The Walt Disney Co.’s new executive chairman Bob Iger said the decision to step aside as CEO with more than a year left on his contract was one that has been a long time coming and was necessary for him to properly focus on the entertainment giant’s creative strategy.
Iger gave up the CEO title Tuesday after 15 years, passing the baton to Disney Parks chief Bob Chapek, effective immediately. Iger will remain with the company through Dec. 31, 2021, and will lead its board of directors as executive chairman.
Iger had tried to retire on at least three occasions over the past five years, but something always brought him back. Since being named CEO in 2005, Iger has brought such iconic brands as Pixar, Lucasfilms and Marvel under the Disney umbrella. In the past year alone he has led the purchase of certain assets of 21st Century Fox for $71.3 billion and launched its wildly successful streaming service Disney+ in November.
In a conference call with analysts after the market close on Feb. 25, Iger said the decision to step down now wasn’t made out of any particular sense of urgency, “other than we felt the need was now to make this change.” He added that Chapek had been singled out as his successor “for quite some time.”
Iger said after the completion of the Fox deal and the launch of ESPN+ and Disney+, the company’s asset base is in place and that the No. 1 priority is now to focus on the creative side of the business.
“Thinking about what I want to accomplish before I leave the company at the end of 2021, getting everything right creatively would be my No. 1 goal,” Iger said. “I could not do that if I were running the company on a day-to-day basis.”
Chapek, who spent the bulk of his 27-year career tenure with Disney on the studio side -- he served as president of Walt Disney Studios Home Entertainment and as president of distribution for The Walt Disney Studios before joining consumer products in 2015 -- said that he and Iger have worked closely through all aspects of the business.
“Bob [Iger] has been great in terms of giving me exposure across the many segments of the company,” Chapek said on the call. “I spent 19 years at the Studios and then moved on to consumer and then on to parks, so I had probably a fairly broad overview of how the company operates, regardless of the different industries that we work in. That said, obviously I have not spent as much time on the media side or the direct-to-consumer side, but we have some really great experienced leaders that are in place in those businesses. The way that Bob manages his direct team is we have a lot of cross fertilization. We meet every single week and discuss each other's businesses. While I certainly have an opportunity to immerse myself more inside those media businesses, I have a bit of fluency just like my peers have some fluency in our business and familiarity with the opportunities and some of the challenges that they all face.”
In a research note, Evercore ISI media analyst Vijay Jayant wrote that although the announcement was somewhat abrupt, it has been common knowledge for quite a while that Iger would step down after his employment contract was up.
“We think a quick transition makes sense and effectively eliminates the need for a transitional period, and we do not expect any meaningful strategic shifts for the company as a result of the change,” Jayant wrote.
As far as Chapek, Jayant noted that the parks chief supervised a massive capital investment that doubled the size of its cruise ship fleet and led to the construction of several theme parks around the globe. And more importantly, the 22-month lead time between now and Iger’s departure gives the outgoing CEO ample time to show Chapek the ropes.
“[T]he ~22-month lead time between now and the end of Iger’s contract gives Bob Chapek plenty of time to assume and learn day-to-day CEO responsibilities,” Jayant wrote, adding that he doesn’t anticipate any major structural changes at the company. “As mentioned, we think the abrupt nature of this evening’s press release announcing Chapek as CEO stems only from the goal of making the transition as swift and smooth as possible. We fully expect Iger to remain engaged in executing the company’s long-term strategy and note that Chapek appears to have been named CEO after a long and thorough search conducted by the company’s board.”