When Bob Chapek was growing up in Indiana, the highlight of the year was the family trip toDisney World in Orlando, Florida.
The 60-year-old executive went on to oversee that very park as head of Disney’s resorts business, and now he’s taking charge of the entire $70 billion-a-year empire as the new CEO. It’s a daunting moment for someone whose eyes still light up when he talks about walking through Disney World’s Main Street U.S.A.
“At the core of everything, the center of our brand, is creative storytelling,” Chapek said in an interview on Bloomberg Television. “If the creative storytelling is right, then everything else is right.”
Chapek’s elevation to chief executive officer, taking over for longtime Disney steward Bob Iger,surprised investors and analysts with its suddenness on Tuesday. But Chapek was long seen as a key contender for the job. Over his 27 years at Disney, he helped orchestrate the company’s home-video strategy and then overhauled how its parks operate.
“Bob Chapek not only knows the company very well — having run a few of our important businesses — he is also someone that we know,” Iger, 69, told Bloomberg Television.
The question now is how well Chapek manages businesses he hasn’t run yet, including one of the company’s biggest source of revenue and profit: television. Disney is embracing streaming as a core part of its operations, and Chapek will have to learn as he goes.
The succession follows a huge run-up for Disney’s stock, largely due to the successful launch of its new Disney+ video streaming service last year. But the company faces headwinds, including a coronavirus outbreak that has shuttered theme parks and delayed movie releases in China.
Disney shares were down 1% to $126.92 in premarket trading Wednesday, off their worst levels of the late and early sessions as investors digested the news.
Chapek also will have to fill the Tom Ford loafers of Iger when it comes to making bold bets. Iger transformed Disney with the takeovers ofPixar, Lucasfilm and Marvel, and, more recently, the $71 billion acquisition of Fox’s entertainment operations.
“We suspect investors will have a difficult time believing any successor will be able to match Mr. Iger’s results,” Citigroup Inc. analyst Jason Bazinet said in a note Tuesday.
But Chapek’s track record shows he’s willing to adapt — and wring maximum profit out the businesses he’s running. He was one of the architects of the company’s “vault” strategy, where Disney released classic movies like “Dumbo” on DVD every few years, creating a frenzy among parents and collectors.
Named to lead Disney’s consumer products, Chapek went about reorganizing the division. He let go dozens of staffers in favor of an approach that focused on the company’s film franchises, rather than on categories of merchandise. He caught lightning in a bottle when the 2013 animated film “Frozen” caused a surge in demand for blue Princess Elsa dresses and Olaf the snowman backpacks.
When he took over the theme parks, Chapek began implementing a strategy of tiered pricing at the resorts. Guests who wanted to visit on peak days paid as much as $209 a day for a ticket that allows them to hop between parks. Annual pass prices exceed $1,000. Nighttime events were created to charge extra for folks who wanted to attend.
Chapek justified the increases through massive investments in new attractions. Under his watch, Disney opened the $5.5 billion Shanghai theme park. A new Avatar-themed attraction at Disney’s Animal Kingdom in Orlando brought new life to that resort. And two Star Wars-themed lands opened last year at a cost of about $1 billion each.
Still, Chapek’s appointment came as a surprise to many. Senior executives were told only that morning. Some speculate that Iger wanted to avoid the prolonged succession struggle fought by his predecessor, Michael Eisner. The company’s directors also may have gotten inspiration from the quick transition achieved by Mark Parker, a fellow Disney board member, who stepped down from the CEO position atNike Inc. in January.
The move will likely be a disappointment for Kevin Mayer, Disney’s streaming chief, and other CEO hopefuls at Disney. That could include TV chief Peter Rice, who came over with the Fox acquisition.
Instead the board picked a longtime Disney insider, steeped in the company’s unique culture. Disney has typically hired leaders from within, and Chapek will only bethe seventh CEO in its nearly 100-year history.
“It made perfect sense,” said Iger, who plans to stick around as chairman through 2021 while also overseeing the creative side of the business. “It also creates a really smooth transition.”
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