Walt Disney (DIS) Finds A New Hope In The Return Of Iger

3:16 pm Monday, November 21st, 2022

Walt Disney’s (DIS) content creators would be hard-pressed to come up with a more dramatic and surprising turn of events than the shake-up that’s occurring in real life at the entertainment powerhouse. In a move that conjures up thoughts of Luke Skywalker improbably returning to rejoin the Republic in The Force Awakens, DIS announced that Bob Iger will return to his former CEO role for the next two years. Like Skywalker, many view Iger as an iconic figure in DIS history who has the ability to overcome daunting challenges and obstacles. Currently, those challenges primarily consist of improving DIS’s profitability — especially for its loss-generating Disney+ platform — and turning its stock around.

Iger will replace Bob Chapek, who stepped down last night after serving as CEO since February 2020. Just one month after Chapek took the helm of DIS, the pandemic struck, setting the stage for what would become a wild rollercoaster ride for the company during his tenure. Initially, Chapek gained investors’ favor as subscriber growth exploded for Disney+, forging a new digital-centered path for growth in a stay-at-home world. From the day Disney+ launched on November 12, 2019, through early March of 2021, DIS shares gained as much as 40%, mostly driven by Disney+ subscriber growth and the expectation that the platform’s losses would soon decline.

Nevertheless, the development is receiving a favorable response for the following reasons.

During Iger’s tenure as CEO from 2005-2020, DIS shares increased by more than 400%, spurred by several transformational acquisitions that greatly expanded its library of content. For instance, DIS acquired Marvel in 2009 for $4.0 bln, followed by its acquisition of Lucasfilm in 2012 for $4.05 bln.

To say that the CEO shakeup at DIS came as a surprise is a major understatement. There was likely more happening behind the scenes than the public is aware of, but there was little evidence to suggest that a move was on the horizon. The bottom line, though, is that DIS has staked much of its future on the success, growth, and ultimately, profitability, of its DTC assets. In the end, DIS felt that Iger is the best choice to lead the company forward in its digital transition.