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Why Disney CEO Bob Iger Is Back at the Helm of the House of Mouse

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J.D. DURKIN: “We Thank Bob Chapek for his service to Disney  (DIS) - Get Free Report over his long career, including navigating the company through the unprecedented challenges of the COVID 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.” Martin, what was your reaction to this as this broke late last night, and what's been the reaction for investors so far on this Monday morning?

MARTIN BACCARDAX: Well, there were a lot of market murmurs, J.D. it has to be said, after Disney's third quarter, I beg your pardon, fourth quarter earnings earlier this month. The conference call wasn't particularly satisfactory. Of course, they missed on the top and bottom line. And they posted a $1.5 billion loss in the direct to consumer business, which is where Disney Plus and the streaming operations are housed. So there was absolute disquiet. Obviously, the stock is under the throes of one of its worst declines in about four decades. So far this year, and it's just massively underperformed the Dow and virtually all of its competitors. So something had to be done.

But I was surprised to see the level in which all of this escalated to on Sunday evening. Reports say that Bob Iger was only approached by the board on Friday evening with respect to sounding out his temperature for taking on the CEO role and indeed coming back after his retirement. So this moved very, very quickly in a shocking manner. I think Chapek, to some degree, hadn't really insinuated himself within the board in terms of finding their confidence. And ultimately, the fourth quarter miss and the rather flat discussion that followed in the conference call was probably the straw that broke the proverbial back.

J.D. DURKIN: What was it about Mr. Iger, you think that has I mean, obviously endeared himself either to fans of the brand, or people on the board, that makes him the suitable candidate to come back into the fold during such a difficult time?

MARTIN BACCARDAX: I think they just need a steady hand at the tiller, really, J.D. I mean, ultimately, the parks division is doing well. It's ramping up visitors as a result of the drop in COVID restrictions. China, of course, aside. So really what Disney appears to need is somebody who can come in and manage the media assets in a significant and indeed efficient manner. And that was absolutely not Mr. Chapek’s skill set. He was more of a theme park person, and that's where his expertise lied. Whereas Iger is a dyed in the wool Hollywood executive who understands exactly what's happening, both on the content and the distribution side. So having him in for this two year period is really important for Disney, and it also probably alludes, at least in my estimation J.D., to some activist shareholder pressures that have sort of bubbled up over the last three or four months. And maybe the board saw Iger as a better representative for Disney's interests than Mr. Chapek.

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