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Disney Stock Lower As Board Extends Contract of CEO Bob Chapek

"Bob is the right leader at the right time for The Walt Disney Company, and the board has full confidence in him and his leadership team,' said Disney chair Sue Arnold.

Updated at 12:29 pm EST

Walt Disney  (DIS) - Get The Walt Disney Company Report shares edged lower Wednesday following a move by the entertainment giant's board of directors to extend the contract of CEO Bob Chapek by another three years.

Chapek, who took over from longtime boss Bog Iger in February of 2020, has steered the company through the worst of the Covid pandemic, and maintained both investment and interest in the group's lucrative Disney+ streaming service.

Disney added 7.9 million subscribers in its fiscal second quarter, which ended in March, taking ESPN+ to 22.3 million paid subscribers and Hulu to 45.6 million, while overall subscriber totals for its Disney+ streaming services hit 137.7 million, topping well ahead analysts' estimates by around 2 million.

Disney also said it intends to meet its September 2024 goal of having total subs in the region of 230 million to 260 million, although that would require adding 9.1 million new addition each quarter.

However, he has also courted controversy through his handling of the company's reaction to Florida's LGBTQ laws and the abrupt departure of entertainment executive Peter Rice.

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"Disney was dealt a tough hand by the pandemic, yet with Bob at the helm, our businesses -- from parks to streaming -- not only weathered the storm, but emerged in a position of strength," said board chair Susan Arnold. "Bob is the right leader at the right time for The Walt Disney Company, and the board has full confidence in him and his leadership team."

Disney shares were marked 1% lower in early afternoon trading to change hands at $94.94 each, a move that would leave the stock with a year-to-date decline of around 38%.

Supply chain and travel disruptions, as well as the ongoing inflation surge, ate into Disney's second quarter earnings last month, with the group's adjusted bottom line firmly missing Street forecasts at $1.08 per share.

"We're very carefully watching our content cost growth. And we reaffirmed our guidance on both subs and on profitability," Chapek told investors on May 11. "So we think they move together. It's obviously a balancing act, but we believe that great content is going to drive our subs, and those subs then in scale will drive our profitability.

Group revenues, Disney said, rose 23.3% to $19.25 billion, missing Street forecasts. Parks and Experiences revenues came in at $6.65 billion, topping the Street's $6.3 billion estimate and rising more than 100% from last year as visitors returned to re-open resorts and cruises around the world, particularly in Hong Kong and the United States.