After Contract Renewal, Disney CEO Bob Chapek Looks To Prove Wishes Can Come True With Him Helming The Ship

After Contract Renewal, Disney CEO Bob Chapek Looks To Prove Wishes Can Come True With Him Helming The Ship

Walt Disney CEO Bob Chapek won praise in many corners in 2020 for ably steering the company through the devastation of Covid after taking the baton from Bob Iger early in that fateful year.


The year-and-a-half since has seen much more blowback along with bouquets, with the sharp pullback in Disney’s share price reflecting in part lingering questions about the future of the seventh person to serve as CEO in the company’s 99-year history. He publicly clashed with Scarlett Johansson over the release of Black Widow, ejected widely respected executive Peter Rice with minimal explanation and fumbled — by his own admission — the company’s response to Florida’s “Don’t Say Gay” legislation.

Earlier today, though, Chapek got a three-year contract renewal from the Disney board of directors. The announcement of the widely expected renewal capped a two-day meeting of the board. On Wednesday, the newly re-upped boss will be back in his element, presiding over a christening ceremony for the Disney Wish in Port Canaveral, FL. The cruise ship will set off on its maiden voyage July 14.


Its development and construction overseen by Chapek during his stint running the company’s theme parks and resorts division, the Wish is the first new cruise ship to join the fleet in the past decade. It incorporates themed dining attractions and other extensions of the company’s potent Marvel, Frozen and Star Wars brands, plus a “1923” area dedicated to the year the company was founded. “This is really his baby,” a longtime former colleague of Chapek’s tells Deadline. “Welcoming this ship in the company’s centennial year will be his chance to reset the narrative. Parks, cruise ships — that’s been a real specialty. That’s where he feels comfortable.”


Prior to renewing his contract, Chairman Susan Arnold issued a statement affirming the board’s confidence in Chapek, just after the Rice firing. Canning a top exec wouldn’t usually warrant such an avowal, but it followed a bumpy period. The board convened behind closed doors but had a full slate of topics to cover, from the C-suite to politics to streaming.


“If the board has to publicly put its support behind him, it means something is wrong,” said one Wall Streeter referring to Arnold’s public statement, which said the strength of the company post-pandemic “is a testament to Bob’s leadership and vision for the company’s future. In this important time of business growth and transformation, we are committed to keeping Disney on the successful path it is on today, and Bob and his leadership team have the support and confidence of the board.” 

No one argues that Chapek’s elevation to the top job — a surprise to Hollywood and Wall Street — came at an agonizing time, in February 2020, with the pandemic about to shutter global business. The Indiana native, who began his career in advertising and also had lengthy tours of executive duty in consumer products and home entertainment, took over with a three-year contract that was due to end in February 2023.   


“Certainly, the timing was bad and the industry was in flux and the question was, ‘Is he able to step up?’ It requires a politician and an executive and a creative, ideally,” the Wall Streeter said. But “Bob does not have a natural constituency. People do not know him on the Street. When he was named CEO, investors didn’t know him and then the pandemic prevented him from getting out there and meeting people. So, he is still a bit of an unknown. I am not sure who is defending him.”  


The legal scuffle with Johansson (settled a few weeks after it flashed into public view) and perceived waffling around Florida’s so-called Don’t Parental Rights in Education bill (dubbed “Don’t Say Gay” by opponents) both dinged his reputation as a leader. Disney became Florida Gov. Ron DeSantis’ punching bag and lost a special state economic zone after Chapek spoke out at the annual meeting in March — but not before alienating many employees by his public silence.


“As an investor, I have my own views, and that doesn’t seem relevant to me,” the Wall Street vet added. “But it was certainly a big deal internally. Your fist job as CEO at a creative company is to motivate and energize people.” The Rice episode, which snuffed out the run of the company’s entertainment chief without the customary parting gift of a production deal or the executive on the outs being permitted to announce their own exit, also vexed many employees. It followed a lengthy period of speculation that Rice, a longtime Fox deputy who joined Disney after the $71.3 billion acquisition of most of 21st Century Fox, could be a legitimate candidate to take the reins as CEO. 


More recently, Disney passed on costly rights to hugely popular streaming cricket in India, locking up linear rights instead. Given the company’s dogged insistence as recently as May that it will hit its target of 230 million to 260 million global Disney+ subscribers by the end of fiscal 2024, it is expected that the company will need to trim that forecast. Even though Wall Street lately has cooled on subscriber numbers as the most important of metrics, any reduction will run counter to the norm in the streaming race, where the bar is being raised. “That’s really the dilemma,” says a former Disney streaming exec. “If you lower the number, will the Street react like they have to Netflix? But then if you don’t adjust expectations and then you don’t hit the target in two years, the pain could be even worse.”


Lightyear, the latest film in the Toy Story franchise, proved a disappointment. On the bright side, Shanghai Disneyland is about to reopen amid a vigorous upswing in parks.


The stock has been glum. After slipping a fraction during the regular trading day, it perked up a fraction in after-hours trading on the contract news. Still, its current price of $96.59 is near the $92 low for the year and almost half of the roughly $188 it was trading at last fall at its 52-week high. 


Disney will report results for its fiscal third quarter in August. The  company’s shareholder meeting is in March. Disney, unlike other big media groups, is not a controlled company with massive positions held by family trusts and insiders. The 2004 meeting remains a signal event for the company, as it was the beginning of the end for former CEO Michael Eisner. Activist shareholder Roy Disney banded with other shareholders to strip Eisner of his post as chairman of the board. He resigned as chief executive six months later.


Even though he has a new contract, if Chapek were to incur any displeasure on the board, it is possible for him not to serve out the full length of his term.


“I haven’t heard any rumblings about anyone running actively, campaigning against him,” the Wall Street source pointed out, as with Eisner, although filmmaker Abigail Disney, Roy’s daughter and Walt’s great-niece, has spoken out against Chapek’s most recent pay package. The Disney heiress “is doing her thing. It’s not like there is something structural, that there is some big mistake that he made. It’s just not been smooth.”