Disney has reappointed Bob Iger as its chief executive in a surprise decision as the entertainment company ousted his hand-picked replacement, Bob Chapek, after less than three years in the job.
During Iger’s acclaimed 15-year reign, Disney made a series of big acquisitions, including the Marvel film franchise, the Pixar animation studio and the Star Wars film franchise.
He retired as chief executive in 2020, having delayed his exit several times to guide the company through the early stages of the coronavirus pandemic. He was replaced by Chapek, who formerly ran its theme parks division, but stayed on as executive chairman until the end of last year.
Iger returns to the CEO role with immediate effect and will serve for two years, Disney said in a statement late on Sunday. The company highlighted a fivefold market value increase under his leadership, adding that he had a “mandate from the board to set the strategic direction for renewed growth” while it looked once more for a long-term successor.
Michael Antonelli, a market strategist at Baird, a US asset manager, said Iger’s return was “probably the most significant piece of corporate upheaval since [Steve] Jobs went back to Apple” and the news sent Disney’s shares up more than 8% – nearly $14bn – when Wall Street opened on Monday.
“We applaud Disney’s board for the courage to make this change,” said Michael Nathanson, senior analyst at MoffettNathanson. “We have never hidden our affection for Mr Iger and the job that he did in building Disney into the global powerhouse that it has become.”
Chapek had overseen a difficult period for Disney, with disruption from the pandemic – which forced its theme parks to close – followed by concerns over the profitability of its streaming service, Disney+. The platform is competing in a crowded field and has spent billions of dollars creating new content as it contends with rivals Netflix and Amazon Prime Video. While Disney+ has grown subscriber numbers rapidly, it has come at the cost of steep operating losses.
Disney has also faced pressure in Florida, where its Walt Disney World theme parks are based, over its public opposition to the state’s “don’t say gay” laws that ban classroom discussion of sexual orientation and gender identity in certain grades.
The company’s market value has slumped by more than 40% during 2022, much worse than the 17% decline in the S&P 500 index of large US companies.
The news of Iger’s return prompted the widely respected MoffettNathanson to upgrade its target share price for Disney to $120 – it had been trading at under $100 – its first upgrade on the stock since early 2020.
Susan Arnold, Disney’s chair, said: “We thank Bob Chapek for his service to Disney over his long career, including navigating the company through the unprecedented challenges of the pandemic. The board has concluded that as Disney embarks on an increasingly complex period of industry transformation, Bob Iger is uniquely situated to lead the company through this pivotal period.”
Iger said: “I am extremely optimistic for the future of this great company and thrilled to be asked by the board to return as its CEO.” Disney did not publish a statement from Chapek.
His return comes weeks after Disney’s share price took a battering after reporting a rare miss on revenues and profits, and a doubling of losses on its streaming business to $1.5bn in the quarter to 1 October.
Disney has spent about $9bn to date on loss-making Disney+, and about $30bn annually on content from Hollywood blockbusters and big budget TV shows to NFL football across its television and streaming businesses, which include ESPN and ABC.
The company said its streaming business had hit “peak loss” and Disney+ remains on track to become profitable in its 2024 financial year, at which point it will most likely be bigger than Netflix, although it has pegged back subscriber expectations to between 215m to 245m globally.
To meet this goal Disney is pushing through price rises of up to 38% in the US, with regions including Europe likely to see increases in the near future, and will launch an ad-supported subscription tier starting in the US on 8 December.
Analysts expect Iger to implement cuts in areas including content spend at Disney+ and the pay-TV sports network ESPN.