The secret to Hollywood, explains one of America’s most prominent media executives, is to understand it like an “old money town” run by half a dozen people, friends so close they often meet for dinner on a Sunday night.
With a wave of his hand and some cinematic sweep, the executive evokes a typical get-together of these Hollywood royals, with the CAA super agent Bryan Lourd present, perhaps sitting beside the legendary film-maker Steven Spielberg.
The guest list would chop and change, the executive says, but the head of the table would be reserved for one man: Bob Iger, a leader who fused creative flair with business acumen and made The Walt Disney Company the biggest name in media.
Even in semi-retirement after stepping down from Disney in late 2021, Iger remained a towering presence in Hollywood. “If he questions you,” the executive says, “then you’re in trouble”.
Such was the fate of Bob Chapek, the chief executive of Disney who was unceremoniously ejected this week after just 33 months in the job. With a plot twist worthy of Hitchcock, his replacement was Iger, now 71, the man who chose Chapek as his heir in 2020 but quickly found him wanting.
Chapek’s downfall followed a bad financial run for Disney in its centenary year — and a bleak spell for the whole media industry. Shares in Disney had more than halved from their March 2021 peak, wiping about $210bn from its market value. A big miss on quarterly earnings last week, including a $1.5bn loss on streaming services, rattled Wall Street even further. An internal uprising followed. By the weekend, Chapek was out.
But for old colleagues, and many in Hollywood, Chapek’s defining mistake was not missing numbers but something more intangible. His public spats over pay with stars such as Scarlett Johansson were a symptom of a deeper problem. Chapek had lost the confidence of the creative community, as well as the support of the one man who could give him the keys to Hollywood.
“It is tough to run a media business in America because eventually it becomes a Hollywood business,” says one former Disney executive who worked with both Bobs. “It is a hierarchical place, almost caste-like. They do not accept an outsider. Chapek had no chance without Iger. When they fell out, it was over.”
Iger’s return was greeted with near euphoria within Disney’s ranks. During his 15-years at the helm, Iger had embodied the swagger of Hollywood in bloom. His acquisitions of Lucasfilm, Marvel and Pixar were creative bets that had paid off handsomely; Disney accounted for almost 40 per cent of the US box office in 2019, according to Comscore. Even his expensive streaming gamble with Disney Plus in 2019 had been cheered by Wall Street.
“If there were a machine that produced CEOs and all the dials were turned to eleven, Bob Iger would be the one walking out,” says Sean Bratches, a 27-year veteran of Disney’s ESPN sports network.
But his second act at Disney begins as a winter chill grips the industry. Once lucrative cable television businesses are spluttering. Wall Street has lost faith in the profit potential of streaming to replace what is being lost. Recession looms. Disney’s strengths under Iger increasingly look like part of the problem. Is Iger’s Hollywood touch really what is missing?
The contrast between the two Bob’s could hardly be more stark. Chapek grew up in the industrial town of Hammond, Indiana, and, despite 29 years at Disney, he never “went Hollywood”. He maintained his Midwestern reserve as he rose through the ranks from the home entertainment business to running distribution at the Walt Disney Studios. Before becoming chief executive, he oversaw the theme parks — a job he clearly loved.
Until he got the job, Chapek had never had to deal much with the “talent”, a coverall term in Hollywood for everyone from an Oscar-winning director to TV script writer. Through most of his career he consciously avoided the limelight — exactly where much of the talent longed to be. As one top executive at a Disney rival noted after Chapek’s dismissal, maintaining good relations with the talent isn’t a sideline to running a business, it “is the whole job”.
“He certainly wasn’t a guy who was good at the touchy-feely stuff,” says another senior Hollywood executive.
All business leaders in Hollywood know of the potential pitfalls, and few managed them as adroitly as Iger. “This town revolves around the creative people. To be credible you have to be good with talent,” says Josh Berger, a 30-year veteran of Warner Bros who oversaw the Harry Potter franchise. “If you misjudge that, the town will just brand you as talent unfriendly. It can be very unforgiving.”
Chapek viewed his distance as a strength while he set about reorienting Disney for the streaming age. If the talent got their way, he reasoned, every movie would end up on a big screen with a giant promotional budget, not on a streaming service.
He told the Financial Times last year that Hollywood creatives’ “preference of the medium for their storytelling” — effectively deciding whether it should be made for the big screen — was an obstacle to growth at Disney Plus. “We love theatrical exhibition and we love linear TV, but it’s not about what we love — it’s about what the consumer wants,” he said.
So Chapek stripped studio chiefs of their authority to set budgets and distribution strategies and placed them under the authority of Kareem Daniel, a trusted lieutenant. Creative executives bristled at the lack of autonomy under Daniel, hurting morale to the point that some complained to the board this year.
“It’s not like Disney before [Chapek] was a great organisation that nurtured artists — they’re a tough group of people,” says a senior Hollywood executive. “But at least there was respect and appreciation and an awareness that both sides have to work together instead of the business side dictating that this is how it’s got to happen.”
Iger fired Daniel on his first day back in the job and asked some of the very executives who had reported to him to create a new structure “that puts more decision-making back in the hands of our creative team”.
Jeremy Zimmer, chief executive of United Talent Agency, says Iger’s reappointment is “good news because it’s going to re-stabilise a team that had worked really well together”.
During Iger’s previous tenure, Zimmer said, there had been “a strong appreciation of the interaction between the creative side and the business side. One wasn’t subjugated to the other.”
A more uncomfortable question for Iger is whether the troubled Chapek era was partly down to him. Iger had notoriously been reluctant to hand over the reins at Disney, grooming and then unsentimentally dropping a clutch of potential heirs over the years.
Chapek, once chosen, appeared to represent everything that Iger was not. Colleagues wondered whether Iger’s real aim was to remain essential, and stay on as a powerful chair, a position he held for the first 22 months of Chapek’s tenure.
In practice, relations with Chapek soured as the new chief executive tried to put his own stamp on Disney; Iger made his displeasure plain. “Iger has never been upset with anyone the way he was upset with Chapek,” says the colleague of both Bobs, noting they could hardly bear to be in the same room.
Having failed to land an ambassadorship he coveted in London or Beijing, friends of Iger say he began to stew over Disney’s fate — until the call came giving him a chance to rectify matters.
“[Iger] made bad choices, obviously, and he wants to correct the black mark [on succession],” says an old member of Iger’s top team. “He is ‘the only guy that can run Disney’ is kind of the storyline. That’s an unfortunate one because he has to find someone who can run Disney other than himself.”
During Iger’s 11-month absence from Disney, some analysts and old colleagues have taken a dimmer view on parts of his legacy — especially the $71.3bn purchase of 20th Century Fox from Rupert Murdoch in 2019, a high-watermark for media dealmaking in the era of easy money.
They also note that he was the architect of Disney’s streaming strategy, including its low pricing to stimulate demand. (Disney will raise prices on its streaming services next month as it seeks to turn a profit by 2024.) Regardless of who might be the C-suite, Disney will be entering leaner times across the board.
One course correction is likely to involve the strategy for Disney Plus, which Chapek sought to aggressively expand into general entertainment and hit a target of 260mn subscribers by 2024, almost 100mn increase on today’s subscriber base. Iger’s original vision was always more narrowly focused on Disney’s family superbrands rather than becoming another Netflix, say old colleagues. There will probably be more focus on profitability and cost control, not a recipe for easy relations with Hollywood.
Speculation has also turned to whether Iger, who defined modern Disney through dealmaking, might seek another transaction to cement his legacy. Options include spinning-off highly profitable but declining businesses such as ESPN, while moving Disney into growth areas such as gaming. Iger’s longstanding relationship with Apple might bring new partnerships, his old colleagues say.
Within Disney there is a curious mix of emotion: the comforting security of turning to a familiar leader, with the unease that comes with knowing the seasons are changing, and the 100-year-old media empire may yet transform in unexpected ways.
Weeks before leading the internal revolt against Chapek, Disney’s chief financial officer Christine McCarthy told her college alumni magazine of her love of gardening, declaring: “pruning is healthy”.
“Cut out unproductive things in your life. Rid yourself of harmful relationships,” she said. “It will feel bare and exposed at first, but give it time and breathing room, and you will flourish.”