Does Bob have a magic wand ?
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Animators of “How to Train Your Dragon” had to attend flight school during production.
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Disney: The return of Bob
The house of Disney (DIS) replaced Bob Chapek as the CEO with the return of Bob Iger. Bob Chapek was unceremoniously ejected and received criticism for the streaming division's losses at Walt Disney Co. In the recent town hall at the company, Iger laid out priorities, addressed issues on hiring and quashed rumours of merging with Apple.
Downfall
Bob Chapek was chosen as the heir in 2020 by Iger, and it came as a surprise to many. Chapek was unexpectedly chosen in the long line of competition to succeed Iger. A veteran of Disney with a reputation for finding innovative methods to extract more money out of theme-park visitors through price hikes and special events. After he was promoted to the topmost position, the Covid-19 pandemic began almost immediately, requiring him to give layoff warnings to tens of thousands of workers he had just recently started working with them.
From its March 2021 top, Disney's share price had more than halved, erasing roughly $210 billion from its market value. Streaming service losses of $1.5 billion, along with a significant miss on quarterly results last week.
But for former coworkers and many in Hollywood, Chapek's most significant error wasn't missing numbers but rather something more ambiguous. His public fights about salary with celebrities like Scarlett Johansson were a sign of a bigger issue. Chapek had lost the support of the one person who could have given him the keys to Hollywood as well as the trust of the artistic community.
Before he got the position, Chapek had never had to deal with "talent". In order to reposition Disney for the streaming era, Chapek saw his distance as a strength. He reasoned that every movie would end up on a big screen with a huge promotional budget rather than on a streaming service if the actors got their way.
Key highlights from Q3 earnings:
Earnings per share: $1.09 per share vs 96 cents expected
Revenue: $21.5 billion vs $20.96 billion expected
Disney+ total subscriptions: 152.1 million vs 147.76 million expected
Renewed hope
Bob Iger’s second act at Disney starts as the business feels the frost of winter. The once-profitable cable television industries are struggling. Wall Street no longer believes that streaming will be profitable enough to make up for lost revenue. A recession is approaching. Disney's advantages under Iger seem to be contributing to the issue more and more. Iger's Hollywood flair—is that really what was lacking?
Iger did not take long to undo Chapek's work: In his first directive as CEO, he informed staff that he would be collaborating with Christine McCarthy (CFO) and other executives to create a new corporate structure "that puts more decision-making back in the hands of our creative teams." A Chapek protégé named Kareem Daniel, who oversaw the company's film and TV distribution division, was fired.
On the day Iger’s return was announced, the company’s shares rose 9%, and it was under him that the company stock was up annually at 11.3% between 2005 and 2020. The media conglomerate's fiscal fourth-quarter results underperformed analysts' expectations, and management issued a warning about slower growth going forward, which caused the stock to plummet.
The disappointing results prompted some analysts to lower their target prices for Disney stock, but the majority of Wall Street remained bullish in its predictions. However, the question still remains, will Iger be able to bring back Disney’s glory?
Market Reaction
DIS ended at $95.69, down 3.22%.
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