It was no secret that Bob Iger had long delayed his retirement and had last been on record with an expected December 2021 retirement goal. But it came as a real shock today when the Walt Disney Company announced that “Effective immediately,” Bob Chapek would take over the role as CEO.
Bob Chapek has rapidly consolidated his power and position in the company, combining Parks, Resorts, Travel, Disney Vacation Club, and Consumer Products into a single massive business unit. He is most known for his cost-cutting initiatives and revenue enhancements at Parks and Resorts. Pushing increased profits through price increases, new revenue opportunities, and simultaneous budget cuts. We expect he’ll take that same mentality into the remaining Disney business units he wasn’t already running.
A new president for Parks and Resorts will be announced at a later date. Bob Chapek is not currently on Disney’s Board of Directors and will be named at a later date. He will report to Bob Iger and Disney’s Board of Directors. It is still possible that the board could reject his nomination, but unlikely that will happen.
Bob Iger will temporarily assume the role of Executive Chairman to direct the company’s creative endeavors and aid with the transition. But he is expected to leave the company entirely at the end of his contract on December 31, 2021.
“With the successful launch of Disney’s direct-to-consumer businesses and the integration of Twenty-First Century Fox well underway, I believe this is the optimal time to transition to a new CEO,” Mr. Iger said. “I have the utmost confidence in Bob and look forward to working closely with him over the next 22 months as he assumes this new role and delves deeper into Disney’s multifaceted global businesses and operations, while I continue to focus on the Company’s creative endeavors.”
Bob Chapek will be the seventh CEO in Disney’s history.
Update – Disney Stock Drops After Hours
Disney stock had a brutal day of trading due mostly to Coronavirus concerns. Two of Disney’s parks in China remain closed due to the outbreak, and many of Disney’s products are made in China.
Disney timed the announcement of Bob Chapek’s rise to Disney CEO for the market close at 4pm Eastern. However, at that exact moment, Disney’s stock dropped sharply in after hours trading. That doesn’t mean that the stock won’t recover tomorrow, but rather that initial reaction to the news of Bob Iger stepping down and Bob Chapek taking over spooked some investors.
Ultimately, we expect the markets to react positively to Chapek’s ascension as he will be able to wring extra profits and savings out of the entire company, which generally means higher stock prices. It’s the long term success of that strategy that may cause problems further down the road for the company. We’ll have to wait and see how being CEO changes Bob Chapek’s business strategies.
Let’s Hear From You
Let’s hear from you, what do you think about this major shakeup in Disney leadership? Do you think Bob Chapek will be a good replacement for Bob Iger as Disney CEO? Or does his legacy of cutting budgets and services while raising prices concern you? Let us know in the comments below.
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