Disney executive chairman Bob Iger is reasserting control over The Walt Disney Company as the coronavirus pandemic has shaken up the entertainment company's entire line of business, according to a report by the New York Times.
Just two months ago, Iger announced plans he had put off four times since 2013: to retire. He announced Feb. 25 that he would name Chairman of Disney Parks, Experiences and Products Bob Chapek as the company's new CEO and serve as executive chairman until Chapek could make the full transition at the end of 2021.
But the coronavirus hitting the United States has seemingly changed everything. The Walt Disney Company is losing as much $30 million or more a day due to the pandemic, according to media industry analyst Hal Vogel. As a result, the company has been forced to shut the doors of its theme parks indefinitely, postpone upcoming blockbuster film releases and TV productions, and even furlough 43,000 union employees as well as executive, salaried and hourly nonunion employees deemed “not necessary at this time” starting April 19.
Iger had also offered to forgo his entire salary for the year while Chapek took a 50 percent pay cut and lower-level executives took a 20 percent pay cut.
But in an emergency like this, Iger told the New York Times he had no other choice but to abandon his plan to pull back.
“A crisis of this magnitude, and its impact on Disney, would necessarily result in my actively helping Bob [Chapek] and the company contend with it, particularly since I ran the company for 15 years!” he said in an email.
The realization hit just after the company’s March 11 annual shareholder gathering in Raleigh, North Carolina, which served as Chapek’s debut and was staged "as a carefully scripted handoff," according to the Times.
“I’ve watched Bob [Iger] lead this company to amazing new heights, and I’ve learned an enormous amount from that experience. I feel incredibly fortunate to be able to work closely with him during this transition,” Chapek said at the meeting.
Those new heights include the acquisitions of Marvel, Lucasfilm and Pixar, and 21st Century Fox, leading to the development of the company's new streaming service, Disney+, which has reached 50 million paid subscribers in five months.
Still, with Iger's return of control, he is now faced with the biggest challenge of his career: figuring out what the company will look like after the crisis.
His main challenge will be getting people back into the parks while mitigating the spread of the virus, which Iger told Barron’s he already has a plan for.
“One of the things that we’re discussing already is that in order to return to some semblance of normal, people will have to feel comfortable that they’re safe. Some of that could come in the form ultimately of a vaccine, but in the absence of that it could come from basically more scrutiny, more restrictions,” Iger explained.
Among those measures, Iger told Barron's the company would likely include taking visitors' temperatures as they enter Disney's theme parks going forward.
Disney's Parks, Experiences, and Products division brought in more than $26 billion in revenue in the fiscal year of 2019.
Iger also reportedly told associates he sees this moment as an opportunity to look across the business and permanently change how it operates. He told them he anticipates "ending expensive old-school television practices like advertising upfronts and producing pilots for programs that may never air" as well as operating with less office space.
He also reportedly anticipates the company having fewer employees when the dust settles but pushed back on that claim in an email to the Times on Sunday evening, saying that he had “no recollection of ever having said” that he expected a smaller work force but that “any decision about staff reductions will be made by my successor and not me."
It will undoubtedly be an unpredictable and rough next two years for Chapek to determine if he can hold the job, but Iger has assured Chapek that "the extraordinary circumstances would be taken into consideration in the board’s evaluation of Mr. Chapek’s performance."
Chapek's appointment came as a shock to many who expected another Disney executive, Chairman of Walt Disney Direct-to-Consumer & International Kevin Mayer, would take over the reins of the company. Mayer has now been tasked, however, with overseeing Disney's popular streaming service.
Disney did not immediately return FOX Business’ request for comment on the New York Times' report and how the decision for Iger to reassert control would impact his transition plans going forward. For the time being, that succession plan will remain on the back burner as Disney figures out how to get people back to its parks and cruise ships and into the movie theaters in what will be a defining moment of Iger's career and a make-or-break moment for Chapek's.
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Disney closed at $103.50 per share, falling slightly at the end of Monday’s trading session.