Mickey Mouse waves during the 96th Macy's Thanksgiving Day Parade in New York on Nov. 24.ANDREW KELLY/Reuters
Gus Carlson is a U.S.-based columnist for The Globe and Mail.
There’s a basic guiding principle that every company leader must understand: Know your core business.
Yet virtually every decision Bob Chapek made during his two years as chief executive officer of the Walt Disney Company DIS-N told the company’s stakeholders he just didn’t get it.
He took budgets and power out of creatives’ hands, treated talent poorly, insulted loyal customers and embroiled the company in a public political fight that was breathtakingly off-brand.
So tarnished was Mr. Chapek’s tenure that his own leadership team, including chief financial officer Christine McCarthy, blew the whistle on him to the board of directors and prompted his predecessor and mentor, Bob Iger, to return to the corner office.
Finally, Disney is back on the right track. But what a long road it took to get there.
Mr. Iger, whose creative contributions during his 15 years as CEO included the acquisitions of Pixar, Marvel, Lucasfilm and 21st Century Fox, stepped down in 2020 but stayed on as executive chairman until the end of 2021 to help his handpicked successor get settled.
Their relationship soured very quickly over Mr. Chapek’s handling of Disney’s creative output and his management shakeup, which centralized decision-making among Mr. Chapek’s allies, many of them non-creatives. The feud had Mr. Iger worried that, under Mr. Chapek, Disney was losing its soul.
Early on, Mr. Chapek reorganized the media and entertainment division under longtime right-hand ally Kareem Daniel, a former banker. Mr. Chapek also fired Peter Rice, Disney’s TV chief, a move that further rankled the company’s creative community.
Then there was the public clash with Scarlett Johansson, star of the film Black Widow. Mr. Chapek decided to distribute the movie through the Premier Access window, available at extra cost through the Disney+ streaming platform, at the same time the film opened in theatres.
Ms. Johansson sued Disney for breach of contract, saying Mr. Chapek’s strategy cost her millions of dollars in lost revenue. The ensuing public bickering between the actor and the CEO was embarrassingly non-Disney.
In March, Mr. Chapek wrestled with Florida Governor Ron DeSantis over the state’s new parental rights law. Nicknamed the Don’t Say Gay law, it bans the teaching of gender identity in schools from kindergarten to Grade 3.
Bowing to pressure from LGBTQ+ employees at Disney, Mr. Chapek vowed to have the law repealed. In response, Mr. DeSantis stripped the company of its special self-governing status for its theme park and hotel properties near Orlando.
Several commentators point to the dispute as another example of a “go woke, go broke” leadership strategy, but Mr. Chapek’s demise was in motion well before that tangle.
He even stirred controversy at Disney’s theme parks. He raised prices and fiddled with attraction features and loyalty programs such as the Magic Key for annual passholders.
In a move akin to telling an airline’s frequent flyer program members that they are bad for business because of the discounts they get, Mr. Chapek suggested that an “unfavourable attendance mix” at theme parks was hurting profitability. Magic Key holders took the comments as a dig, and a line of bootleg T-shirts and coffee mugs appeared for sale online bearing the word “Unfavorables” in Disney’s famous font.
Quite simply, Mr. Chapek forgot – or perhaps never really understood – Disney’s core business: creative storytelling.
His tone deafness was reflected in the dismal financial results reported by Disney on Nov. 8, when its performance missed analysts’ expectations for both revenue and earnings per share – a rare stumble for the company.
But not only were the financial results disappointing – including a widening year-over-year loss at its streaming division – Mr. Chapek was also widely criticized for his sunny and blithe demeanour in delivering them.
Disney shares, which had fallen more than 40 per cent since January, fell another 12 per cent on the news.
In stepping back to the helm this week, Mr. Iger declared Disney would resume a course “that honours and respects creativity as the heart and soul of who we are.”
He quickly fired Mr. Daniel and vowed to revamp the company with “a clear mission focused on creative excellence” and a “new structure that puts more decision-making back in the hands of our creative teams.”
“I fundamentally believe that storytelling is what fuels this company,” he said in a note to employees. “And it belongs at the centre of how we organize our businesses.”
For beleaguered stakeholders, that’s the core business story they need to hear.