When announcing he was leaving his role of CEO to The Walt Disney Company with immediate effect on February 25th, Bob Iger, 69, was met with many questions on why now and why so suddenly.
Iger left on a high and in a whirlwind of a grand media tour highlighting his success: the launch of Disney+ set to immediately rival worldwide powerhouse Netflix, being name business person of the year by Times, and even being tipped to be a serious candidate for the next US presidential elections. Whilst speculations had been rife since 2013, the question of his retirement was never addressed publicly. So why now? Mr Iger himself confirmed there was no more than met the eye.
Unfortunately for Mr Iger, the news of his retirement from the CEO role to assume the mere role of Chairman, coincided with the beginning of the Coronavirus pandemic which is proving catastrophic to The Walt Disney Company business model and reliance on theme parks and cruises. Some say that Iger was too involved in setting his own legacy in stone that he may have missed the threatening signs of the crisis. Others argue that he did realise how devastating the coronavirus was about to become and preferred jumping ship to protect his legacy.
The truth is that Bob Iger hasn’t really left. Whilst he left Bob Chapek hold the reins for a few weeks, the ‘Executive’ Chairman is now back in charge. His focus is clearly on what the Disney of the future will look like, in an industry that will need to reinvent itself to keep people safe and will likely operate with less employees.
Iger’s leadership will be a great asset to turn around the company’ fate in the aftermath of the pandemic, however the task at hand is not to be underestimated. Disney’s model relying on creating experiences, and a shift from on-screen to in-person entertainment is particularly exposed to the health crisis.
The company’s largest division, covering its expanding cruise ships business and theme parks, generated $26bn in the year ending last June. All these are now closed for an unforeseeable future. Its second division, television, is not in a better place, as the flagship ESPN cannot flourish in the absence of games and sporting events to broadcast and is now surviving on broadcasting athletes playing video games. Even the third division, Studio, will see its growth strategy cut from under its feet as movie openings in theatres disappear. The successful introduction of Disney+ is providing a gimmer of hope. The news last week that it had attracted 50 million subscribers improved the company’s share price by 7%. However, the platform is still in its infancy and far from generating profit. All together this means The Walt Disney Company is currently recording eye-watering losses. Media Industry analyst Hal Vogel estimated that the company is losing in the region of $30m or more a day. End of March Disney borrowed $6bn, a sign of the financial impact of the crisis but also of the confidence from its leadership team that it would recover from it.
This was enough for Bob Iger to decide to postpone his retirement plans. In an email quoted by the New York Times, Iger confirmed he would be actively helping Bob Chapek and the company in these troubled times and referred to his 15 years tenure as CEO. The pair addressed immediate concerns from shareholders and the company executives before announcing the closure of the first park in the US on March 12. On March 13, Bob Chapek announced via email the mass furloughing of employees as well as immediate cuts and freezes to costs. The number of employees being furloughed out of the company’s 223,000 employees is unclear but it is said to involve more than 30,000 people in California and a further 43,000 in Florida. Whilst all employees will keep their benefits they will stop being paid on April 19.
Bob Iger’s focus is on the future of the company and how the crisis will transform its operating model. The main challenge for the whole industry is how to get people back, safely, to the parks. Various measures are being considered, including taking visitors’ temperatures. But the transformation will run deeper than how to filter visitors, it is expected to change how Disney invests with a reference to stopping some of the current television practices like advertising upfront and producing pilots for programmes that are not confirmed. Mr Iger refused to confirm whether the company would downsize its workforce.
Whilst Bob Iger’s legacy now back on the table, the question of his succession may also open again. Chapek’s 2-year trial period as CEO will be tainted by unexpected, dramatic circumstances and the close involvement of Bob Iger in the running of The Walt Disney Company. None can tell when the situation will normalise again, nor when Bob Iger will feel it is time for him to leave again.