CryptocurrencyInvestingBanksReal Estate

Disney’s business is booming—but CEO Bob Chapek is stumbling anyway and insiders worry his tough leadership style is causing too much friction

June 16, 2022, 9:00 AM UTC
Disney - Fortune 500 - Bob Chapek
CEO Bob Chapek took over from Bob Iger at the start of the pandemic—but it has been a rocky road since.
Illustration by Alexander Wells

Bob Chapek’s career can best be described as a grueling race: a grind-it-out, sweaty, brutal marathon that looks as hard as it probably is.

The metaphor is apt, as Chapek himself will tell you. While growing up a “latchkey kid” in Indiana, he was a member of the Scrabble club, but where he really channeled his energy was in running track, he told an interviewer in 2021. “I wasn’t the greatest runner in the world, but I did what I could, and every time I wanted to stop because I was tired, I kept going.” That relentless, head-down determination to power through the pain defines his work philosophy as well: “It’s the value of willpower,” Chapek continued. “I don’t have a secret that I wake up early or do XYZ before I go to bed. It’s about a value…There’s been a bazillion things where it could have been very easy to throw in the towel…When you know something is important, have a dogged determination to get ’er done.”  

Chapek’s “dogged determination” saw him advance step after step, rising in the ranks at one of America’s most storied corporations over three decades. In February 2020, he finally reached the top: handpicked by the legendary Bob Iger, he became the seventh CEO in the history of the Walt Disney Co.

Two years in, a strange mashup is emerging: Disney’s stock is way up, and so is revenue. But instead of being lionized by his colleagues, Chapek is laboring under a cloud of culture war issues; clashes with talent; public firings of key executives, pushback from parkgoers over his controversial Genie+ app; and a reputation for focusing too much on the short-term bottom line rather than amplifying the people who make the magic. 

None of the recent mishaps are exactly of his own making, but few think Chapek has handled the string of difficult events smoothly. This month’s unusually public firing of TV content chief Peter Rice stunned Hollywood insiders, aghast at what seemed a graceless breach of industry etiquette, and spooked Disney shareholders who knocked the stock down nearly 4%. The fallout over the incident prompted Disney’s board to issue a rare statement reiterating support for Chapek, whose contract is up in February.

In Disney’s carefully choreographed world, leaders have typically had high EQ—able to finesse changing cultural moments and navigate complicated, nuanced relationships without breaking a sweat. Beloved CEO Bob Iger had a reputation for blending empathy and polish with big, imaginative swings that sent the stock soaring to 439% over his 15-year tenure. Chapek, by contrast, has a reputation for transactional brass tacks and a bottom-line-first ethos. Alison Taylor, executive director of Ethical Systems at New York University’s Stern School of Business, teaches a course on leadership in the 21st century and notes that Chapek seems an offbeat pick for the current times: “Everyone maybe dropped the ball and got this old-school guy. It’s like they ignored the Disney EQ.”

While Chapek seemed to have been anointed by Iger himself, the handoff has been marked by awkward moments. Ben Smith wrote in the New York Times that during a brief period of overlap between the two top executives, Chapek was referred to, “almost kindergarten style, as ‘Bob C,’ while Mr. Iger [was] still just ‘Bob.’” Iger’s intimate retirement party seemed to solidify the uncomfortable dynamic between the two, with Chapek and Iger sitting at different tables, not interacting. 

While every new boss is inevitably compared to their predecessor, nowhere is the scrutiny more severe than at Disney, where employees, former employees, devoted fans, shareholders, global media, and even movie stars have a fervid interest in the person helming the entertainment empire. And many are now wondering whether the qualities that made Chapek a dutiful and capable No. 2 are a fit for the leader—and face—of an iconic, complicated organization like Disney. For all the gains he’s made through years of hard work and perseverance, Chapek’s success now more than ever depends on whether he can answer a key question:

He can run Disney, but can he lead Disney?

Disney’s good soldier

When Chapek was named CEO in February 2020, he seemed a logical choice—a steady hand amid pandemic chaos. With a nearly 30-year Disney career, he intimately knows the business. His roles spanned the president spot at Walt Disney Studios Home Entertainment (then called Buena Vista Home Entertainment); managing distribution for Walt Disney Studios; head of consumer products at the company; chairman of Walt Disney Parks and Resorts; and chairman of Disney Parks, Experiences, and Products. He has a reputation for being dependable and efficient, always delivering for shareholders in whatever project he heads.

Chapek joined Disney after working in brand management at the H.J. Heinz Co. On his watch, Disney moved its home entertainment business from VHS tapes to DVD and Blu-ray; opened Shanghai Disneyland in 2016; created and built Pandora, the Avatar-themed world in Animal Kingdom in 2017; launched Star Wars: Galaxy’s Edge at Disneyland and Walt Disney World; invested more than $20 billion into parks, attractions, hotels, and cruise ships; and saw more than a 100% change in operating income for parks and resorts between fiscal years 2016 and 2019. During Chapek’s tenure the growth in operating income at Disney parks was 85%, or a 13% compound annual growth rate.

But being the CEO of Disney involves an alchemy that makes it a more nuanced job than leading many other Fortune 500 companies.

Drinks are served at the bar at Oga’s Cantina following the unveiling of Star Wars: Galaxy’s Edge at Walt Disney Co.’s Disneyland theme park in Anaheim, California, U.S., on Wednesday, May 29, 2019.
Patrick T. Fallon—Bloomberg/Getty Images

Jim Shull, former executive creative director at Walt Disney Imagineering, explains that the company is a uniquely complex ecosystem. “It’s not something where you can bring someone…hand them the keys, and say, ‘Oh, by the way, go build hotels, deal with the Chinese government, and parks and consumer products,’” he says. “It takes time to really understand all of the pieces and how they work together.” Plus, with Iger continually postponing his retirement, other candidates may have lost patience.

Indeed, there had been other, more obvious candidates for the job. Some felt that individuals like then COO Tom Staggs and DTC chairman Kevin Mayer, who seemed at ease and engaged in a casual working relationship with Iger, were well suited to handle the dichotomy of financial demands and a nuanced relationship with creative talent. (Staggs left Disney in May 2016, Mayer in May 2020. Now the two run their own Los Angeles–based production company, Candle Media.)

But if he wasn’t flashy, Chapek was certainly steady. The opening of Iger’s 2019 book, The Ride of a Lifetime, details two intense, consecutive emergencies at Walt Disney World during the opening of Shanghai Disney in June 2016. Iger and his team were, of course, abroad for the park opening when he got news of a shooting at an Orlando nightclub, just 15 miles from Walt Disney World. The victims included two Disney employees, and, police reported, the gunman had plans to attack the theme park as well. Then, within hours, Iger faced a second emergency: An alligator had attacked a child at Disney’s Grand Floridian Resort. As Iger tells it, in both instances, Chapek was his strong and steady second, managing each awful scenario: “The bond you form in high-stress moments like this, when you’re sharing information you can’t discuss with anyone else, is a powerful one…In every emergency I’ve encountered as CEO, I’ve been grateful for the competence and cool heads and humanity of the team around me,” he wrote. 

Christine McCarthy, senior executive vice president and chief financial officer at Disney, has worked with Chapek for more than two decades and reiterates the competence Iger described in his book. “Bob assumed the CEO role right at the beginning of the pandemic, and it is because of his leadership and strategic vision that Disney not only weathered that unprecedented crisis, but emerged even stronger with the rapid growth of our streaming business and the remarkable rebound at our parks and resorts. Bob has a deep admiration and respect for the Disney legacy and brand, its employees and cast members, and our consumers.”

Yet no one described Iger and Chapek as close. One ex-Disney executive who didn’t want to be named to protect personal relationships says the dynamic between Iger and Chapek was never truly comfortable, with Chapek deferential to Iger, always one step behind, never speaking unless spoken to. The pair’s dynamic was “tight, but not friendly,” the source observed, noting that while the two leaders worked together closely, there was no natural personal connection between them. The former executive describes Chapek as someone who isn’t cool under pressure. Indeed, multiple sources mentioned that Chapek turns bright red when he gets angry or frustrated. Chapek is also known to be a numbers guy to the core, totally obsessed with hitting quarterly growth projections, and less able to relate to the creative minds behind attractions, film, and TV. 

Another floated theory is that Iger began to realize he might not enjoy sharing the stage with a charismatic equal who might one day eclipse his legacy. Chapek’s less shiny veneer may have been attractive from that perspective. Regardless, says the former executive, Chapek’s MO—and struggles—could easily have been anticipated by anyone who knew him well. “Nothing that has transpired with Chapek, for those that know him, is surprising. In terms of where his focus is, how he prioritizes, who he listens to, it’s not surprising. What I think is more surprising is the leadership around him. The checks and balances that didn’t seem to come into play.” 

Disney’s magic makers

While Chapek and Iger did not agree to interviews for this story, several longtime employees paint a picture of a historically supportive and nurturing leadership culture within the company. Lee Cockerell joined Walt Disney World in 1990 to open Disneyland Paris. He worked as executive vice president of operations at Walt Disney World for a decade, under Michael Eisner and Bob Iger. At that time, he says, Disney “just manufactured cash. Michael and Bob were focused on the movie business, and we were just churning out profits and doing great.” Cockerell describes Iger as having loads of finesse, and knowing “how to get his relationship right with people.” While Cockerell never worked directly under Chapek, he admits, “for Bob Chapek, following a guy like Bob Iger must be painful.” Iger’s ability to read the room seems to permeate nearly everything written about him. 

In the 33 years Jim Shull spent at Imagineering, his job was to pitch and then build new park attractions at Disney properties. He did this first under Eisner, then Iger, and just before retirement, Chapek. “I would go to Bob Iger and say, ‘Hey Bob, I have a good idea based on a movie. It’s family-friendly; we can get it there in four years.’ He’d look at me and say, ‘We need it sooner. Can you do this, this, and this to get it there sooner?’ He would be part of the process.” Chapek, on the other hand, says Shull, would kill the idea on the spot if there was not immediate agreement on Chapek’s terms of cost or timing. The conversation would end, and the idea wouldn’t see another day, says Shull.  

Iger, says Shull, developed a cadence with the Imagineering team. He engaged in a negotiation, asking questions and pointing out what aspects of the pitch worked for him, what didn’t, and why, as well as what the team could possibly tuck away for later use. He showed interest; by Shull’s estimation, he always felt Iger was up for being convinced of the merits of a project. “It didn’t mean I always won, but he would listen and be engaged,” says Shull. “I would use the term ‘transactional’ for Bob Chapek. [He] thinks more along the lines of, how does that fit the box and how much does it cost?”

When Chapek’s role was chairman of parks and resorts, Shull says, he seemed nervous in pitch meetings. “He asked the types of questions you’d ask if you came from consumer products,” says Shull. “He talked in units. I felt like he was trying to understand a very different business from what he was used to.” One Disney employee who often sits in on pitch meetings at Imagineering disagrees, noting that Chapek isn’t at all nervous, but in awe of and impressed by the creative team. At the same time, the employee says, Chapek is not afraid to hold the team accountable to important business-minded factors such as ride capacity and guest satisfaction when considering new ideas.

At Disney, hit movies inform everything from experiences to consumer products to attractions. “It’s the tail wagging the dog,” notes Shull. “It’s the difference between the commercialization of content and the creation of content…For instance, Encanto. There was a good song about [the character] Bruno that became huge. That’s not something you know is going to be a hit. It takes a skillful hand in the CEO role to manage the talent, and hopefully they come up with hits for you. If you’re in a transactional frame of mind, it’s harder to do that.”

We don’t talk about Iger

Certainly Iger’s finesse carried over to his impeccable timing—he announced Feb. 25, 2020, that he would retire, mere weeks before Disney parks began shutting their doors because of COVID. Chapek was named his successor shortly afterward. A month later Iger, speaking at the company’s shareholder meeting, said, “I can’t think of a better person to succeed me in this role.” He had previously joked with New York Times columnist Kara Swisher that he flunked retirement four times. He said that he had promised himself he’d leave the Disney CEO post “when I felt like I still had it in me to do more, but that things were good and I didn’t want to tempt fate.”

ORLANDO, FLORIDA – SEPTEMBER 30: Bob Chapek, (L) Walt Disney Company CEO and Bob Iger, Executive Chairman of Walt Disney Company speak during “The World’s Most Magical Celebration” Walt Disney World Resort 50th Anniversary at Magic Kingdom on September 30, 2021 in Orlando, Florida.
Gerardo Mora—Getty Images

It was two months later, some surmise, that Iger angered Chapek with an interview he gave to the New York Times media column. In a true Prince Charming moment he both offered his services—and insinuated that Chapek needed them: “A crisis of this magnitude, and its impact on Disney, would necessarily result in my actively helping Bob [Chapek] and the company contend with it, particularly since I ran the company for 15 years!” 

Immediately, cracks began to show.

The all-stars from Team Iger had slowly begun to peel off from the company (chief human resources officer Jayne Parker in June 2021; head of PR Zenia Mucha in July 2021; chief creative officer at Walt Disney Studios Alan Horn in October 2021; and general counsel Alan Braverman in December 2021, to name a few). Chapek began to hire his own team and orchestrated a major reorganization: Disney would, under his plan, center its creative effort and focus on Disney+ and other streaming channels. While analysts expected the company to completely tank in the wake of COVID park closures and travel disruption, Chapek’s lean toward streaming resulted in the exact opposite outcome. Disney+ reached 100 million users well before expected, and the company’s revenue rose 45% by the close of 2021.

At the parks, Chapek had his own ideas, too. In October 2021, the company launched Genie+ at Walt Disney World Resort. The service is a tech-heavy, monetized version of Disney’s long-loved, totally free FastPass system. With Genie+, park goers are beholden to an app on their phones in order to book (and pay additional fees for) passes to skip the lines on select rides. The service is meant to save parkgoers time, helping them organize and plan their day, the company said in a statement on its website announcing the launch. What’s more, say analysts following Disney stock, Genie+ is a profits driver, allowing for more time eating, drinking, and shopping inside the park gates. 

But quickly a parade of devoted Disney fans began to push back, angry that the company decided to monetize a perk guests long felt was baked into the Disney experience and into the already expensive price of entry. “We just returned home last night after a week in FL.,” reads one November 2021 comment on the company’s parks website. “We typically go every year. I was so disappointed with [the] Genie service. For my family of four, we spent approx $150 more per day on Genie and still weren’t able to get on the rides we wanted.”

By 2022, Disney’s stock price had dropped more than 30% from its 2021 high. At Walt Disney World this spring, there were protesters outside the gates livid about the company’s lack of a sufficient response to Florida’s Don’t Say Gay bill, and a mixed bag of sentiments inside among Disney devotees. One family of six from Kansas City, who have made the trip every other year for decades, admitted they’d likely stop coming so regularly, as they just can’t afford the new pay structure. Instagram and Twitter are peppered with similar sentiments. One July 2021 Instagram post from @diswiki reacted to the initial news of Chapek’s decision to retire FastPasses: “Well, if there was ever a sign that it may be time to hang up the ears…this may be the final straw…This new management is killing the Disney magic…@disney is already expensive as it is. Doing things like this will only price out even more families and kids. How can this be right?”

Then in July 2021 came Chapek’s decision to play hardball with Black Widow star Scarlett Johansson, who sued the company after the film was released simultaneously in theaters and on Disney+, cutting her earnings by a sizable chunk. Disney publicly revealed the details of her contract and sparred with her in the media, something that Iger was rumored to be embarrassed by

The dynamic seemed to further deteriorate as Disney found itself at the epicenter of a culture war around Florida’s Parental Rights in Education bill, a.k.a. Don’t Say Gay. While Chapek initially stayed mum, Iger quickly tweeted, “If passed, this bill will put vulnerable, young LGBTQ people in jeopardy.” It wasn’t until a few weeks later that Chapek spoke up. He said in a staff memo, “I want to be crystal clear: I and the entire leadership team unequivocally stand in support of our LGBTQ+ employees, their families, and their communities. And, we are committed to creating a more inclusive company—and world.” A group of anonymous Disney employees launched whereischapek.com with a petition and details on a Disney Do Better Walkout, and a public petition on change.org has garnered more than 114,000 signatures calling for Chapek’s ouster as a result of his lagging response to the bill. In retaliation for the company’s stance on the bill, Florida Gov. Ron DeSantis signed in April a law that will dissolve (as of Jun. 1, 2023) the company’s special tax status established in 1967 with the Reedy Creek Improvement District. In May, county residents filed a second lawsuit against the dissolution (the first was dismissed by a federal judge), saying that Disney will need to cover the $1 billion in bond debt they’ll have to shoulder if the district is eliminated. 

Disney’s streaming bet

In the midst of all the drama, Chapek’s focus has been exactly where it always has: on the numbers. Disney’s total revenue rose 23% in the second quarter of this year to $19.2 billion compared with last year’s performance. Per capita spending at Disney parks increased by more than 40%, exceeding 2019 levels, while revenues at parks, resorts, and experiences doubled to $6.7 billion during the quarter. In terms of streaming, Disney+ gained an additional 7.9 million subscribers in the quarter for a total of 137.7 million (surpassing the 135 million analysts expected). And with a quick look back on his tenure to date, it hasn’t gone half bad in terms of shareholder deliverables. In many ways 2020 was a good year for Chapek. By Dec. 28, 2020, Disney stock had recovered all its pandemic losses and then some, hitting $181.18 per share, up from its $85.9 share price low on March 18, 2020. 

Chapek wrote in a January 2022 memo to employees that the company would need to meet its customers where they are, following along as technology forever changes entertainment: “We must evolve with our audience, not work against them.” By the May 11 Q2 earnings call, Chapek was fluid, talking numbers and addressing analyst questions about the metrics around streaming and Disney parks revenue, confident in the company’s future. His overall focus, he said, is a long-term play for “a high-quality creative pipeline,” a nod to the fact that Disney is hard at work building out a metaverse that’s unlike anything the entertainment industry has yet seen. “For our storytellers, it’s like taking out the lane markers in the swimming pool, and telling them you have the whole pool to swim in,” Chapek told Fortune in January. In fact, in the last few weeks there’s been both a shakeup and an infusion of new blood across Disney’s topline leadership. In early June, Chapek hired former Apple games exec Mark Bozon as Disney’s first VP of next-generation storytelling. Then in early June, Chapek made a surprising move to fire Peter Rice, chairman of Disney General Entertainment Content. Rice, it has been widely reported, is beloved among Hollywood peers and was under contract until the end of 2024. Disney spokespeople quickly announced that Rice would be replaced by Dana Walden, chairwoman for entertainment for Walt Disney Television, who has worked closely with Rice for several years to churn out hits on ABC and Hulu. The move came one day after Susan Arnold, chairwoman at the Walt Disney Company, stepped up to back Chapek. “The strength of the Walt Disney Company’s businesses coming out of the pandemic is a testament to Bob’s leadership and vision for the company’s future,” she said. “In this important time of business growth and transformation, we are committed to keeping Disney on the successful path it is on today, and Bob and his leadership team have the support and confidence of the Board.”

And while the company’s financial performance has been decent, there’s still a sense that Chapek is missing…something. Gary Hamel, cofounder of the Management Lab and coauthor of Humanocracy, argues that there are certain ephemeral qualities to leadership that simply can’t be taught. “Every board wants to find a leader with the creative skills of Steve Jobs, the integrity of Desmond Tutu, and the resilience of Lee Kuan Yew,” says Hamel. “It’s hard to find and certainly not what a board can expect.” And, he says, so much of this comes down to instinct, self-awareness, and straight-up DNA. “When you succeed someone like Iger, you have to see what your strengths are and adapt your strategy accordingly.” 

In any CEO succession plan, there’s inevitable comparison and Monday-morning quarterbacking, adds Logitech CEO Bracken Darrell. While Darrell knows neither Iger or Chapek personally, he’s been watching the Disney fallout and admits that he can’t help but consider his own experiences at General Electric, and the CEO baton pass between Jack Welch and Jeff Immelt. “I was at GE when Immelt came in after Welch,” he says. “The approaches were so different. It just shows how hard a succession is.” 

Interestingly, Darrell’s take is that Chapek was given a tremendous advantage with the timing of the pandemic and park closures. “It’s always better to have a problem to solve,” he says, noting that coming in when things are perfect only leaves a margin for error. NYU’s Taylor says another piece of the Iger/Chapek case study cuts right to what we want in a CEO to begin with. “There is interesting data on how CEO job descriptions have massively changed,” she says, citing 2021 data from executive search firm Heidrick & Struggles and the National Bureau of Economic Research. “Less barking orders at the top; a lot more emphasis on EQ and networking and sustainability.”

In the end, Disney chose a runner. As for becoming a leader? The jury’s still out, but you can certainly count on one thing: He’s working to get ‘er done.

Sign up for the Fortune Features email list so you don’t miss our biggest features, exclusive interviews, and investigations.