For months, Hollywood has been engaged in a guessing game about Bob Chapek’s future as Disney’s chief executive, with detractors contending that missteps had sealed his fate with Disney’s board: His reign would soon be over.
The Walt Disney Company’s board renewed Mr. Chapek’s contract for an additional three years on Tuesday, with Susan Arnold, the board chair, saying in a press release that he’s “the suitable leader at the suitable time” and espousing the board’s “full confidence in him and his leadership team.” That signifies that Mr. Chapek, who took the helm of Disney in February 2020, could remain there until a minimum of July 2025. The vote was unanimous.
“On this vital time of growth and transformation, the board is committed to keeping Disney on the successful path it’s on today, and Bob’s leadership is essential to achieving that goal,” Ms. Arnold said.
Mr. Chapek, 63, faces a frightening to-do list. Disney’s stock price must be reinvigorated, to place it mildly. The corporate’s balance sheet continues to be recovering from the pandemic. Worker morale needs improving. Disney has been struggling in China, with the Shanghai Disney Resort and Hong Kong Disneyland closing and reopening (and shutting and reopening) due to coronavirus concerns, and Disney movies failing to get cleared for theatrical release by the Chinese authorities.
Disney’s domestic theme parks have been packed, with visitors spending greater than ever on food, merchandise and hotel rooms. But some investors are frightened that a possible recession could hurt park attendance and guest spending. Disney needs its theme parks to maintain generating wheelbarrows of money to offset losses at its streaming division, Disney+, which has been growing quickly but isn’t expected to be profitable until 2024.
“Leading this great company is the respect of a lifetime, and I’m grateful to the board for his or her support,” Mr. Chapek said in a press release from Florida, where the board was meeting ahead of the dedication of a recent Disney Cruise Line ship.
Mr. Chapek was groomed by his predecessor, Robert A. Iger, who stepped down from the role a month before the coronavirus pandemic forced Disney to shut down most of its businesses. Mr. Iger remained Disney’s executive chairman until December, when he left the corporate altogether.
Since then, Mr. Chapek has delivered results which have surpassed Wall Street’s expectations. Crucially, his team has managed to maintain Disney+ growing at a much faster rate than expected; the streaming service added nearly 20 million recent subscribers worldwide in Disney’s last two fiscal quarters, about 60 percent greater than analysts had predicted.
But three aspects have caused Disney’s stock price to say no nearly 40 percent since Mr. Iger decamped.
In March, Disney became embroiled in a political storm over its botched response to a recent education law in Florida, where the corporate has roughly 80,000 employees. The law amongst many things prohibits classroom discussion of sexual orientation and gender identity through the third grade, with limits on what teachers can say in front of older students. L.G.B.T.Q. organizations and a torrent of corporations criticized the bill, with opponents calling it “Don’t Say Gay.”
At first, Mr. Chapek tried to not take a side, a minimum of not publicly, prompting an worker revolt. He then forcefully denounced the bill. Right-wing media figures and Florida’s Republican governor, Ron DeSantis, began to rail against “Woke Disney.” In April, Mr. DeSantis revoked Disney World’s designation as a special tax district, a privilege that had effectively allowed the corporate to self-govern the 25,000-acre megaresort near Orlando since 1967. (Disney has since been working behind the scenes with Florida officials to seek out a tax district compromise.)
One independent survey of greater than 33,000 Americans taken through the height of the debacle found that Disney’s brand was tarnished. On April 29, Mr. Chapek fired Disney’s most senior communications and government relations executive, who had joined the corporate only 4 months earlier.
Two other aspects — each out of Mr. Chapek’s control — have hurt Disney’s stock price. One is a general stock market downturn, with investors worrying a couple of potential recession, inflation and the Russian invasion of Ukraine. Disney’s more mature streaming competitor, Netflix, moreover spooked Wall Street by losing subscribers for the primary time in a decade, prompting a large sell-off in media stocks.
Mr. Chapek’s previous contract was set to run out in February. By giving him a second term in such aggressive fashion, the board is actually wiping the slate clean of the “Don’t Say Gay” matter and giving him a possibility to revive investor confidence within the promise of streaming.
Disney shares increased barely in after-hours trading in Tuesday.