01 January 2023

Restoring Magic to the Kingdom

"I only hope we don't lose sight of one thing--that it was all started by a mouse."

--Walt Disney

What kind of Hollywood ending might a script writer have in mind for a remake of the 2020 CEO decision at Walt Disney Co.?

Of the pressing items on returning CEO Bob Iger's "to-do" list (reversing reorganization, streaming, the decline of broadcast and cable tv—according to one observer), perhaps nothing is more critical than correcting his one big failure—naming Bob Chapek as his successor. 

(C) Walt Disney Co.


Reuters reported that Bob Iger is returning to Walt Disney Co. as chief executive, less than a year after he retired, "to boost investor confidence." The stock sunk more than 40% last year, lagging the nearly 7% year-to-date drop in the broader Dow Jones Industrial Average. It lost almost a third of its value while Chapek was at the helm.

Iger, 71, agreed to serve as chief executive officer for two more years, Disney said in a statement. He replaces his chosen successor, Bob Chapek, who took over as Disney CEO in February 2020 just as the COVID-19 pandemic led to park closures and visitor restrictions. 

"The Board has concluded that as Disney embarks on an increasingly complex period of industry transformation, Bob Iger is uniquely situated to lead the Company through this pivotal period," Chairwoman Susan Arnold said in the statement.

An uncertain process

Why is CEO succession at Walt Disney Co. like the Magic Kingdom's Space Mountain--a roller coaster ride in the dark? It may result from inadequate board planning. Not sorting CEO and COO responsibilities. Neglecting leadership transitions. And a culture of limited power sharing.    

Disney's unsteady history of managing executive suite transitions at its Burbank, Calif. headquarters—sometimes referred to as the Seven Dwarfs building—should have been a cautionary reminder for Iger and the board. But instead, succession failures were behind the curtain as the newly appointed chief executive appeared live from Walt Disney Studios on Monday, November 28, 2022, hosting a 40-minute company-wide Town Hall meeting of in-person and virtual employees.

A pattern of behavior

When Disney president and chief operating officer Frank Wells, considered a legend at the company, died in a helicopter crash in April 1994, chairman and chief executive Michael Eisner decided not to promote Jeffrey Katzenberg, chair of Walt Disney Studios, to fill Well's position as No. 2. Eisner said he wanted to run Disney by himself. So, after 19 years with the company, Katzenberg resigned.

However, Michael Eisner then hired Michael Ovitz, a founder of Creative Artist Agency, as president in October 1995, only to terminate him 16 months later with a court-approved $130 million severance package. 

Eisner, who had successful emergency quadruple heart bypass surgery in July 1994, served as CEO for 21 years and never wanted to leave. "I would expect to stay there forever," he said in 1997. But, as it turned out, that presumption was not to be.

Eisner's tenure ended in 2005 with a shareholder revolt led by Roy Disney, nephew of the founder, Walt Disney. In a newspaper commentary in the Financial Times, Roy Disney and his advisor, Stanley Gold, accused the Disney executive officer of refusing to "brook criticism, nurture talent, or groom a successor."

With Michael Eisner's dismissal, Disney's then-president, Bob Iger, was appointed CEO.

Tom Skaggs, former chief operating officer at Disney, was widely expected to succeed Iger in 2018. Skaggs had financial experience as CFO and later served as Disney Parks, Experiences, and Products chairman. Then the company announced that Skaggs would leave in May 2016. Bob Iger would run Disney alone and extend his contract four times before finally stepping down as CEO in February 2020 while remaining board chair until the end of 2021.

A final act?

There's a need for Bob Iger to work his magic one more time to repair Disney's businesses, morale, and especially its CEO succession process. Working closely with the board to find the right person and put them in the right place as the entertainment industry is transformed.

Could this "boomerang" moment have a Hollywood ending? Well, it may happen differently than planned. To quote Heraclitus, "No man ever steps in the same river twice, for it's not the same river, and he's not the same man."

Nevertheless, this extended performance is Robert Allen Iger's ultimate legacy and maybe Walt Disney Co.'s future.

Note: A version of the January Post appeared in the Orlando Sentinel.


© Bredholt & Co.