Bob Iger’s run as the Walt Disney Company’s CEO has finally come to an end. Today, he announced he is officially (finally) stepping down as chief executive and will be replaced by current chairman of parks and resorts, Bob Chapek. Iger will be Executive Chairman until his contract ends December 31, 2021. This gives him time to help Chapek adjust to his new role.
Bob Iger’s Beginnings
Robert Allen Iger began his career working for ABC. Though he started as a menial worker, he grew in the company and was eventually named President and COO. When the Walt Disney Company purchased ABC in 1996, Iger remained on as President of ABC to help with the transition. Iger’s career continued to grow and in 2000 he was made COO, 2nd in command to then CEO Michael Eisner. After some messy attempts to “save Disney” by Roy E. Disney, Roy Disney’s grandson, Michael Eisner stepped down and Bob Iger was named CEO in 2005.
Iger’s run as CEO will forever be remembered for his acquisitions. In 2006, the Walt Disney Company acquired Pixar for $7.4 billion in stock and the rights to Oswald the Lucky Rabbit from NBC Universal by trading Al Michaels, an ABC sportscaster. In 2009 Iger negotiated to acquire Marvel Entertainment. It cost Disney only $4 billion, which they had already recouped at the box office by 2012. Iger still wasn’t done though. In 2014, Disney purchased Lucasfilm Ltd. from George Lucas for another $4 billion. Iger negotiated some more and in 2019 Disney acquired 21st Century Fox for a whopping $71.3 billion. Fox also got them the majority shares in Hulu, which Disney now controls.
In addition to expanding the company through acquisitions, Iger grew the company in other ways. He oversaw the opening of Hong Kong Disneyland in 2005 and Shanghai Disneyland in 2016. He made a full acquisition of Disneyland Paris, which had previously been controlled by a financial holdings company. Disney+ went live last year. There were also many park updates, including brand new themed lands in nearly every park, and blockbusters like Star Wars, Avengers, and Frozen that hit theaters.
In Iger’s 15 years as CEO, he accomplished enormous financial growth for the company. In 2005, the Walt Disney Company had a revenue of $31,944 and a net income of $2,533 million. Last year, the company had a revenue of $69,570 million and a net income of $10,441 million. If you take inflation into account, the company’s net income has increased by 10%. With all the money he spent to acquire other companies, the Disney corporation is still a big money maker. Iger will likely be remembered as a very successful CEO.
A Long Time Coming
We have known for sometime that Iger was nearing retirement. In fact, rumors have been going around for many years as each of his contracts came to an end. His original contract ended June 30, 2018. Leading up to that date it appeared Tom Staggs, the company’s CFO, was being groomed as the next CEO. In April 2016, he unexpectedly left the company. With no replacement in sight, it wasn’t surprising that in March 2017 Disney announced Iger’s term would be extended to July 2, 2019. Just a few months later, they extended his contract again until 2021.
In the last few years, Bob Chapek became the obvious choice as next CEO. In 2015, he became chairman of parks and resorts. During his tenure, Shanghai Disney Resort opened, the Disney Cruise Line fleet doubled, and the most immersive lands in the history of the Disney Parks, Galaxy’s Edge, opened. He also spent time in consumer products and home entertainment. Though it was surprising that Iger retired today instead of waiting for his contract to end next year, we are not suprised Bob Chapek was chosen as his successor.
What’s to Come
During Chapek’s time in parks and resorts, he appears to be a big fan of sticking to franchises and experiences that are already successful. Rather than coming up with new IP for the parks, new rides have often come from the most successful movies. We will likely see more big budget remakes and sequels in the future. This will likely lead to a DreamWorks-like chain of sequels in money making franchises. The parks will continue to receive new rides and enhancements. Chapek seems to like saving money and putting copies of rides in different parks, so it wouldn’t surprise us if we continue to see more copycat rides. While this does allow more people to experience each attraction, it also means that the identities of the parks are getting blurred.
We hope Chapek will encourage new IP, but don’t be surprised if he plays it safe and sticks to what they know makes money. Chapek also seems to be a fan of cutting entertainment in the parks to save money and increasing ticket prices to increase revenue. Hopefully this will not continue in the coming years. Unfortunately, this kind of thinking is what led Disney into performance struggles like those after Walt’s death or the end of the animation renaissance.