Visitors walk toward Sleeping Beauty's Castle in the background at Disneyland Resort, in Anaheim, Calif.Jae C. Hong
Of the many things that run downhill, the bad decision-making at the highest levels of the Walt Disney Company DIS-N is among the rankest and most damaging.
And, as is often the case, it is those in the lower echelons of the organization who are paying the price.
Sins of the father? The roughly 7,000 Disney workers – cast members, as the company affectionately refers to them – who will be banished from the Magic Kingdom in the coming months can’t be faulted for thinking so.
The layoffs are part of a plan to cut US$5.5-billion in costs, including US$3-billion in content spending, to right the listing franchise, which turns 100 this October. The job reductions will be across the company, including Disney’s media and distribution division, parks and resorts, and ESPN, its flagship sports network.
This didn’t need to happen. And if there is even a sliver of justice here, it is that Bob Iger, the chief executive retread ultimately responsible for the embarrassing destruction of value, morale and trust inside and outside the organization, is now forced to clean up his own mess.
It is a painful irony for all concerned – not only employees, but also customers, investors and anyone else who has strong feelings for this iconic brand that has cornered the market in selling fantasy and happiness to millions.
Mr. Iger got the fantasy part right by thinking his protégé and handpicked successor for CEO, Bob Chapek, was the right man for the job. The happiness didn’t follow.
To be sure, the two years under Mr. Chapek’s leadership shook the foundations of the brand. With the full endorsement of Disney’s board of directors, he broke every rule that made the company so successful.
He restructured to marginalize the creative ranks that are the lifeblood of Disney, firing senior creative executives and surrounding himself with bankers.
He crossed swords publicly with valued talent, generating a lawsuit from Black Widow star Scarlett Johansson, who claimed she lost millions of dollars because of his decision to release the film on the Disney+ streaming platform and in theatres simultaneously.
He raised prices at theme parks and insulted loyal, repeat customers by suggesting that park revenues were hurt because Magic Key pass holders were using them too much.
And, perhaps most famously, he embroiled the company in a politically charged public fight with Florida Governor Ron DeSantis over state parental rights legislation that angered some LGBTQ+ employees at the company’s showpiece Disney World property in Orlando.
Meanwhile, he failed to energize the company’s streaming platforms, which sucked time, money and resources without offering convincing signs of hope.
While the hit to Disney’s reputation was significant, the financial impact of Mr. Chapek’s moves was most painful. Disney’s share price fell more than 40 per cent from its peak in 2021.
Remarkably, rather than send Mr. Chapek a signal that they were unhappy with his performance, the board rewarded him with annual pay raises and big bonuses.
Whether or not Mr. Chapek believed he was bulletproof because of his mentor’s position and influence is unclear. The real mystery is why, considering the continuing destruction of value under his tenure, it took so long to blow the whistle.
Eventually, the company’s chief financial officer, Christine McCarthy, said enough is enough and cried foul to the board.
The board’s reaction to two years of bad decision-making was to make one more: reinstating Mr. Iger as CEO. He had been CEO for 15 years before stepping down in 2020. He stayed on as executive chairman until the end of 2021 to oversee Mr. Chapek’s transition into the role and was handed the job again when Mr. Chapek was fired last year.
Lest the Disney cast members who didn’t get the axe consider breathing sighs of relief for still having their jobs, Mr. Iger had some sobering news in detailing the layoffs last week. Fewer people plus big turnaround ambitions equal lots more work.
“For our employees who aren’t impacted, I want to acknowledge that there will no doubt be challenges ahead as we continue building the structures and functions that will enable us to be successful moving forward,” he said.
The message from the top was clear: The beatings will continue until morale improves.