Returning Walt Disney Co. CEO Bob Iger wasted no time putting his stamp on the company, announcing plans to overhaul the Burbank entertainment giant.
In a memo to employees Monday, Iger said Kareem Daniel, head of Disney’s controversial Disney Media and Entertainment Distribution unit, would leave the company.
“In the coming weeks, we will begin implementing organizational and operational changes across the company,” Iger said. “I intend to reframe things in a way that honors and respects creativity as the heart and soul of who we are.”
Daniel was elevated to one of the most powerful positions at Disney by his former boss, Bob Chapek, who was fired Sunday night in a stunning move by Disney’s board of directors. Many managers complained that they lost their autonomy when he was promoted October 2020.
So far, Wall Street has supported the dramatic management change at America’s best-known entertainment company.
Disney shares rose on Monday after the news Iger returns as Chief Executive Officer. They rose by $5.78, or 6.3%, to $97.58.
Capek’s departure was partly blamed for the company’s lackluster earnings report. Disney recently announced spending cuts, including a hiring freeze.
Media analyst Michael Nathanson praised Iger’s return, upgrading his rating on Disney stock to Outperform (Buy).
“He had a backwards vision for streaming that was driven by subscriber growth, not profitability,” Nathanson told CNBC on Monday.
Iger ran Disney from 2005 to 2020, then served as the company’s executive chairman until 2021, when he retired. Under the new contract, he will be chief executive for the next two years and will be tasked with finding a successor.
Nathanson said Iger will be up to the task of making the tough decisions needed to combat the ongoing decline of Disney’s pay-TV business and put its streaming services on a path to profitability.
“What I like about Bob Iger is that he was direct, he was honest,” Nathanson said. “He will make a difficult choice. There are tough choices to be made here in terms of the assets they have and the investments they need.”
Nathanson said that Capek “didn’t want to deal with the reality of what happened in [analyst] called, and everything flew in his face.” But he added that Iger will have problems his second time at Disney.
“It’s going to be a different regime than when he first started,” Nathanson said. “He has to cut things down. He has to look at the portfolio and really make some tough decisions.”
Disney announced this last week lost 1.5 billion dollars in its most recent fiscal quarter on its streaming services, which added subscribers without approaching profitability.
Capek said the fourth quarter marked the peak of Disney’s streaming losses as the company prepared to raise prices and add an ad-supported Disney+ tier. A few days later, Capek sent a memo to Disney executives calling for cost cuts, including layoffs and a hiring freeze.
CNBC commentator and “Mad Money” host Jim Cramer was unimpressed, calling for Chapek’s firing during his Nov. 9 appearance on the network. The video clips were shown when CNBC covered the story on Monday.
Kramer compared Chapek to an NFL coach who “loses too many games.”
Cramer was particularly critical of Capek’s handling of poor earnings during a call with financial analysts.
“He made it look like it was a four-star quarterback,” Kramer said. “Deception”.
Kramer’s call for Chapek’s firing was not the reason for his ouster, one longtime Disney watcher said. But Cramer was able to crystallize the market’s impatience with Chapek and helped frame the issue for the board, the source said.
Disney shares are down more than 40% in 2022 after starting the year at nearly $160 a share.
The company is valued at 164 billion dollars. During his career as chief executive, Iger, 71, grew the company’s market capitalization from $48 billion to $257 billion.
Times staff member Meg James contributed to this report.