Disney: Return of Iger, 'King of Hollywood' | FT Film
For 15 years Bob Iger was the 'King of Hollywood', transforming Disney with the game-changing acquisitions of Marvel, Pixar and Lucasfilm. His successor Bob Chapek's disastrous tenure lasted just two years and now Iger is back for a second reign as CEO, confronted by a new landscape: Disney's legacy businesses are in decline, its streaming services are losing money and its share price has slumped. Can the king revive the Magic Kingdom?
Filmed by Gregory Bobillot, Ryan Griswold and Petros Gioumpasis. Graphics by Russell Birkett. Produced, directed and edited by Daniel Garrahan
You can enable subtitles (captions) in the video player
This is a story about the world's most revered entertainment and media company.
About a revolution in Hollywood.
A different landscape for players like Disney, who used to be the top dog.
Investors lost confidence in where Disney was going.
Bob Iger has been one of the most successful chief executives in Hollywood history.
It's important to think about Hollywood and Los Angeles as like a court. There's always been a king. Bob Iger was certainly at the top of the tree.
It's also a story of succession.
Succession is really important. Disney clearly screwed it up the first time around.
Now, the king of Hollywood is back for a second reign.
You're talking about a different Hollywood, a different landscape for players like Disney.
Can he revive Disney?
Is there a quick fix? How does Bob Iger reinvigorate Disney?
Disney is a company that doesn't really need much introduction. Everyone knows its theme parks created by its founder Walt Disney.
It kind of embodies this American nostalgia. It's this iconic brand. And I hate the word 'iconic,' but it's true.
Disney is the largest media company in the world. If you ask anyone what is Disney or who is Mickey Mouse, they'll know.
Before we talk about streaming and all of the challenges, we should just remember what an enormous entertainment juggernaut Disney is.
It's the most valuable entertainment company in the world even after its stock price has declined quite a bit.
It's got huge studios - Fox Television, the ABC and ESPN TV networks. It's just a sprawling, mammoth operation.
When Disney rises, the industry rises - and vice versa.
The question is, who's the next Bob Iger? The answer to that isn't immediately obvious.
It's important to think about Hollywood and Los Angeles and the history of it as a little bit like a court. There's always been a king who the rest of the industry reveres, might be a little bit frightened of, and looks up to.
Over the years, Louis B. Mayer, Lew Wasserman, who created MCA Universal, which is now Universal, Steven Spielberg, David Geffen, Jeffrey Katzenberg, who formed DreamWorks - these were people who commanded a certain amount of respect and a certain amount of fealty.
Iger established himself as somebody who could see where the entertainment business was going. He was the new king of Hollywood.
Bob Iger is charming and powerful. The guy that's having lunch with Oprah at the Polo Lounge. He's embodied that Hollywood swagger.
Bob Iger has a pretty stellar reputation in corporate America, a bit Jamie Dimon-esque, the pinnacle of a much-beloved American corporation, comfortable in a room with actresses and actors in Hollywood, but also politicians.
I began at ESPN in 1999, through 2018. I did work with Bob at different senior level executive meetings. One of the great skills of Bob is being able to read what the market trends are going and make decisions on how to place big bets.
He quickly set off on this series of game-changing acquisitions.
The original Iger reign at Disney was all about content.
When Bob Iger took over from Michael Eisner in 2005, he came in and made some very decisive moves.
It wasn't this behemoth that it is now. Iger really built Disney through really big deals and really big bets.
He made peace with some of the most contentious relationships that Michael Eisner had had.
Made peace with Stanley Gold and Roy Disney. Made peace with Steve Jobs, which led to the acquisition of Pixar.
Pixar was ironically started by a man who learned his trade at Disney, a guy called John Lassiter. He put John Lassiter in charge of Disney Animation. The output improved immeasurably. There was hit after hit.
Pixar went to even greater heights. They were able to maintain two distinct cultures between the Pixar culture in northern California and Burbank in southern California. Animation at the heart of the company was the first thing he did.
The second big acquisition was Marvel in 2009.
Buying Marvel was a genius idea.
And he took a bet. Paramount looked at it and passed on it because they thought it was too expensive, ironically.
This provided some of the biggest hits in Hollywood history, including the Avengers series.
I remember writing at the time, good luck to them making money out of some of these lesser-known characters, or Guardians of the Galaxy, who's heard of that?
I am Groot!
And, lo and behold, there are these billion-dollar franchises built out of these minor Marvel characters, like Guardians of the Galaxy.
The third big transformative acquisition came in 2012, when Iger acquired Lucasfilm from George Lucas.
The Lucasfilm acquisition felt like a pretty chunky price at the time.
Again, this was one where people thought maybe Disney had overpaid. But this has really paid off with some of the biggest-grossing films in Hollywood history, not to mention all of the theme park attractions.
All the films since and all the series since, it looked like the deal of all time.
The film acquisitions that Bob Iger made were brilliant. Each one of them seemed very expensive, but they all drove the company's business in ways that no one would have imagined at the time of acquisition.
Back in 2005 he wanted to lean into technology in a way that would exploit the opportunity for content. I had the opportunity to see, by sitting on the campus, the vibrance of the creative community that was on the studio lot change radically. Within 100 days he had taken a company of that size and, really, redefined the culture within that short amount of time.
A comic book becomes a movie which becomes a video game which becomes a theme park attraction, and so on. In Pixar's case, an animated film that moves across so many different businesses, they are leverageable across so many different platforms - existing ones, and ones that we haven't even seen created yet.
When Iger came in the first time, Disney's content engine was not working. They were struggling in animation. When he left it was the strongest IP content company in the entire world.
The Bob Iger template was building franchises within Disney that could be used to power other parts of the business.
A Marvel movie, it's going to be superheroes. Pixar, really great quality animation. Nobody had that. And because it was branded, consumers knew what they were getting.
Using that intellectual property to drive sales of consumer products, to drive visits to the theme park served Disney and served Iger really, really well in the first 15 years at the top of the company.
Bob was absolutely a very keen consumer of all of our products. His ability to be able to think like a consumer and then act like an executive was felt in his decision-making.
The ultimate media dealmaker who made three of the best acquisitions in the history of this industry.
The profits for Disney flowed for many, many years.
Disney+ was Bob Iger's big, final move in his previous tenure, saying this is about survival. If we don't move to streaming, we'll become extinct. It grew very, very quickly, the stock price just floating higher, and higher, and higher as they kept adding more subscribers.
There was definitely mistakes made. They bought a company called Maker Studios. That was a mistake. They bought Club Penguin.
$70bn acquisition of the Fox assets from Rupert Murdoch.
At the time it was seen as perhaps a pretty good acquisition. It's now viewed pretty poorly, particularly among activist investors. A lot of them think that Disney overpaid for it.
Outside of the walls of Disney there seemed to be a lot of discussion of Bob needing to find a successor for the job that he had not yet decided that he was going to vacate.
Iger was not just really good at the job. He also loved the job of running Disney. He extended his contract a number of times.
The outside influence of that conversation may have forced that transition a little sooner than needed to be.
The parlour game in Hollywood towards the end of Bob Iger's first term was, who was going to succeed? And this went on for years. People talked about Tom Staggs, Kevin Mayer - who are both seen as natural heirs apparent. Bob Chapek, a guy who ran Disney's parks division, was eventually picked by Iger.
We're very optimistic about the future. We're very encouraged by what we've seen.
Unfortunately for Bob Chapek, one week later, the world shut down.
Chapek's time as CEO of Disney was disastrous. He had very bad luck.
He had to shut the company down completely due to Covid-19.
It seemed rather sudden that Iger left. Was it fearing that the pandemic was going to be worse than anyone expected? Was it trying to go out on top?
I think if there was any critique for Bob it was the timing of the succession. It's very difficult to have a succession plan when you happen to be enjoying your time and succeeding exceptionally in your chair.
It wasn't like Chapek was made president or COO for a period of time. It was instantly transitioned to, basically, becoming CEO. It seemed like a rushed transition.
He was always viewed as an outsider.
The satisfaction scores that we're getting from our guests are extraordinarily high.
He had spent most of his time working in the theme parks side of the business, considered more operational.
Yeah, he wasn't a TV guy. Iger came up through TV. He used to be a TV weatherman. So he was really steeped in TV and Hollywood culture.
He was the guy at all the premieres that everyone loved. And I think his biggest strength is the soft skills, convincing both investors and actresses that this is the right thing for them. That was Chapek's downfall.
He didn't know how to really schmooze with people.
He lacked Iger's tactility for dealing with people with big egos, for dealing with other powerful people.
We all know that Bob Iger had left very big shoes to fill. Bob Chapek just has a different personality. And so one of the first things that happened publicly was a big fight with one of their big stars, Scarlett Johansson.
Disney was going to release the film Black Widow on Disney+ on the same day as it was released in theatres. The money that big movie stars receive when they have a big theatrical release wasn't going to happen, and this caused Scarlett Johansson to ultimately sue the company.
It became a very public, quite messy round. Iger would never have done that in a million years. Never.
When the agents start talking about you, and when the talent is cross with you, then there's only really one way down. Bob Iger was the king of keeping high-profile stars, their agents, directors, all the people who were essential, happy. There was no one better.
Then you have this culture war in Florida with the governor, Ron DeSantis.
We've also drawn a very firm line in the sand against imposing things like gender ideology in our schools. My job is not to kowtow to some woke corporation in Burbank, California.
A lot of the Disney shareholders felt that if had been Iger, Disney wouldn't have been caught up in this negative media storm.
At the same time that there were public issues, there were issues within the company. The company was restructured. A lot of the decision-making became centralised. Creativity content wasn't really his background.
The lifeblood of Disney is its creative output. And if the head of the company doesn't have the support of the creatives, then you don't have a company.
Bob Chapek's story is also one of a series of unfortunate events. The pandemic, people aren't going to cinemas, people aren't going to your Disney parks. But I really do think the number one issue is you're following Bob Iger.
You're talking about one of the most successful CEOs of all time.
Chapek was replacing someone who was more, really, than just a CEO. And he was still there in the town. He kept his relationships. He kept talking to people.
Iger set it up that way. He would stay on at the company, have this creative role for a few years, even once Chapek was CEO.
This god in Hollywood is sitting right behind you, being like, are you sure what you're doing is right? That makes it difficult to be successful.
I met Bob Iger just weeks before he was due to leave the company. At the premiere of Encanto, Iger and I were chit-chatting, and he said, are you here to interview him? And I said, yeah. And he said, OK. It was an interesting moment.
There was already a lot of tension between the two men. And they were barely on speaking terms by the time Iger left the company.
And then he finally did leave. So Chapek had less than a year where he was truly the one fully in power. Chapek's time was so bad there was conspiracy theories that Iger purposely chose someone that wasn't that good just to make himself look better, right?
Bob Iger is the classic CEO who has a huge, successful run. It's difficult to let go of that.
There is some magic to being the CEO of Disney. It's great to be the king of the Magic Kingdom.
His inability to pick a successor is probably the big black mark on his resume.
Was Chapek always the wrong guy? He didn't have the management skill to build a team where everyone was rowing in the right direction.
Well, it's not up for debate, is it? Iger is come back and now has to clean up the mess.
Even after years of rumours, everyone was shocked by it. It was a Sunday night when they had sent out this email. Just a short statement: 'Iger has returned as CEO.'
The final straw for Bob Chapek was they had lost a billion and a half dollars in streaming because they were investing so heavily in the business.
That weekend, he was out.
Bob Iger came back to a company that is significantly more challenged than when he left. There are macro headwinds. There are secular headwinds, disruptions from outsiders.
Nelson Peltz is this investor with this hedge fund which is called Trian. His goal was to raise the stock price and he makes money off of it.
Peltz put Iger under pressure to slash costs...
He wanted Disney to raise the dividend.
...to give him a seat on the board.
A proxy battle is when a activist investor takes a position in a company, and they want a board seat, and the company says, no, thank you. You can then choose to walk away, or you can do what Nelson Peltz said in this case and say, I am going to ask shareholders to put me in the board even though the company has declined to do so.
Just months earlier Disney had given a board seat requested by another activist investor named Dan Loeb. They were not going to give another activist investor a board seat.
Usually, proxy battles get pretty brutal, and they cost a lot of money.
Definitely tarnished Iger's return.
This billionaire investor was going up against the king of Hollywood and challenging him.
There was a personal story why Nelson Peltz got into it involving Ike Perlmutter, who was the Marvel chairman.
He was on the inside of Disney, but he's very good friends with Nelson Peltz. And then Nelson Peltz takes a stake, and then Ike gets fired.
This is the things that Bob Iger can do that Chapek would never get away with. If you cross him, you will pay for it.
It was always going to be an uphill struggle for Peltz to wound Iger. And ultimately, he didn't.
Cost cuts and reducing staff is not exactly unique to the Walt Disney Company. We've seen it at Paramount, Warner Brothers, Discovery, Netflix. My guess is Disney would have done a lot of this stuff regardless.
But the fact that an activist investor had the temerity to take on Bob Iger, to take on Disney, this household name, shows you that the shine had come off the Iger premiership a little bit and that the new reality he's confronting is different and more challenging than others he's had to deal with in the past.
It's a more sober start to his tenure. And the agreement was that he would do the job for two years and then he's out.
Bob Iger now is dealing with the biggest test of his career.
Disney bet the farm on streaming.
So there are three parts to Disney's streaming business - Disney+, a smaller service called Hulu, and finally, there's ESPN+.
The pandemic was actually a boost for streaming services.
We're all at home. Most people are subscribing to everything - Netflix, and Disney, and Hulu - because there's nothing else for you to do.
About a year ago, the economy changed quite dramatically - rising interest rates, stock markets starting to fall. Disney's share price has fallen off a cliff. It's about half of what it was worth at its peak in the pandemic in 2021. Investors changed their mind on streaming.
Disney was one of these companies that was losing a lot of money.
Streaming is a very, very cost-intensive business that doesn't necessarily come to fruition in two, three, four, or five years.
So they went from cheering on this strategy, grow subscribers, who cares about the money, into you need to figure out how to make money.
Iger in February unveiled his plan for what he's going to do.
Well, there's a big focus on driving revenue and cutting costs. 7,000 jobs will be cut and five and a half billion dollars in costs.
The problem with the streaming war is that we're all a bit impatient, right? You want to see something new every week on Netflix. So they're all being pressured to continue to bring us all these new shows.
We're starting to see what a profitable streaming service looks like. Some advertising. And we're also starting to see higher subscription fees.
You can see that being the model that others like Disney embrace, an ad-supported tier as well as a subscription tier.
As linear TV erodes and as the cable universe declines, the opportunity for taking that advertising to streaming has still not been realised.
This is premium video. You know if you're an advertiser the quality of the video that you'll be in. This is not user-generated content. It's where the world is going, and these are very high-quality, hard-to-reach demographics.
Disney now has first-party data. Their customer is not subscribing to Comcast, which owns that first-party data. They're now getting it directly. And from that becomes the opportunity to create new ways to target in the advertising community because they will know families, they will know households.
The assumption is that people are not going to want to pay for more than two or three services when the dust settles on this whole thing. And so everyone is jockeying to make sure that they are one of those three services.
There is too much competition in streaming. There's definitely too many companies that are going to require consolidation. I don't think there's anyone out there, though, who doesn't believe Disney is an ultimate winner. The question is, what do they want to win?
Is their goal to topple Netflix and be 1-2 with Netflix? In order to be Netflix you need not just kids and family and franchises, but you need reality TV, and you need movies, and you need thrillers and documentaries. How long are they willing to lose money?
Losses ballooned up to $4bn a year under Chapek.
Is Disney's special sauce really just core Disney, kids, features, animation?
Disney is now in this impossible situation where they're trying to navigate the existential decline of the businesses that actually make money for them while also trying to build these streaming services that are losing billions of a year.
You've got companies like Apple and Amazon who don't care how much money they lose in streaming, and you're competing against them. Cord-cutting, meaning getting rid of your cable or satellite system, is accelerating. Viewership of linear TV is declining.
Competition for streaming services is intense. And investors don't want Disney losing $3bn to $4bn. They want them making money in streaming.
The new businesses are not making money, and it's unclear if they will ever make as much money as the old ones do. And I think that was the realisation that investors really had over the past year.
Disney enjoyed one of the greatest businesses ever invented in the last 40 years, and that was the cable television business.
A business where you get paid regardless of whether somebody watches. Just for having access, you get paid.
Disney's traditional TV channels have been the biggest moneymaker. But that's the past.
You can't go into streaming and think you're going to have what you used to have. You've got to realise it's a substantially worse business. But it's better than no business.
But even with ESPN, they know that, eventually, they're going to have to move it to streaming somehow. And that's going to cost a lot of money.
ESPN, for a long time, was the cash cow for Disney. And now because of cord-cutting it's in decline, like a lot of the other cable channels in Disney's portfolio and across the industry.
How important is it for Disney to continue to own ESPN? They're starting to separate it out financially. Is it a prelude to a sale? There's a lot of questions around ESPN that are affecting the stock price.
Sports in the US is primarily built to be able to allow advertising within that. The consumer is willing to not only pay for the service for the right for sport, but then, within that pay for the service of right for sport, to be able to have a TV timeout. Why would that be a business that you'd want to think about being able to take away?
I would not be surprised in 10 or 20 years if there's still a strong, steady broadcasting and cable business that contributes a lot to cash flow - not a growth business. But radio has been around for, I don't know, a hundred years, and it's not a growth business, but it's a big cash business.
Among the numerous challenges that Iger faces, and the most important one is what do you do about the theatrical experience, what do you do about the cinema.
Cinema is one of the few sectors that has had a hard time recovering from the pandemic.
And that's largely because people are consuming entertainment in different ways. In the old days, a Hollywood studio like Disney would launch its movie in theatres with a blizzard of marketing - adverts on buses, on TV. In the pandemic a lot of that got junked so that studios like Disney and Warner Brothers just threw movies that cost a hundred million, $150mn onto streaming services.
The economics of that don't work.
This is why for companies, traditional companies that have other assets, it's very important to have the theatrical window. It sets the value not just for the streaming platforms, but for other areas, including consumer products.
This model of franchises and movies which spawn sequels is still successful, but if there are fewer people going to the theatre, that puts that model into some jeopardy.
The complaint for a while in Hollywood has been that no one has any new ideas and we're just regurgitating the same franchises with different spinoffs.
This is part of Bob Iger's big mission, how to revive some of its great franchises, from Pixar to Marvel to Lucas.
The creative content has to get better. I mean, there is a view of investors who are increasingly worried when you see the animation crown shift from Disney to Universal. Super Mario is blowing global numbers out. Disney is struggling.
I mean, look at Lightyear last year. They probably didn't make any money on the film at all.
Pixar has gone downhill, not having a smash hit in a while. The challenge is to figure out how to do more with less.
Bringing the creatives back into that conversation gives you a sign of how Iger is reprioritising the creatives within the company.
He has a good relationship with most of the big... the heads of the studios. The hope right now is that he will be able to revive those engines, even with less money.
All of the headaches that Disney's had, the great news that they've had over the last year has been the rebound in theme parks.
The parks business struggled during the pandemic because they had to close.
Coming out of Covid, it almost seems insatiable, this demand for live experiences.
In a postpandemic world, even with limited disposable income, even with recession, parks have never been more vibrant.
They've made more money by raising their prices, which is something that they've also gotten some backlash over, the idea that this is becoming a luxury good when it's supposed to be for working-class families.
One Wall Street analyst I talked to said they could even charge more and the parks would still be full.
The clock is running on Iger. He's got less than two years now to execute a turnaround plan, come up with a growth plan.
Is Iger the man to revive Disney? I wouldn't bet against him. He has a better feel for the company and a sense of what it is than anybody else.
It's hard to imagine anyone more qualified.
There's no one better skilled in reviving Disney's creative direction and figuring out what the asset mix is ultimately going to be.
The other thing that Iger has to do is to find the next Bob Iger.
He screwed up succession. I have to believe he's not going to make the same mistake twice.
What does Bob Iger have that makes him so successful? Why can't they find that within Disney?
Other people could have bought some of these assets and didn't. He was just incredibly savvy in his dealmaking.
Everything flowed through him, almost to his detriment. Because now we're seeing, without him, the company is unable to succeed.
What most shareholders believe is that Iger will try and stay longer.
It's tough when you have that much power and that much influence to really let go of it.
That's a drug, having all that power.
Who's the next Bob Iger? There's a couple of names being kicked around, but they're all going to struggle. They're all going to labour in the shadow of this guy who turned the company, took it from here to here.
What they've done now is created this perception that the only person who can save Disney is Bob Iger. So what does that do when you replace Bob Iger? It sends the share price down. If he turns the company around, and the share price goes back up, and shareholders are happy, why should he leave?
Iger has loved being the CEO of Disney. He loves being the king of Hollywood. It's great to be Bob Iger. But he's older. Let's face it, the job's not as fun now as it was before.
It's more fun to be a swashbuckling dealmaker, to make a deal with Steve Jobs to buy Pixar. That's fun, legacy-building stuff. Figuring out how to manage the decline of the cable business, build out the streaming business, that's tough. Is that what you want to do as you near your mid-70s? I'm not sure.
We have the oldest president who is running for re-election. I've got to imagine that, in Bob's mind, he's a youngster in comparison to that, with a lot left to give.