Bob Iger “Alarmed” By Disney World Price Increases & Disliked Layoff Plans
With each passing day following Disney’s Bob Swap–firing Chapek and rehiring Iger–new revelations come to light about what led to the board ousting one Bob and bringing back the other, as well as the fallout between the dueling Bobs. Today, we have an update on that drama, along with Iger’s next moves as he looks to restore the “soul” of the Walt Disney Company.
We aren’t going to recap everything that has transpired thus far, just the details pertinent to understanding today’s drama. Late Sunday night, Disney Fired CEO Bob Chapek and Rehired Bob Iger as CEO. In case you missed it, that article recapped this saga dating back to 2020, covered why we weren’t surprised by this development, and also offered words of ‘warning’ for overly-excited Walt Disney World fans about the changes that might be on the horizon (more on that last point towards the end of this article).
Following that, Disney’s Battle of the Bobs: Why Chapek Was Fired, How Iger Returned & What’s Next offered more palace intrigue about the sequence of events since this summer when Disney’s board of directors renewed Chapek’s contract. It also covered Bob Iger’s new salary, how much Chapek was paid to go away, alternate candidates Disney’s board considered, who Iger fired on day one, restructuring changes he has planned, how he’s already made a positive difference, what else Iger can do to score easy wins as he reclaims the throne, and more…
This brings us to the third full day of Iger’s second reign as CEO, which has brought with it a slew of new revelations about the fallout between the Bobs, pictured together above. (Hey, we warned you that it was going to be a slow-trickle of rumors about the downfall of Chapek and Iger reclaiming the throne!) There’s also new cause for optimism about the future of Walt Disney World, Disneyland, and the company as a whole.
Let’s start with the past. According to a new report in the Wall Street Journal, there was tension from the beginning between Iger and Chapek. It all began a few weeks after the stunning change in CEOs, when the two sparred over layoffs. Iger wanted to delay any COVID-related layoffs until the CARES Act, a massive spending bill making its way through Congress meant to blunt the pandemic’s economic impact, was signed into law.
Iger argued that this would allow laid-off Disney Cast Members and employees to take full advantage of its statutory protections and government relief. At this point in time, there was already bipartisan agreement on providing an economic safety net so as to avoid mass unemployment and cataclysmic consequences–it was a foregone conclusion that relief was on the way, it was just a question of when and how much. Iger’s calculation was that it was better to wait–both for the sake of Cast Members and the company.
Chapek, pictured above, wanted to rush the layoffs, feeling enormous pressure to cut costs and preserve cash. As you might recall, the international parks were all closed–some for a couple of months–by this point, and the company was hemorrhaging money. Then in mid-March, both Walt Disney World and Disneyland closed.
In the end, Iger “overruled” Chapek, and convinced Disney’s board of directors that it was pragmatic to wait. Disney continued to pay Cast Members from then until late March, despite the closure. Iger ended up being vindicated, in both the short and long term. Had Disney laid off tens of thousands of Cast Members then, they would’ve been among the first high-profile companies to do so; even in that climate, it would’ve been highly controversial.
That’s to say nothing of the human impact on Cast Members. Then-President Trump signed the CARES Act into law on March 27, a little over a week after the domestic parks closed. Once the CARES Act was signed into law and Cast Members would have protection via that, Disney began to furlough tens of thousands of workers in early April. Disaster averted–or at least delayed.
Ultimately, both Walt Disney World and Disneyland laid off over 28,000 Cast Members in Fall 2020, which was one of several waves of company-wide layoffs. It was heartbreaking news then, and one we said was chosen from a “veritable buffet of least-bad choices” at the time. Now we know how much worse things could’ve been if Chapek had gotten his way.
As a result of the layoffs at Disney, Universal, SeaWorld, and area hotels, Central Florida had the highest unemployment rate in the country. This has been quickly forgotten as the broader economy and theme parks have bounced back, but that was truly a tough fall and holiday season–and one that saw many Cast Members reliant upon food banks to survive.
With the benefit of hindsight, the layoffs were also a bad long-term decision for Walt Disney World and Disneyland. On both coasts, the parks have struggled to rehire and retain new Cast Members. Capacity is reduced as a result in a multitude of ways, most of which have meant Disney is leaving money on the table during a period of unprecedented demand and consumer spending on travel. (The more vindictive among you might experience a sense of schadenfreude at Disney experiencing financial loss due to the decision to lay off Cast Members. Sadly, I doubt that’s the lesson learned by many at the company.)
According to the Wall Street Journal, Chapek was infuriated by Iger doing an end-run around him to prevent the layoffs in March, complaining to his inner circle that “he was being undermined from the minute he was promoted.” Chapek was frustrated because Iger had indicated he would focus exclusively on creative work in his new role as executive chairman, but was interfering in day-to-day matters that were supposed to be the CEO’s domain. This was something we covered back in April 2020–turns out those rumors were very much accurate.
Over the past two years, there were multiple stories like this. Iger made it known to friends and former colleagues that he disapproved of changes Chapek was making at Disney, setting off a whisper campaign across Hollywood that never allowed Chapek to escape his predecessor’s shadow. Chapek also never escaped critique, as these ‘whispers’ were inevitably published in the Hollywood trades, New York Times, and elsewhere. Meanwhile, it doesn’t really seem like Chapek had any friends or allies in Hollywood.
Iger’s disdain for Chapek was an open secret in the entertainment industry. Several people who dined with Iger in Los Angeles over the past several months have told a multitude of media sources that Chapek’s mishandling of the Disney brand and legacy was a frequent lunch conversation topic. Iger felt that Chapek was taking Disney in the wrong direction, and Iger would fixate on the topic so much that it became “uncomfortable,” according to some associates. (Perhaps Iger should’ve dined and with some of the folks in the comments section here for proper and mutual commiseration!)
Iger felt that Chapek had prioritized streaming business growth at the expense of the rest of Disney, like cable television and the theme parks. Disney+ was one of the few bright spots for the company, and Chapek dramatically boosted growth projections. Honestly, it was difficult to fault Chapek for that at the time–the theme parks were closed or slowing recovering and losing billions of dollars per quarter at the time. Streaming was really the only card he had to play for at least his first 6 months as CEO.
Nevertheless, Iger thought Chapek’s projections went too far, and that he was too beholden to changes in Disney’s stock price. Iger was also “alarmed by increases in prices at Disney theme parks that Mr. Chapek argued would boost revenue and limit overcrowding,” according to people who spoke with Iger.
As previously mentioned, Iger received countless calls from creative executives and former colleagues at Disney who were frustrated with Chapek. The feeling was mutual. “He’s killing the soul of the company,” said Iger on more than one occasion. This refrain might as well have come from Walt Disney World and Disneyland fans, as it echoes so much sentiment shared here over the last couple of years. (Doesn’t it feel vindicating to know that someone in a position of power–the position of power–at Disney agrees with you?!)
In another move that might as well be pulled from the fandom, Iger drove a car with a customized license-plate frame that asked: “Is there life after Disney?” It appears that Iger’s life outside Disney mirrored his final years inside the company, when it appeared that he did not want to leave, and repeatedly delayed his retirement plans.
Bob Iger has wasted no time in reshaping Disney after returning as CEO. In a memo to division leadership, Iger announced restructuring will begin “in the coming weeks.” As part of that, Kareem Daniel, chairman of Disney Media and Entertainment Distribution and protege of Bob Chapek, was fired.
Prior to leaving, Chapek sent a memo to executives that “tough and uncomfortable” cost-cutting decisions would be made, including a hiring freeze, layoffs, and other austerity measures. This mandate reportedly blindsided multiple high-level leaders and alienated them even further from Chapek. (However, it is what many unprofitable tech ventures are doing right now, which is how you’d categorize the Disney Media and Entertainment Distribution that currently controls Disney+ and other streaming services.)
Iger now has the chance to undo this yet-unmade decision. He has indicated that correcting the company’s finances is a top priority, and it’s widely expected that Iger’s early emphasis will be to stem the bleeding and ensure that Disney’s streaming businesses are actually on a path to profitability. That might mean more layoffs are in store for DMED, as well as more scrutiny over spending, production, and distribution plans for media.
After hitting the ground running, Iger sent out an email before the Thanksgiving break informing employees and Cast Members about an upcoming town hall on November 28, 2022 at 9 am Pacific. During this, Iger will discuss his vision for the future of the Walt Disney Company and field questions from employees. He’s expected to use the discussion as an opportunity to further boost Cast Member morale, which has already jumped considerably since Iger’s return.
Iger says that he is focused on building on the company’s rich history and legacy of “creativity, innovation, and inspiration.” Thus far, he hasn’t offer specifics about his plans for the future, beyond the “organizational and operating changes” coming to DMED and other areas of the company that will “restructure things in a way that honors and respects creativity as the heart and soul of who we are.”
When it comes to commentary, there’s a lot to unpack here. I already peppered the portion about layoffs and furloughs with my personal thoughts, but want to underscore what a significant positive difference Iger made there. While it’s fair to say we don’t know the full story, we do know that it would’ve been worse had Iger not intervened. (And it was already pretty bad back in mid to late 2020.)
From my perspective, this anecdote is a worthwhile prism through which to view much of the last two years. If you asked many fans for their ‘reaction’ to the furloughs and layoffs at the time, and how they viewed Bob Iger and Josh D’Amaro as a result, the majority likely would’ve had unkind words (mild understatement) to say. To be sure, we certainly wouldn’t have been lavishing praise on either of them at that specific moment. And yet, behind the scenes, at least one of them was fighting to do the right thing.
More recently, we have repeatedly expressed confidence in both D’Amaro and Jeff Vahle, the president of Walt Disney World. We’ve also repeatedly noted that, as difficult as it might be to believe, there are individuals who care and are pushing for positive changes at the parks, but their hands are tied due to orders from above.
Hopefully the anecdote about layoffs illustrates how even high-level leaders are powerless when there’s a mandate from above. In this case, Chapek was overruled by the board of directors by way of Bob Iger, literally the only person on earth who could’ve pulled off such a move. Does anyone now have any doubt that other Chapek mandates were unpopular with his subordinates, but they didn’t have the leverage or influence to do anything about it?
In case there’s any question about where Josh D’Amaro stands with Iger, it’s worth noting that he was promoted multiple times (including to the high-profile position of Walt Disney World President) under the first Iger regime. He also was not fired as soon as Iger returned, a la Kareem Daniel. Most notably, D’Amaro was floated as a potential CEO successor in recent reporting, much of which was almost certainly sourced from the Iger camp.
Knowing that Iger was in active communications with past colleagues and that he was “alarmed” by Chapek’s price increases, it wouldn’t surprise me in the least if Iger and D’Amaro spoke directly about this topic over the last two years. This could be one reason why D’Amaro kept a low profile when it came to most unpopular decisions. (As I’ve said before, I will readily admit it if my defense of D’Amaro ends up being a bad take–but I’ve heard enough positive things about him from people I trust that I’m willing to go out on a limb and believe that he was backed into a corner over the last couple years.)
Bob Iger will have the chance to undo more of this damage in the days and weeks to come. Next week’s town hall will be particularly illuminating in that regard. While I’m expecting it’ll be mostly a morale booster that’s vague on specifics, it will presumably reveal some insight into the future of the media divisions and parks & resorts, if not direct details.
In an earlier post, we wrote that “Walt Disney World fans should not overestimate what’s in the purview of the Walt Disney Company’s CEO. Bob Iger is not going to come in this holiday season and give the gift of Disney’s Magical Express, free FastPass, unlimited Park Hopping, Annual Pass sales, reservation-free visits, lower prices, or the Disney Dining Plan.”
Honestly, I’m now much less confident in that assessment today than I was two days ago. I still think it’s probably true that none of those things will immediately change. Even though I believe Iger was being sincere about his alarm over the pace and degree of price increases, I also think he’ll have a difficult time rolling back any of that.
It’s very difficult to put the genie back in the bottle–both literally and figuratively–once the company gets a taste of that sweet upcharge revenue. Many of the highly-touted 40% increases to per guest spending have been driven by ticket and resort price increases, and further fueled by monetizing FastPass.
Given that he was brought it to stem the bleeding and improve Disney’s financials, I have a difficult time believing that Iger is going to take the immediate hit on Genie+ and the other upcharges just to improve goodwill among Walt Disney World fans. It’s very difficult to envision a way that he does that in the near-term given the uphill battle that Disney+ and Hulu face.
With that said, I’m heartened by the very fact that price increases are on Bob Iger’s radar as something he disliked at all. To be sure, prices increased a lot under throughout Iger’s first tenure as CEO (a trend that really got going at the end of Eisner’s run), so it’s not like he’s totally “innocent” in that regard.
However, I can recall at least a couple of times when the Iger regime made comments about deliberate and measured (or something to that effect) price increases that were below what the market would bear. At the time, I wrote this off as posturing, but maybe there was truth to it? Perhaps there was a reason why paid FastPass was long-rumored under Iger, but never actually came to fruition?
In short, this has me believing that Iger will specifically roll back some of the unpopular changes at Walt Disney World and Disneyland over time. I’m not going to pretend to know when or what form that’ll take, as this is a really difficult needle to thread and bell to unring for investors and other stakeholders.
Perhaps Iger will pause the previously-announced but not yet implemented ticket price increase slated for Walt Disney World in December 2022? Maybe other, bigger changes will occur next spring, coinciding with an expected economic downturn or exhaustion of pent-up demand? This would be my guess. I doubt we see many, if any, tangible fruits of Iger’s return at Walt Disney World or Disneyland until 2023. I think Iger will have his hands full with streaming and other problem points until then.
Ultimately, this opens the door for a lot of positive, guest-friendly changes at Walt Disney World in the not-too-distant future. A lot of revealing information has come to light in the last few days, and it further reinforces what many of us suspected for a while about the night and day differences between Chapek and Iger. Even if they carried out some similar initiatives, there are very clear contrasts between how the two view the history and legacy of the Walt Disney Company, and their visions for its future. Personally, I’m excited to see a return to Iger’s version of that, especially now that he is thinking more about his legacy and knows how things could go without him.
With that said, just as I warned you against getting overly excited about the tangible improvements resulting from Iger’s return, I’m now trying to do the same, myself. While this may simply seem like a rumored statement or insignificant remark, the important thing to remember is that Iger is nothing like Chapek when it comes to communications. Everything Iger does is meticulously scripted and choreographed–the man is a master at messaging. He would not have allowed his camp to leak this without there being any greater purpose. I don’t know about you all, but I’m once again optimistic for what the future holds with the Walt Disney Company’s leadership.
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YOUR THOUGHTS
What do you think about the Iger’s efforts to thwart Chapek from laying off Cast Members? What about Iger’s claim that he was “alarmed” by price increases at Walt Disney World and Disneyland? Thoughts on anything else discussed here? Think Iger will bring back Disney’s Magical Express, free FastPass, unlimited Park Hopping, Annual Pass sales, reservation-free visits, lower prices, or the Disney Dining Plan? Or, do you think we’re reading too much into his comment? Are you bullish or bearish about the company’s future as the Walt Disney Company enters its 100th year? Think things will get better or worse throughout 2023? Do you agree or disagree with our assessment? Any questions we can help you answer? Hearing your feedback–even when you disagree with us–is both interesting to us and helpful to other readers, so please share your thoughts below in the comments!
Now, about the resurgence of the Apple rumors…
Personally, I would love to see Disney go back to ‘family friendly’, ditch the ‘woke’, lower their prices, ditch the fast pass altogether, and maybe go back to ABCDE ticket rides, so everyone gets the opportunity to ride the good ones. Limit the number of times you can ride them. ‘Fast Passes’ really screwed up the lines. Before, they may have been long, but they kept MOOOVING. Constantly.
I can see where lowering the cost would increase attendance, but, leave the reservation system in place…. Or some part of it. And build a 3rd park…. Maybe in Texas…
The crowds are numerous times greater than what they were before fast pass…maybe an order of magnitude. The waits without a fastpass type system would probably be unbearable and you would probably get 2-3 attractions per day.
I would bet that Iger rolls back or significantly changes park reservations. It is a change they can make that will be popular with fans and casual guests alike, and I would presume cast members will dig it too (no more dealing with all the angry guests). It does not involve turning off a direct revenue stream. I’ll be optimistic about positive changes for the parks with Iger back at the helm, but given the streaming losses I would assume any direct revenue streams will be off limits (at least in the short term). My guess is the announcement is soon, but nothing takes place until after the New Year.
I would *love* to believe all of this and be hopeful. But having read DisneyWar I know better :p As you said, everything leaked is likely on purpose. So maybe this is all true, or maybe this is just what Iger wants us to think. We have no real way of knowing. So in the end it’s going to come down to his decisions. If he makes good decisions, I’ll be happy. Until then I’m going to try to keep my excitement restrained to avoid disappointment.
Thank you for updates to this story, Tom. I truly admire Bob Iger and hold him in the highest esteem. It’s silly, but the older I get, the less heroes I find. So, it is totally a Disney story for the hero to step back in and give me hope. I’ve loved Walt Disney since I was about 12 years old, and strive to learn more and more about everything Disney. Disney brings me and thousands of others joy, which I think is an exceptional byproduct of Walt’s initial vision. We Pollyanna types kinda take seriously the legacy we are part of. Thanks for sharing all the great news!
Count me not happy. Not that I cared for Chapek but Iger is the one who let in all the hard core activists and their “not so …secret agendas.” For people who would prefer Disney without woke politics, its only going to get worse. Bob C. at least tried (though not very hard) to steer the company to a more neutral position but those activists in the company weren’t having it.
“Let’s get Dangerous!” Honestly, Iger’s best skill set is his ability to listen to his Creatives/Cast Members to discern which direction is an absolute win. It didn’t seem like Chopek took anything on board and just made the calls he wanted. Well, he tried to at least.
I think we will see a massive call on Disney’s various talents to “fix” and improve what is in place. He may have already done that and has those plans in his back pocket. So many employees/executives genuinely love Disney and he is smart enough to trust that they will apply their various skills for that love. As long as it is in keeping with his vision for the company, I see a lot of little things getting approved left and right. His staff has had a lot of time to think about how they’d “save Disney” during Chopek’s reign. Time to see them with the support to make those changes. AKA a 90’s after-party and 200% rare characters. 😉
That he didn’t care he would ruin the lives of CMs and their families by laying them off before the Cares Act? Chapek really is TRASH, without any concern about other human beings. It all makes sense about him and his decisions now. He got exactly what he deserved.
This is how most Fortune 500 companies treat their workers. Sounds like a strong argument for unionized workers
There are a few different unions representing Disney workers ( I liase with some that belong to UFCW)
Bravo! I eagerly await the next installment of Swapping Bobs. Thank you for keeping us updated.
As someone whose job is all about helping teams streamline process and profit I can tell you that Chapek made the fatal mistake of treating a company based on creating dreams and memories and connections like it was a plant turning out widgets. Relying solely on data and cost cutting makes more sense when the work is repeatable and consistent. When you’re creating dreams relying on data takes you down the path we’ve seen. It’s not a good match. Hence the comments about Chapek being a bean counter. Iger gets that Disney is built on feelings and dreams. If you don’t have that creative energy and focus then you get the reaction from customers that you’ve seen. Even through the parks are packed there are a lot of people who are not creating good memories from these long pent up trips. That damage takes a long time to repair. Iger gets that and while he has a daunting task in front of him I’m happy that we have someone who gets the soul of Disney making the decisions again instead of just looking at a spreadsheet.
unfortunately, many dreams have already taken the impact. Changes since BC took over have already put the nail in the coffin for many families. It is hard enough to save for a Disney trip but add in the cost of Genie+, Park reservations , cost of getting family members to WDW and paying for parking at a resort, costs and planning that wasn’t in a trip to WDW prior have left many Disney vacations no longer unobtainable. Oh, and did I mention the constant park pass increases. Too bad these changes weren’t foreseen with CEO BC aka the ‘Bean Counter’s, sigh
I really think that a smart Iger probably reads this post although he won’t admit to it under oath. He has a good feel of what has happened and has some changes that we will all benefit from. We will see faster completion of existing projects and some of our lost loves will return. You can already feel how this is a positive step in the right direction and just maybe the higher ups get that. Time will tell, but I think things will happen more quickly than not.
I heard Iger wants to get rid of Country Bears…
Are you trying to put gas on the fire and hurt us all! Crazy, thought and I hope you don’t get banished. LOL.
>>I heard Iger wants to get rid of Country Bears…
That’s rumor was started by Chapek.
Tom. Great coverage, in depth analysis and your editorial comments. I don’t think this is an “easy button” to push and make everything right again. But I do think the Disney company has heard the multitude of disappointing comments from the fans, media, wall st analysts and bloggers (thanks for the (un)biased coverage of how you see this company navigating the current environment. I think the one thing I would say is, people are passionate about it because they love it When the experience gets ruined when it doesn’t need to, people get upset and express their disappointment. I think there is a way for the company to make money and have a great customer experience. Here’s to hoping they find the right balance.
I guess I am ok with price increases but not necessary loving the increase. However, our family visited WDW spring of 2022. To begin with, Disney Magical Express was gone. This was a great disappointment to all of us. I loved in the past the greeting at the airport and the Disney Magical Express. To me, the Disney Magical Express was the beginning of the Disney experience and was very welcome. Our family all agreed that the overall attitude of majority of the cast members was not quite as good as previous visits. Considering the overall cost of our visit it was a little disappointing when compared to past visits. I hope Iger can bring back some of the magic.
My thoughts are similar. I understand the price increase, and don’t necessarily hate it…because can you imagine how crowded it would be if tickets cost half of what they do today? It’s already too crowded. Leave the high costs, but bring back everything that made Disney special!! Magical Express signaled the start to our vacation! Annual passes, tables in wonderland, and fast passes that were included with ticket prices…all of these things made Disney – Disney.
I’ll admit, I was happy that Iger was back, but not particularly optimistic that would mean much for the parks, but with each passing day I get just a little more optimistic that things might start to improve
Chapel, pictured above…
Tom, you’re the best.
iger should start by capping the price of Genie+ at $15
Iger should demolish Genie Plus!
Is Iger’s master plan a 2024 presidential run? We know he’s looked at this before. Come back into the spotlight, “save Disney”, then go on to “save the country”? Yes he’s getting old, but still 10 years younger than Biden.
I think this is the pivot *from* presidential aspirations, not to them.
Iger is a class act. I see Disney doing great going forward. The road will be rough but if anybody can take Disney back to its heights it’s Iger. Great decision by Disney to bring him back.
great article Tom!