For months, Hollywood has been engaged in a guessing game over Bob Chapek’s future as Disney CEO, with critics claiming missteps sealed his fate with Disney’s board: his reign would soon be over.
The Walt Disney Company’s board of directors renewed Mr. Chapek’s contract for another three years on Tuesday, with Susan Arnold, the chair of the board, saying in a statement that he was “the right leader at the right moment” and espousing the “full confidence of the council in him”. and its management team. This means that Mr. Chapek, who took the reins of Disney in February 2020, could stay there until at least July 2025. The vote was unanimous.
“During this important time of growth and transformation, the Board of Directors is committed to keeping Disney on the path to success on which it is today, and Bob’s leadership is essential to achieving this goal,” said said Ms. Arnold.
Mr. Chapek, 63, faces a daunting to-do list. Disney stock price needs reinvigoration, to put it mildly. The company’s balance sheet is still recovering from the pandemic. Employee morale needs to improve. Disney is struggling in China, with Shanghai Disney Resort and Hong Kong Disneyland closing and reopening (and closing and reopening) due to coronavirus concerns, and Disney films have not been allowed to be released in halls by the Chinese authorities.
Disney’s national theme parks have been packed, with visitors spending more than ever on food, merchandise and hotel rooms. But some investors worry that a possible recession could hurt park attendance and visitor spending. Disney needs its theme parks to continue generating wheelbarrows of cash to offset losses from its streaming division, Disney+, which has grown rapidly but is not expected to be profitable until 2024.
“Leading this great company is the honor of a lifetime, and I am grateful to the board for their support,” Mr. Chapek said in a statement from Florida, where the board was meeting ahead of the meeting. unveiling of a new Disney Cruise Line ship. .
Mr. Chapek was groomed by his predecessor, Robert A. Iger, who resigned from his position a month before the coronavirus pandemic forced Disney to shut down most of its operations. Mr. Iger remained Disney’s executive chairman until December, when he left the company altogether.
Since then, Mr. Chapek has delivered results that exceeded Wall Street expectations. Above all, his team managed to keep Disney+ growing at a much faster rate than expected; the streaming service added nearly 20 million new subscribers worldwide in Disney’s last two fiscal quarters, about 60% more than analysts had expected.
But three factors have sent Disney’s share price down nearly 40% since Mr. Iger decamped.
In March, Disney was embroiled in a political storm over its botched response to a new education law in Florida, where the company has about 80,000 employees. The law prohibits, among other things, classroom discussions about sexual orientation and gender identity until third grade, with limits on what teachers can say in front of older students. LGBTQ organizations and a torrent of businesses criticized the bill, with opponents calling it “Don’t Say Gay”.
At first, Mr. Chapek tried not to take sides, at least not publicly, sparking a revolt from employees. He then strongly denounced the bill. Right-wing media figures and Republican Florida Governor Ron DeSantis began denouncing “Woke Disney.” In April, Mr. DeSantis revoked Disney World’s designation as a special tax district, a privilege that had effectively allowed the company to run the 25,000-acre megaresort near Orlando on its own since 1967. (Disney has since been working behind the scenes with Florida officials to find a tax district compromise.)
An independent survey of more than 33,000 Americans at the height of the debacle found the Disney brand was tarnished. On April 29, Mr. Chapek fired Disney’s top communications and government relations official, who had only joined the company four months earlier.
Two other factors — both beyond Mr. Chapek’s control — hurt Disney stock price. One is a general slowdown in the stock market as investors worry about a possible recession, inflation and the Russian invasion of Ukraine. Disney’s more mature streaming competitor Netflix also spooked Wall Street by losing subscribers for the first time in a decade, prompting a large selloff in media stocks.
Mr. Chapek’s previous contract was due to expire in February. By giving him a second term so aggressively, the board essentially wipes the slate clean of the “Don’t Say Gay” case and gives him an opportunity to restore investor confidence in the promise of streaming.
Shares of Disney rose slightly in after-hours trading on Tuesday.