LOS ANGELES — Walt Disney Co.'s returning chief executive, Bob Iger, wasted no time putting his stamp on the company, announcing plans for a major overhaul of the Burbank entertainment giant.
In a Monday afternoon memo to employees, Iger said that Kareem Daniel, head of Disney’s controversial Disney Media and Entertainment Distribution unit, would be leaving the company.
“Over the coming weeks, we will begin implementing organizational and operating changes within the company,” Iger said. “It is my intention to restructure things in a way that honors and respects creativity as the heart and soul of who we are.”
Daniel had been elevated to one of the most powerful positions in Disney by his former boss, Bob Chapek, who was ousted Sunday night in a stunning move by Disney’s board. Many executives complained that they lost their autonomy when he was promoted in October 2020.
So far, Wall Street has supported the dramatic leadership change inside America’s most famous entertainment company.
Shares of Disney surged Monday on the news that Iger is returning as chief executive. They closed up $5.78, or 6.3%, to $97.58.
Chapek’s exit was partly blamed on the company’s most recent lackluster earnings report. Disney recently announced cost cuts, including a hiring freeze.
Media analyst Michael Nathanson praised the return of Iger, raising his rating on the Disney stock to outperform (buy).
“He stuck with a streaming vision that was backwards that was driven by subscriber growth and not profitability,” Nathanson told CNBC on Monday.
Iger ran Disney from 2005 to 2020, then served as the company’s executive chairman through 2021 when he retired. Under his new deal, he will be chief executive for the next two years and will be tasked with finding a successor.
Nathanson said Iger would be up to the task of making tough decisions needed to deal with the ongoing decline of its pay-TV business due to cord cutting and putting its streaming services on a path for profitability.
“What I like about Bob Iger: He’s been direct, he’s been honest,” Nathanson said. “He’ll make tough choices. There are tough choices here as far as the assets they have and the investment they need.”
Nathanson said Chapek “was not willing to deal with reality, which is what happened in the [analyst] call and it all blew up in his face.” But he added that Iger will have some challenges the second time around at Disney.
“It’s going to be a different regime than when he first started,” Nathanson said. “He has to cut things. He has to look at the portfolio and really make some hard decisions.”
Disney announced last week it had lost $1.5 billion in its last financial quarter on its streaming services, which have added subscribers without approaching profitability.
Chapek declared that the fourth quarter represented the peak of Disney’s losses in streaming as the company prepared to raise prices and add a Disney+ tier with advertising. Just days later, Chapek sent a memo to Disney leadership calling for cost-cutting measures, including layoffs and a hiring freeze.
CNBC commentator and “Mad Money” host Jim Cramer was not impressed, calling for Chapek’s firing during his Nov. 9 appearances on the network. Video clips were shown when CNBC covered the story on Monday.
Cramer compared Chapek to an NFL coach who “loses too many games.”
Cramer was especially critical of the way Chapek handled the poor earnings performance on the call with financial analysts.
“He made it sound like it was a four-star quarter,” Cramer said. “Delusional.”
Cramer’s call for Chapek to be fired wasn’t the reason that he was ousted, one longtime Disney observer said. But Cramer was able to crystalize the market’s impatience with Chapek and helped frame the issue for the board, the source said.
Disney’s stock has dropped more than 40% in 2022 after starting the year at nearly $160 a share.
The company is valued at $164 billion. Over his career as chief executive, Iger, 71, grew the company’s market capitalization from $48 billion to $257 billion.
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