On the menu today: Disney shocked the world last night by firing CEO Bob Chapek and bringing back his predecessor, Robert Iger. Iger is more or less the walking embodiment of woke capitalism; for a little while, President Joe Biden was contemplating making him the new U.S. ambassador to China. Chapek, by contrast, seemed like a CEO who would have preferred his company stay quiet after what happened in Florida.
What Happens after You Get Woke and Go Broke
On Sunday night, Walt Disney Company’s board of directors shocked the world by announcing that it was firing the company’s CEO, Bob Chapek, and replacing him with his long-serving predecessor, Robert Iger. The move was so out of the blue, the Wall Street Journal reported that, “Other Disney employees said they were baffled by Mr. Iger’s Sunday email and immediately began asking if the message to employees was real or if it came from a hacked email account.”
This same board of directors voted to renew Chapek’s contract as CEO through 2024 this past June! Susan Arnold, the chairman of the board, said at the time that:
Disney was dealt a tough hand by the pandemic, yet with Bob at the helm, our businesses — from parks to streaming — not only weathered the storm, but emerged in a position of strength. . . . Bob is the right leader at the right time for The Walt Disney Company, and the Board has full confidence in him and his leadership team.
Apparently, you can go from “the right leader at the right time” to the wrong leader at the wrong time within five months.
What caused the Disney board to suddenly lose faith in Chapek? At first glance, this is a decision primarily driven by Disney’s sliding profit margins. In the print edition of the Journal, the article about Disney’s move includes the eye-popping sentence: “Since Disney+ launched three years ago, it has lost more than $8 billion as it has expanded rapidly. In the three months ended October 1, Disney+ added 12.1 million net new accounts, bringing its global total to $164.2 million subscribers.” In the online version, the sentence is, “in the most recent quarter, though, it lost $1.47 billion, more than twice the year-earlier loss.” [Emphasis added.]
Disney’s subscription rate (at least here in the U.S.) is $7.99 per month, or $79.99 per year, but next month, the service is adding advertising. If you want the ad-free premium version, it will cost $10.99 or $109.99. That adds up to roughly $1.3 billion in subscription fees per month, about to increase to about $1.8 billion per month . . . and Disney+ is still losing almost $1.5 billion in three months? You would think they were filming the space scenes in the Star Wars shows on location.
You can understand why companies believed streaming would be a much more stable and profitable way to deliver entertainment to audiences. If Disney makes a movie, Disney only gets your money if you get off your couch and choose to go to the multiplex, at least during the theatrical release. If Disney runs that movie on television, it is dependent upon what advertisers are willing to pay to advertise during that movie. But with a subscription service, Disney gets your money all year long if you are a subscriber, whether you watch its streaming service a lot or a little.
So it isn’t only politics that could have spurred the Disney board to replace Chapek . . . but the perception that Chapek wasn’t fully committed to a progressive political agenda probably earned him enemies within the company, and may have made lots of people disinclined to defend him.
Back in March, when Florida’s legislature was debating the “Parental Rights in Education” bill — the legislation that Democrats insist upon calling “Don’t Say Gay” — the former Disney CEO Iger loudly opposed it, and the perception was that Chapek didn’t want the company to get involved in the fight. As the Hollywood Reporter put it at the time:
More importantly, Chapek is busy putting his own stamp on Disney company culture, and clearly he will be less willing to wade into advocacy than Iger. For example, a knowledgeable source says Chapek balked at a proposal to weigh in on voting rights.
Chapek is private about his politics but is believed to be much more conservative than Iger, who was a registered Democrat before becoming an independent in 2016. “Chapek is staunchly opposed to bringing Disney into issues he deems irrelevant to the company and its businesses,” this person says.
It didn’t take too long for gay and lesbian Disney employees to complain that the company’s leadership was abandoning them by not attempting to use its leverage to block the bill. Chapek belatedly moved to oppose the bill, and it didn’t go well for him, as our Phil Klein reported at the time:
For those who missed it, Disney’s CEO Bob Chapek made a public show of calling DeSantis in protest about the parental-rights bill, which has been dishonestly labeled by Democrats and the compliant media as the “Don’t Say Gay” bill. Some suggested that this put DeSantis in a tight spot, given that Disney is one of the most powerful businesses in the state and one of its major employers. But the governor not only told Disney to pound sand, he made a public show of it. . . . In addition to a statement, video was leaked to Fox of DeSantis ripping into Disney and “woke corporations.” Then DeSantis released a campaign ad that prominently featured the video clip, including the part where he — justifiably so — rips Disney’s business dealings with China.
Chapek didn’t placate many of Disney’s employees and made his company an even larger target of criticism from Republicans. (The fight did lead to Newsweek choosing to portray Disney, with its $203 billion in assets, as a beleaguered underdog about to be squashed by the big, mean GOP.)
At the end of October, Chapek appeared on a Wall Street Journal podcast and was asked directly whether the company had become “too woke.” Chapek’s answer was a masterpiece of avoiding any direct political statements:
The world is a rich, diverse place and we want our content to reflect that. And we’re so blessed to have the greatest content creators and they see it similarly. But I think that’s good from a commercial standpoint as well because then you appeal to the largest possible audience. And certainly we live in a world now where everything seems to be polarized, but I think we want Disney to stand for bringing people together and I think we’ll do that by diverse stories and diverse characters.
By comparison, Iger was briefly on a Trump administration business-advisory panel, but resigned when Trump withdrew from the Paris climate accords. He also repeatedly clashed with former president Trump and weighed in increasingly loudly and frequently on DACA, gun control, and other political topics.
At the beginning of the month, CNBC reported that Chapek had been reaching out to House Republicans, attempting to smooth over areas of disagreement:
Disney CEO Bob Chapek has been having private phone calls this year with House Republican leaders including Minority Whip Steve Scalise, R-La., according to people briefed on the matter. Scalise is in line to become House majority leader if Republicans take control of the chamber, which would make him the No. 2 official in the majority party.
Chapek seemed to want to depoliticize Disney, or at least prevent the company from fully embracing every scalding-hot political controversy that came down the pike. Conservatives love the slogan, “Get woke, go broke.” But Chapek wanted to make Disney less woke, and his efforts didn’t improve the company’s bottom line.
The Disney board of directors knows Iger’s increasingly outspoken politics and concluded that they will do less damage than continuing with Chapek’s less-controversy-courting approach. Then again, there may be something of a “woke premium” at work here. The board may well feel that Iger is more likely to keep progressive employees happy and mitigate one potential problem that Chapek’s more neutral approach would exacerbate.
ADDENDUM: Thanks to Howard Kurtz for having me on his program, MediaBuzz, yesterday morning, to discuss how the media covered Donald Trump’s campaign launch, and how Ron DeSantis and Mike Pence are responding to Trump’s new bid.