Disney’s board threw its support behind Chapek, but the firing sent shock waves through Hollywood, sending Disney shares 3.7% down on the day and leading executives to clamor over the abrupt nature of the dismissal.

Rice was one of the most senior executives at the company at the time of his dismissal—in charge of a $10 billion annual budget and enjoying oversight of 300 TV shows across Disney platforms including ABC, the Disney Channel, Disney+, Hulu, and FX. His departure comes three years after he was brought into Disney as part of the March 2019 acquisition of his previous employer, 21st Century Fox, and just months after he signed a multiyear contract with a large bonus that ran until 2024.

Here are several issues that reportedly contributed to Rice’s dismissal.  

Too highly compensated?

Executives at 21st Century Fox were paid more than those at Disney, so after Disney closed the $71.3 billion deal, it sought to bring the high compensation of Fox entertainment executives in line with the “more modest” salaries at their new home.

With his contract renewal, Peter Rice had his compensation cut by $5 million, or around 20%, in order to bring it in line with other Disney executives, the WSJ reported.

Rice’s pay was still in the $20 million range at the time of his dismissal, however, according to the Journal.

Brought in Fox blood

After arriving at Disney, Rice began removing several Disney veterans and replacing them with Fox staff. This ousting of people who had been working at Disney for their entire careers reportedly led to a schism between Rice and long-term Disney employees.

Rice’s ability to make such personnel moves changed when Chapek took over from his predecessor, Bob Iger, and reorganized the company’s media and entertainment businesses; this centralized budget power under Chapek’s right-hand man, Kareem Daniel, making it harder for Rice to change Disney’s org chart without being questioned.

Cultural tension with Mouse lifers

Disney executives often spend their entire careers with the media giant and are known as “Disney lifers.” This crew of people did not welcome Rice and viewed him with suspicion, according to the Wall Street Journal.

Kareem Daniel, the Chapek lieutenant who heads Disney’s media and entertainment distribution, started as a Disney intern in 2006. He clashed with Rice, as did Rebecca Campbell, head of international content operations, who joined the company in 1997; chief financial officer Christine McCarthy, who has been at Disney since 2000; and former Disney executive Kevin Mayer, who worked at the company from 1993 to 2020.  

Budgeting questions

Rice also took a different approach to managing his budget. In 2021, the former Fox exec wanted to spend unused funds in his programming budget on marketing and promotion for several shows including the ABC comedy Abbott Elementary and the Hulu series Dopesick and Only Murders in the Building.

This was an unusual move at Disney since marketing and promotion for the shows were divided into two different budgets. The idea was met with pushback from the company’s distribution and finance groups; Rice made a case to Chapek, who gave his approval.

This was a regular occurrence, according to the Journal report, which indicated that when Rice didn’t get his way, he would often go to Chapek.

Renewed two struggling shows

People at Disney also reportedly disagreed with how Rice allocated resources to programming.

Rice’s decision to renew two shows on the Disney+ streaming service—The Mighty Ducks and Big Shot—was questioned, the report said, as both shows cost more than $50 million and had not seen enough success to merit spending on additional seasons.

However, some who know Rice say he was struggling with the challenge of producing new shows during the COVID-19 pandemic, and both programs had been positively reviewed. Additionally, Rice was reportedly motivated to produce the shows because he thought the platform’s programming wasn’t stable enough, and he worried viewers would get frustrated at series disappearing soon after launch.

The potential successor

The tensions within Disney happened as a time when Rice was commonly being cited as a candidate for a senior position at another company or as a successor to the increasingly embattled Chapek.

Rice is admired in Hollywood circles and said to be viewed as talent friendly, a characteristic he and former Disney chief Bob Iger shared. Chapek, meanwhile, struggled to shake the reputation of being an outsider after he 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, and over his changing response to Florida’s “Don’t Say Gay” bill—incoming legislation that will prohibit classroom discussion of sexual orientation or gender identity in Florida’s primary schools.

While Rice didn’t promote himself as a replacement for Chapek, he did little to stop the speculation—a move that harmed his position at Disney, the Wall Street Journal said.

The situation came to a head with Disney’s share price tumbling and Chapek’s role in question, and the Disney CEO announced that Rice would be replaced by Dana Walden, the chairman of entertainment at Walt Disney Television who previously worked at Fox under Rice.

In her first public comment since being elevated to chairman of Disney General Entertainment, Walden sent a memo to staff expressing her “immense appreciation to Bob Chapek for giving me this opportunity of a lifetime,” Deadline reported.