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  • Brett Schafer

Who is Bob Chapek, the New Disney CEO?

We all (and by we, I mean investors) got hit pretty badly this week. Markets were down 11.5%, the worst weekly drop since 2008. This consumed most of, if not the entirety of, the financial media news cycle. And rightly so. But that meant some big news fell through the cracks.

And there wasn’t any bigger news than Bog Iger stepping down from his longtime CEO role at Disney. It was honestly shocking news, seeing as he had signed a contract through 2021 and he had said nothing about this on his book tour. He is staying on as executive chairman and now wants to head “creative” through 2021, so I guess he is staying with the company as long as he originally planned, just not in the CEO role.

We probably will never know the true reason Iger stepped down so suddenly (midweek with no foreshadowing whatsoever). Politics? maybe. Coronavirus fears? Finally burned out? Who knows. But what really matters to Disney shareholders (of which I count myself as) is his replacement: Bob Chapek.

Below I will outline who Bob Chapek is and what he needs to accomplish to keep Disney atop the media throne. He has big shoes to fill. Iger is perhaps the greatest media exec of all time, acquiring Marvel, Star Wars, and Pixar, which generated a tremendous ROI for Disney.

Alright, let’s see who this Chapek is.

Bob Chapek the Executive

Incoming CEO Bob Chapek does not lack experience. He has worked at Disney for 27 years and headed up multiple divisions during his time. Most recently he was in charge of Parks and Experiences, but before that, he was in charge of Consumer Products and then, before that, Studio Entertainment.

Chapek is 60 years old and received his MBA from Michigan State University. He seems to be an all-star middle manager, an almost Tim Cook-like guy, if you want to make the Iger/Steve Jobs comparison.

One thing you don’t see on Chapek’s bio is anything to do with video streaming. That job belongs to Kevin Mayer, who many people thought was the likely candidate to take over as CEO.

Anecdotally, it seems like people were disappointed Mayer wasn’t named Chief Executive because of how important streaming video is to Disney. But I actually think it is the smarter move bringing in Chapek. Being the CEO of Disney involves managing a ton (and that’s an understatement) of highly complex global businesses. I’d rather have a seasoned manager like Chapek spending his time on that than someone who is the ballast behind Disney+’s success.

Come to think of it, this new trio (Chapek as manager, Iger as creative, and Mayer at streaming) is the optimal strategy for where Disney is right now. Chapek will likely be around for a shorter time, will not need to make any big acquisitions like Iger, and can defer some of the strategies for where he is not an expert to other members of the executive team.

Being the CEO of Disney, you likely need to be a phenomenal manager of managers. Chapek seems like the best candidate to fill this role.

What Bob Chapek Needs to Do

It’s aggressively arrogant for me, a literal nobody with a podcast, to decide what is important for the incoming Disney CEO. But I am going to do it anyway because it is fun. I’m not including Coronavirus stuff but obviously, that could hurt them a ton in the short-run. Man, what a first year it would be if there was a worldwide pandemic to manage around.

Here is what Bob Chapek, the incoming Disney CEO, needs to accomplish to create value for his shareholders:

  1. Make the (5? 10? 2?) year transition from cable to video streaming, putting every piece of content onto Disney+, ESPN+, or Hulu, and then bundling them together.

  2. Finish the flywheel for Disney’s acquired assets like Star Wars and Marvel. This would be stuff like Star Wars Galaxies Edge and Baby Yoda dolls. That is where the high-margin stuff is.

  3. Sustain the culture of being the absolute best in content creation.

If they do this successfully they will own family entertainment in the internet age. They will also be more vertically integrated than ever before, getting rid of the cable providers and likely increasing their margins over the long-term.

Being the CEO of Disney, or really of any giant corporation, is never a cakewalk. But Chapek is coming into a situation where a lot of groundwork has been laid. All he has to do is make sure the plans get finished.

Disclosure: The author is not a financial advisor, and may have an interest in the companies discussed.

#Disney #Stocks #Investing #NewDisneyCEO #BobChapek #Finance #BobIger

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Listen On: Spotify Apple Podcasts Disclosure: The author and podcast guests are not your financial advisors. Ryan Henderson and Brett Schafer are general partners and portfolio managers at Arch Capita

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