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Disney’s under-pressure CEO just made his biggest power move to date—and it has tanked morale

June 10, 2022, 12:44 PM UTC

The Walt Disney Company on Thursday abruptly fired Peter Rice—the head of the company’s TV division—for being an ill fit with its corporate culture. But while Disney’s board threw its support behind CEO Bob Chapek and his ousting of Rice, much of the rest of the world was less impressed.

Following the dismissal, Disney’s shares dropped 3.7% on the day, and a chorus of industry executives slammed Disney management—anonymously—in the Hollywood press.

“Chapek just made another massive mistake,” one industry executive told The Hollywood Reporter, while a Disney insider claimed, “It’s not good for the company. Morale is terrible.”

Many executives are shocked at the way Rice was fired. According to one high-level executive at a Disney competitor, “At Disney, at that level, you don’t treat [an executive] that way. You give him a production deal, you give him a cover story, you give him a party, you walk them out the door. If you have to execute someone, there are ways to do it. It’s the lack of touch. It’s like this guy [Chapek] doesn’t know how things are done in our town.”

This is the latest headache for Bob Chapek, whom CNBC described as having “a harder exterior and at times, according to colleagues, struggles with emotional intelligence,” and another in a string of difficulties he has faced in following his much-loved and respected predecessor, Bob Iger.

Since beginning his tenure, Chapek has faced staff walkouts over an insufficient response to the “Don’t Say Gay” bill—incoming legislation that will prohibit classroom discussion of sexual orientation or gender identity in Florida’s primary schools—right after deciding to move 2,000 of Disney’s theme park engineers, or “Imagineers,” from Southern California to Florida to take advantage of lucrative state tax credits.

Chapek also reorganized the company’s media and entertainment businesses, and centralized budget power under his right-hand man Kareem Daniel, prompting anger from Disney’s veteran division leaders for taking away their profit-and-loss power. And Chapek publicly feuded with Scarlett Johansson over Disney’s release of Black Widow on Disney+ while the movie was still in theaters, which she claimed deprived her of potential earnings.

Conflicting reports

Reports diverge on whether Rice’s firing was expected or not.

Some were shocked at the ousting of Rice—who was in charge of shows across Disney platforms including ABC, the Disney Channel, Disney+, Hulu, and FX—and compared his commitment to his team with Chapek’s supposedly more distant leadership. “I wonder if Chapek has even been aware that Rice held Zoom town halls and Q&As throughout the pandemic that really made him a presence in the lives of us rank-and-file schlubs,” a Disney executive told The Hollywood Reporter.

But other reports claim that Rice was indeed not the best fit for Disney. Rice alienated Disney executives after coming from Fox’s looser culture and failing to adapt to the “buttoned-up style” at Disney, the New York Post reported. They called his exit a “long time coming.”

Rice joined the company from his previous role as president of 21st Century Fox. During his tenure at Fox Searchlight, Rice turned the company into an Oscar and box office superpower, producing hit movies like Little Miss Sunshine, Sideways, and Slumdog Millionaire.

Filmmakers came out to praise Rice. “Peter’s the best executive I’ve ever worked with, and I know many other artists would agree,” said Danny Boyle, the director of Slumdog Millionaire. He added that Disney would be “weaker” and “more corporate without him,” according to the New York Times.

“This is about two very different cultures. [Peter] was wildly successful at Fox,” a former Disney exec told the Daily Beast. “I have a lot of admiration for him. What you are seeing is a culture clash playing out.”

What seems clear is that Chapek’s position is not as secure as it could be. Many in the industry have raised eyebrows at the rare public comment made by Disney chairwoman Susan Arnold, saying Chapek has “support and confidence” from the board.

Some speculate that while Chapek will get his contract renewed in February, the fact that the board hasn’t renewed it already is an indicator of the lack of confidence in his leadership.

“You let the CEO get within a year of his contract being up,” one longtime industry player said to The Hollywood Reporter. “That by itself is a statement of nonsupport. A vote of confidence is nonsense. It is the most Mickey Mouse company. It’s so dysfunctional.”

Rice will be replaced by his second-in-command, Dana Walden, who came over with Rice after Disney acquired Fox in 2019. Rice most recently renewed his contract at Disney in August, and it runs until the end of 2024. Disney will pay him out, the New York Times reported.

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