Credit…Chris Pizzello/Invision, via Chris Pizzello/Invision/Ap
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.
Not like that.
The Walt Disney Company’s board renewed Mr. Chapek’s contract for another three years on Tuesday, with Susan Arnold, the board chair, saying in a statement that he is “the right leader at the right time” and espousing the board’s “full confidence in him and his leadership team.” That means that Mr. Chapek, who took the helm of Disney in February 2020, could remain there until at least July 2025. The vote was unanimous.
“In this important time of growth and transformation, the board is committed to keeping Disney on the successful path it is on today, and Bob’s leadership is key to achieving that goal,” Ms. Arnold said.
Mr. Chapek, 63, faces a daunting to-do list. Disney’s stock price needs to be reinvigorated, to put it mildly. The company’s balance sheet is still recovering from the pandemic. Employee morale needs improving. Disney has been struggling in China, with the Shanghai Disney Resort and Hong Kong Disneyland closing and reopening (and closing and reopening) because of 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 more than ever on food, merchandise and hotel rooms. But some investors are worried that a possible recession could hurt park attendance and guest spending. Disney needs its theme parks to keep generating wheelbarrows of cash to offset losses at its streaming division, Disney+, which has been growing quickly but is not expected to be profitable until 2024.
“Leading this great company is the honor of a lifetime, and I am grateful to the board for their support,” Mr. Chapek said in a statement from Florida, where the board was meeting ahead of the dedication of a new 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 company altogether.
Since then, Mr. Chapek has delivered results that have surpassed Wall Street’s expectations. Crucially, his team has managed to keep Disney+ growing at a much faster rate than expected; the streaming service added nearly 20 million new subscribers worldwide in Disney’s last two fiscal quarters, about 60 percent more than analysts had predicted.
But three factors have caused Disney’s stock price to decline nearly 40 percent since Mr. Iger decamped.
In March, Disney became embroiled in a political storm over its botched response to a new education law in Florida, where the company has roughly 80,000 employees. The law among 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. LGBTQ organizations and a torrent of companies criticized the bill, with opponents calling it “Don’t Say Gay.”
At first, Mr. Chapek tried not to take a side, at least not publicly, prompting an employee 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 company to self-govern the 25,000-acre megaresort near Orlando since 1967. (Disney has since been working behind the scenes with Florida officials to find a tax district compromise.)
An independent survey of more than 33,000 Americans taken during 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 company only four months earlier.
Two other factors — both out of Mr. Chapek’s control — have hurt Disney’s stock price. One is a general stock market downturn, with investors worrying about a potential recession, inflation and the Russian invasion of Ukraine. Disney’s more mature streaming competitor, Netflix, also spooked Wall Street by losing subscribers for the first time in a decade, prompting a wide sell-off in media stocks.
Mr. Chapek’s previous contract was set to expire in February. By giving him a second term in such aggressive fashion, the board is essentially wiping the slate clean of the “Don’t Say Gay” matter and giving him an opportunity to restore investor confidence in the promise of streaming.
Disney shares increased slightly in after-hours trading on Tuesday.