr. Chapek, Mr. Loeb asked for big changes to be made to the business. He wanted Disney to give ESPN its own company, change its board of directors, and cut its spending. A month later, though, he changed his mind about wanting to change who runs the sports channel.
In response to Mr. Loeb's suggestions, the company put Carolyn Everson, a digital advertising executive with a lot of experience, on its board and agreed to a standstill with Third Point.
Mr. Iger told employees in an email on Sunday night that he was coming back to the company.
“It is with an incredible sense of gratitude and humility—and, I must admit, a bit of amazement—that I write to you this evening to tell you that I am returning to the Walt Disney Company as chief executive officer,” he wrote in the email, which was seen by The Wall Street Journal.
Several top Disney executives first heard that Mr. Iger was coming back when they read his email on Sunday. At the time, some of them were watching a live stream of an Elton John concert at Dodger Stadium in Los Angeles on Disney's main streaming service, Disney+.
People said that Dana Walden, the head of general entertainment content, Craig Erwich, the head of content for the Hulu streaming service, Ayo Davis, the head of Disney Branded Television, and Alisa Bowen, the new president of Disney+, were all expected to attend the concert.
Mr. Chapek was also supposed to be there, and the company had planned for him to introduce Mr. John from the stage before the concert, according to two people who knew about the plans. However, it's not clear if Mr. Chapek showed up, they said. Other Disney employees said they were confused by Mr. Iger's email on Sunday and started asking right away if the message to employees was real or if it came from an email account that had been hacked.
A person familiar with the talks said that Mr. Iger and the board have only just started talking about him becoming CEO again. Over the last year, Mr. Iger has said at least twice in public that he doesn't want to go back to Disney. In the past few months, he has focused on investing in and giving advice to startups, especially in the tech industry.
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Even more surprising was that Mr. Chapek's contract was extended through the end of 2024, even though he had only been CEO since February 2020. At the time, the board chair, Ms. Arnold, said that even though the pandemic “dealt the company a tough hand,” Mr. Chapek “not only weathered the storm but came out stronger.”