“Fasten your seatbelts. It’s going to be a bumpy night.”

by Roger Colton

Well, by now you likely have heard the news that Bob Iger has returned to the role of CEO of the Walt Disney Company. It’s no secret that things haven’t been going anywhere near well for the company in recent months. Everything from revenue not meeting expectations, to theme park operations issues, to legal challenges with the Reedy Creek District in Florida, to subscriber churn with Disney+ and ESPN… yes, a lot of things topped off with a major drop in stock price and hence, shareholder value.

To anyone who has watched things unfold from the outside, the action of the Disney Board of Directors in replacing Bob Chapek may seem surprising. In light of the extension of his contract in June of this year for an additional three years, one could believe that they saw him as doing the job effectively. Having been CEO through what may have been the most difficult period in the company’s history including the Covid-19 pandemic, there were challenges that seemed to have been met as stock prices soared. 

However, with the price of Disney stock down by 41 percent and at a 52-week low at the close of business on last Friday, change was indeed in the wind. What many may not have foreseen was the return of Bob Iger. Given his accomplishments as the successor to Michael Eisner in 2005 in the CEO role, and his resignation in 2020 in favor of Bob Chapek, it certainly seemed that his time with the company had come to an end and on his own terms. 

The action of Disney’s Board in returning Iger to the CEO role certainly draws a parallel to that of Apple’s Board of Directors when it brought Steve Jobs back. Steve was able to turn the company around and set it on the path that sees millions of its products in the hands of consumers with a customer base that is still growing today. One can indeed hope that lightning may strike twice as the Disney Company seeks to return to previous profits and position as one of the most well-respected brands on the planet.

A difference this time around? This isn’t personal; it’s strictly business. When Roy Disney and Stanley Gold used Save Disney to oust Michael Eisner, there were many moments of personal animosity between the players. This time? Policies under Bob Chapek have had their effect on stock prices, and it isn’t just individuals affected. It is the institutional shareholders that face major losses in their portfolios as the price drops with little rebound on the horizon. That base can’t be ignored and the Company must do everything it can to return that value.

And for those Disney fans who have vilified Bob Chapek, much as they did Michael Eisner, instant gratification isn’t likely to come their way. A look around the theme parks lately offers crowds still buying admissions, despite higher prices. Hopefully, increased budgets will offer managers some opportunities to “plus” things as needed; increased hiring and spending on projects, among them.

It is early in the process as things come together with Bob Iger back in the CEO role. Undoubtedly, changes will be ahead as various players get realigned to see new/old plans set in place. Again, not the first and certainly not the last time this happens at Disney.

Going back to the profits and stock prices the way they used to be under Bob Iger’s watch is not something that will happen overnight. While the stock market will respond to his return, it is only the first step on what is sure to be a bumpy road ahead.

Hence, the quote above, as uttered by Bette Davis, memorably in 1950’s “All About Eve” – “Fasten your seatbelts. It’s going to be a bumpy night”.