Experts Predict Big Changes for Disney in 2023
Disney’s Bob Swap, firing Chapek and rehiring Iger, happened one month ago (time flies when you’re having fun!), but new revelations continue coming to light about the Battle of the Bobs. This post covers more palace intrigue, plus expert predictions of executive leadership shake-ups, mergers, and more in 2023 for the Walt Disney Company.
We aren’t going to recap everything that has transpired in the last month, and much of the current reporting just further corroborates what has already been leaked to the media and trades in the immediate aftermath of Disney’s Bob Swap. However, if you haven’t already read Disney’s Battle of the Bobs: Why Chapek Was Fired, How Iger Returned & What’s Next, you might want to do so to be brought up to speed.
More recently, there was a report that Bob Iger was “alarmed” by Walt Disney World price increases and fought with Chapek over layoff plans. That’s another interesting piece, particularly for those who have claimed there’s no difference between Iger and Chapek, or Chapek and Josh D’Amaro, chairman of the parks division. The whole saga has contained myriad Machiavellian maneuvers–enough to fill yet another volume of DisneyWar.
The latest developments are once again courtesy of the Wall Street Journal, and is essentially a ‘coup compendium’ of what’s already known with added context and certain details fleshed out. The largest material difference is of tone, in that this paints Iger in a less-flattering light than past reporting (which was almost certainly sourced by the Iger regime). It would seem that the Chapek camp is finally adding its perspective to the juicy gossip.
Specifically, the WSJ article indicates that while Iger was still serving as executive chairman, he didn’t move out of the office he had kept as CEO at Disney’s headquarters in Burbank. He called strategy meetings with Chapek’s subordinates without inviting the new CEO and, according to Chapek, Iger had an attitude that “they work for me, not for you.” Iger felt slighted that Chapek hadn’t sought his advice, and Iger told confidants that Chapek was incompetent and doing a terrible job.
Even some of this was already known, but the anecdotes might be viewed in a different light with the added context about Iger’s behavior, attitude, and statements to friends. Even now, there are undoubtedly material details that haven’t been told. And while Iger was vindicated about Chapek in the end, he’s hardly a sympathetic figure or hero of this story.
While the whole article is fascinating, the portion that caught my attention detailed how relations had frayed between Chapek and much of Disney’s c-suite. It was already known that CFO Christine McCarthy was the catalyst for Chapek’s firing, and she had gone to the board threatening to leave if Chapek wasn’t replaced. What was not known is how fractured their working relationship had become prior to that pivotal moment.
The WSJ piece gives added context about the battle between the two, while also characterizing McCarthy as a “Disney devotee” who had the utmost loyalty to the company. She had been annoyed by Chapek’s strategy to shield losses in Disney’s streaming division and had been more straightforward about the company’s financials to the board and investors, whereas Chapek tried to deflect and minimize. (The reporting here is more balanced, yet somehow makes Chapek look even more petty, and there’s evidence that supports the McCarthy version of how things unfolded.)
The sequence of events precipitating the downfall of Chapek is fascinating, but not entirely surprising given what was already known. Much more consequential for Walt Disney World and Disneyland fans is this tidbit: “As the environment inside Disney’s C-suite worsened, more executives voiced concerns in phone calls to Mr. Iger. Some worried Alan Bergman, the studio chief, and Josh D’Amaro, head of the parks division, might quit.”
On countless occasions, this blog has 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. This is the second recent instance of how this might have been occurring, with the Cast Member layoffs being the biggest example.
Unfortunately, the Wall Street Journal does not fixate on D’Amaro or the circumstances that might’ve led to executives worrying that D’Amaro might quit. Also notable is that this is all second or third-hand–it is not being reported that D’Amaro “threatened” to quit or “almost” quit. What’s being reported is that other executives worried that D’Amaro might quit. Big distinction.
However, usually there are not unfounded fears that specific individuals may resign absent statements or behavior suggesting precisely that. In my experience, bad leadership leads to generalized concerns about losing key employees, whereas word of mouth is what ties those concerns to specific individuals. (Stated differently: it’s unlikely that executives would’ve had these worries at random; D’Amaro almost certainly voiced them.)
Why D’Amaro would’ve floated his exit from Disney–or why other executives would’ve feared it–is unknown. It could’ve been the aforementioned Cast Member layoffs; with the benefit of hindsight, it’s now pretty clear D’Amaro was not on board with that. It could’ve been that D’Amaro was forced to defend unpopular decisions he did not make. It could’ve been declining guest satisfaction or other negative changes. It could’ve been something behind the scenes that has absolutely nothing to do with fan outrage.
We could speculate all day, but the fact is that none of us can know for sure. As someone who has been highly deferential to D’Amaro, my natural inclination is to believe the best, but I’m cognizant of that fact that I don’t know–and that would be allowing my bias to show. At the end of the day, the jury is still out on D’Amaro. Even if the damaging decisions were not his, he has yet to do anything in his current role to earn the confidence of Walt Disney World and Disneyland fans.
What I will say is that, after reading the Wall Street Journal article, one of my bigger takeaways is that Chapek did not have complete command over what was happening at Disney. If McCarthy was able to blindside Chapek with a presentation about which he had been given briefing materials in advance, could this have happened on other occasions?
With that, my mind immediately went to the bizarre Parks & Resorts panel presented by D’Amaro at the D23 Expo. At the time, that seemed like D’Amaro almost trying to force Chapek’s hand. I didn’t believe that idea then, as the notion that seemed facially absurd given how presentations like that are orchestrated by Disney. But now? Maybe not so absurd!
Speaking of not so absurd, let’s turn to the predictions by media executives about what changes could happen with the Walt Disney Company in 2023. This is via CNBC, which asked 12 media executives to anonymously give one industry-shaking prediction for 2023. Several of them involved Disney, with answers involving Bob Iger, streaming service mergers & acquisitions, and the future of the company’s CEO position.
We feel this is worth reporting on because last year’s version of this article got several predictions correct, including the return of CEO Bob Iger to run Disney. (Not that it matters, but we made that prediction way back in 2020 when explaining that Bob Chapek was brought in as a hatchet man to make unpopular decisions and give the company a reset. With each leak, it seemed more likely that Iger would return…up until the board extended his contract.)
Regardless, here are the predictions…
Iger Extends – Let’s start with the safest prediction of the bunch, which is that Bob Iger will extend his contract beyond December 31, 2024, his current end date, and stay as Disney CEO for years to come.
Iger has previously announced he would retire, but failed to leave Disney on several occasions. After saying in 2011 that he would retire in 2015, Iger extended his contract on multiple occasions, putting it off as the timing wasn’t right as he sought to complete key acquisitions, fix problems with ESPN, and successfully launch Shanghai Disneyland. Iger most recently extended after Disney’s $71.3 billion acquisition 21st Century Fox assets.
Potential successors didn’t stick around, and the company’s capable CEO candidates shrank with it. That left Chapek as an almost ‘default’ option when Iger opted to abruptly step down in early 2020 without having done much public-facing succession planning and management.
My only commentary is that this is a safe prediction because it’s the one with history on its side. It’s not exactly bold, so getting it “right” isn’t saying much about ones prognostication skills. I wouldn’t bet on this either way–seems like it has fairly even odds of happening.
Disney Acquires an Ex-Executive & Co. – The next prediction flows from the first, in a way. Since Disney lacks a deep bench due to Iger’s past extensions, his best play–if he really wants to leave in December 2024–is acquiring Candle Media and naming Kevin Mayer his successor.
Bob Iger passed over Kevin Mayer for the Disney CEO role in 2020, prompting Mayer to leave Disney and take a short-lived CEO role with TikTok. Mayer really got unlucky with both moves, and Disney’s decision was confounding given Mayer’s success in launching Disney+ and the company’s future in streaming media. Iger could also get another chance with Mayer’s co-founder of Candle Media, Tom Staggs, who also left Disney when it became clear he wasn’t going to be CEO.
I don’t think I need to add much commentary here. In 5 Businesses Disney Should Buy or Sell, I already suggested that Disney should acquire Candle Media primarily as a talent acquisition play for Mayer and Staggs. That duo serving as co-heads of Disney with an Eisner-Wells dynamic is a dreamlike scenario. It’s a great prediction from a ‘things that should happen’ perspective, but I’m far less certain of it from a ‘things that will happen’ perspective. Definitely a long shot, but Iger does take big swings!
Disney CFO Christine McCarthy Leaves – One executive predicted that McCarthy, who is 67, was more likely to leave Disney in 2023 than move on to CEO. While McCarthy turned on Chapek, she also was part of his inner circle for years. Iger may view that suspiciously, given his litany of differences with Chapek, even though McCarthy also served as Iger’s CFO from 2015 to 2020.
Some insiders have speculated that McCarthy’s intimate relationship with the board could lead to Iger choosing her as his successor for CEO. Others have said McCarthy could see an altered role as Iger restructures the company. Iger is expected to reveal those changes as soon as January, and shuffling her role could signal she’s seen internally as a CEO candidate who needs to round out her experience. (Exactly that happened with Staggs and other potential CEO successors in the past.)
McCarthy’s contract runs through mid-2024, making an early retirement unlikely. However, Disney’s board also renewed Chapek’s contract into 2025 just months before firing him. So prematurely ousting an executive and paying them severance isn’t really a non-starter for Disney.
My commentary here is that I hope this does not happen. That may be a surprise to those who read the commentary to Disney CFO Rumored to Succeed Bob Iger as CEO, in which I essentially pleaded with Disney not to make the same mistake twice. Disney needs a charismatic storyteller in its top spot, not a numbers person. However, that doesn’t mean McCarthy is a bad CFO. To the contrary, what she did to navigate Disney through the rough waters of 2020 was masterful.
With that said, I also wouldn’t be surprised if this does happen. Just yesterday, Disney’s stock dropped following a weaker-than-expected opening box office weekend for Avatar: The Way of Water. Disney shares closed down more than 4% at $85.78, after hitting a 52-week low. The company has seen its stock fall more than 40% in the past year, a larger drop than the broader market but consistent with streaming companies. Nevertheless, if things don’t turn around quickly, Iger might seek a scapegoat…and the CFO is certainly a convenient one.
Streaming Consolidation – Not Disney specifically, but many executives predicted mergers and acquisitions in the streaming space, with possibilities including Paramount being sold for parts, merging with Comcast, or being acquired by Netflix. Paramount was involved in several scenarios, a repeat of last year when executives believed it would be acquired.
Another prediction envisioned Netflix merging with Disney. CNBC was quick to note that a Netflix-Disney behemoth seems like a long shot given recent regulatory pushback on other acquisitions. The merger of Disney ($165 billion market value) with Netflix ($130 billion) would be one of the largest deals in history, and would create a streaming giant that could dominate the entire industry. That makes it an antitrust non-starter in the current climate, which is the correct analysis and why it likely will not happen between now and December 2024. However, if Iger extends and the regulatory environment changes in 2025, that’s a different story…
Media Recession Resiliency – If the U.S. economy enters a real recession, the prediction is that the media industry will actually benefit from that. A recession will accelerate current trends that are already in motion, such as cable cord-cutting and streaming subscription uptake. (It also might accelerate industry consolidation and strengthen the big players, closing the door on any mergers in 2025.)
Past recessions have demonstrated that consumers don’t stop paying for relatively low-priced entertainment during economic downturns. This could be good news for an industry that now has more high-quality, low-priced options than ever before. The advertising market will also bounce back faster than anticipated as brands see people switching from higher-priced entertainment to lower-cost at-home options, according to this executive’s prediction.
My hope is that this prediction comes true in full. Disney+ seeing continued subscriber growth and strength in advertising would turn the tables on the current billion dollar quarterly losses, which would be healthy for the company as a whole. Conversely, consumers pulling back on expensive entertainment spending would force Walt Disney World and Disneyland to work harder–meaning discounts, entertainment additions, and other promotions or celebrations to lure back guests. It might also result in the negative consequence of decreased capex on the parks, but is there any sign of major projects on the horizon, anyway?!
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What do you think about leadership fears that Josh D’Amaro would quit if Chapek remained in charge? Thoughts on which decision(s) could’ve led to D’Amaro voicing frustrations to his colleagues? Who do you think will be CEO of the Walt Disney Company on January 1, 2025? Will it be Bob Iger, Christine McCarthy, Tom Staggs, Kevin Mayer, or none of the above? Who should it be? Expect to see streaming services merge next year? Thoughts on anything else discussed here? Are you optimistic about the company’s future as the Walt Disney Company enters its 100th year? Think things will get better in 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!
I know ANOTHER company that started to give people LESS VALUE while charging MUCH MORE for their products and services……….
And although they too were a multi-BILLION dollar company they NO LONGER EXIST:
Can you say BLOCKBUSTER VIDEO?
No even Disney can break the basic laws of economics, especially during a recession and get away with it. This on top of all the WOKE created failures at the box-office! If they continue in their current business culture of trying to wring every last cent from their clientel, while giving them so much less for that money, then one day sooner rather than later we will ALL be saying “…remember what Walt Disney World USED to be like…”
I do not care WHO is the CEO is this path is doomed to fail! And NO ONE is “too big to fail”….
Disney RIP 2019…
Great blog! Glad I found it. Personal speculation is that Iger saw the numbers ahead and chose Chapek as the man to take the fall so he could come in to save the day at a later point. Is it not true that most of Chapek’s initiatives were already set in motion by Iger-planning sometimes years in the making? As far as capex, isn’t there some major investment coming up on the Cruise Line side – the acquisition of the partially completed vessel Disney outbid others to obtain – likely to serve the Asian market? Ships are financed over multiple years, but this along with two more new ships to complete the Wish class is still pretty substantial. This side of the business may remain a challenging environment given recessionary indicators and lingering COVID hesitation. Your thoughts?
I’m by no means an Iger apologist, but stories that Iger “hand picked” Chapek never sat well with me. Now that more and more leaks are being reported of their behind the scenes conflict, I feel fairly confident in my assumption that Chapek’s rise to CEO was much more a choice of the Board forcing his hand than Iger himself.
This level of office undermining and pettiness just doesn’t make sense otherwise.
Iger doesn’t “get” the Disney magic anymore than Chapek. The only thing Iger is good at is walking into a position at a company that has baked in fan loyalty that is near impossible to break. For example, look how he has chipped away and gutted the guest experiences over the last 15 years and people still go. He’s a corporate raider with the greatest conman skills ever. That’s it. Tom…it seems like top management is very eager to anonymously leak stories right now, got any ins?
Inflation, recession, and interest rates. These are the realities of what people are facing right now.
Given all these forces if one had to choose between Netflix and Disney+ for your streaming what would the current American household choose? Not all households are two parents, kids or Disney fans.
If you had held Disney stock for the last five years you would be down approximately 20% (stock did surge 3 months into Chapeck’s tenure but now it is performing poorly probably due to market forces) . If you had held Netflix stock over the same 5 years you would be up approximately 50% (stock has bounced around too but you would still be up).
In the end the new leader will need to make the company money and increase stock value.
Thanks for the broad and thoughtful analysis and predictions Tom. Very enjoyable
I’ve been enjoying reading these, as I lack the history to make really good judgement calls on the future of Disney without this context (but am now expected to know as the ‘Disney’ person among my contacts.) I’d say though, just using logic from the facts presented…that if Disney does *not* acquire Candle Media then it must follow that Iger extends his contract to give more time to look for a replacement. If the opposite happens, then that’d be a pretty clear signal who he’s going to pick.
So much of Disney’s current success seems to now be tied to it’s streaming service that it adds another dimension to the requirement for a CEO, which…with my limited knowledge, sort of gives another reason why Chapek was picked–to navigate those new waters with a numbers-oriented business mind. As we saw though, that doesn’t work for an image-based company like Disney. But…then again, Disney keeps trying to do things that are so inherently tech-based without having a good, solid tech knowledge base. Trying to navigate around inside Disney+ is a headache as much as trying to navigate around inside Genie+…it’s all correlated. We all do inherently understand that a Disney CEO has to have a lot of heart, but finding someone with heart, business acumen, AND a future-minded sense of innovation is where they’re going to struggle. I think having a pair of CEOs like you suggest would be the best possible case to get all three.
Tom, I really do hope the magic can be restored. Our family is actually here now and I cannot bare to describe the failures we’ve seen. Let’s just say we’ve spent more time in Guest Services lines than any attractions due to ride breakdowns. Yesterday, we were evacuated 3 different TIMES from ROR. Our entire party of 8 never got on this ride, and after the 3rd time we were told “you aren’t guaranteed you’ll be able to ride an attraction.” Wow! Disney gladly took our extra $25 per person for this lightning lane but then said this to us after it failed 3 times. I’ve never been so disappointed or embarrassed as someone who brought family and friends om this trip. It’s sad when the attraction where you’ve spent the most time in line is Guest Relations. This was our sad story yesterday!
Locals are STAYING AWAY IN DROVES my friend! I would have told you STAY AWAY! The moment the “Genie+”/”Lightning Lane” money gran started we all KNEW Disney was in trouble!
May I suggest Universal Studios? Especially after “Epic Universe” is open in 2025?
There once was a charismatic storyteller at the helm of this company. His name was Walt Disney. Nothing much will truly change there until the passion and magic can be rediscovered. Until then, it doesn’t matter which suit runs it. It will continue to fail.
Tom. What I am wondering is why did Chapek get the job to begin with? He had been there for years and they all knows what kind of person he was. I’m sure McCarthys and D’Amaro’s opinion of him did not change over night when he became CEO. I think Iger is to blame more than anyone else is this mishap.
Disney charges fifteen dollars to go on a ride that last two minuts. When they loose money on there cable programs, they take it out on the people that want to go to Disneyworld. 90 dollars to park hop. That would be like a taxi driver charging charging you that mutch to drive you next door from your house. The people running Disney are just about money, money, money. And you know I’m telling you the truth. All the magic of Disney is going to be just for the rich. You can’t even go to the parks late unless you pay seven hundred a night for a room . Chapec got a thirty million dollar bonus for destroying all the magic that people love. You and your wife stay at all the nice places at Disney cause you can afford it. Most people can’t. They should open up late night for all people. Put slides in all the pools. If the can hand out thirty million dollar bonuses to a bad person like chapec , they can do something for all the hard working families that have a limited income. What they are doing is wrong, and you know it. You and yours have a very merry Xmas. Love you blog
I recommend this blog to people all the time because (a) I think Tom is as knowledgeable as anyone about Disney Parks and generally gets it right, but more importantly (b) Tom is transparent about his biases and reasons his subjective opinions and experiences may be different than his readers. This article is a perfect example of trying to report facts but also making the reader aware of his own priors and subjective assessments. Great job Tom!
I find the story of the two Bobs and Disney eerily similar to the recent mini-series on Disney Plus – The Santa Clauses. SPOILER ALERT. Santa is having a few issues and decides to retire. He hastily picks a replacement, also with the initials SC (see the pattern here). But the new Santa starts making major changes, doesn’t believe in the “magic” of Christmas (Disney), and things go south quickly. So, the previous Santa is forced (by some friendly elves in key management positions and a witch that seems to have as much power as Santa) to return and oust the new Santa.
Of course, the series was already in production before the recent top management change. So how could the producers and writers know what was going to happen? Maybe there really is a Santa Claus!
Thanks for the spoiler alert. We’re planning on watching the Santa Clauses tonight or Thursday, so I had to stop reading–I’ll report back after finishing! 🙂
I can’t believe I am ahead of Tom Bricker. That’s mind boggling!
Yes!!! I kept seeing the trailers where Tim Allen recaps his experience saying “i picked the wrong guy” and I’m just waiting for someone to come up with a meme or gif for that! You are right on!
Yes! Eerily similar!