On October 1, 2005, Bob Iger became CEO of The Walt Disney Company. 115 days later, it was announced that Disney would be acquiring Pixar which made a statement about Bob Iger’s vision for his tenure at Disney. On February 25, 2020, Bob Chapek became CEO of The Walt Disney Company. 115 days later, Walt Disney World was just making plans to reopen while the opening of Disneyland was still 10 months away. Basically, as soon as Bob Chapek took the reins, he was facing unprecedented challenges to nearly all of Disney’s businesses. Parks were closed, theaters were shuttered, and ESPN had no sports to show. The impact was magnified that Disney had just spent a bunch of resources on the launch of Disney+ and the acquisition of 21st Century Fox. If Bob Chapek had dreams of a major acquisition that would set the tone of his era, his balance sheet would not be able to execute it. Instead of moving Disney forward, he had to focus on keeping it afloat.
Of course, none of what was holding Chapek back at first was his fault. He didn’t cause a global pandemic nor instigate the decisions to acquire 21st Century Fox, nor launch Disney+. When it comes to executing a growth vision, he has been constrained by a balance sheet that has been drained. As Walt famously said, “It takes a lot of money to make dreams come true.” And right now, Disney doesn’t have it. As of the end of Disney’s last quarter which ended in June, Disney’s borrowings were $46 billion. Compare this to $18 billion at the end of June 2018 or $9 billion when Bob Iger took over. And while interest rates have been low, recent hikes put even more pressure on Disney to prioritize lowering their debt over dividends or reinvestment.
So when will Disney fully transition back to a forward-looking company? Bob Chapek has made it clear that December 31, 2022, when the Disney100 Celebration kicks off during Dick Clark’s New Year’s Rockin’ Eve with Ryan Seacrest, he will officially be the man that is leading Disney into its second century of storytelling. Across products, parks, movies, television, and streaming, Chapek’s team is finding ways for the entire organization to celebrate. Some highlights include new nighttime spectaculars at Disneyland and Wish from Disney Animation, which pays tribute to all of the animated features that preceded it. From the outside, it appears that Bob Chapek has committed to making the celebration a big deal. But will this be when Bob is able to execute on his growth strategy?
Disney has yet to restore its dividend or return to the level of reinvestment in the parks to pre-pandemic levels. Disney+ is not expected to become profitable for over a year. While there are many questions about the financial soundness of streaming services, if Disney is able to turn Disney+ into a money maker from money loser, Bob Chapek may be able to execute the next wave of Disney growth. But even under Disney’s rosiest of predictions, the Disney100 celebration will have been over.
While it may be a bit before we return to the Iger-era growth, it would appear that Disney100 is being used as a way to restore optimism before the true growth can begin. Fans that have put up with park closures and movie delays during the pandemic are ready for Disney to be revitalized. While the next big growth opportunity may be further away, Bob and his team may view Disney100 as a way to re-energize Disney’s employees and fans while they get their financial house in order.
Will Bob Chapek be able to execute? I have no idea. But I will give him credit for trying. His enthusiasm for the anniversary, as well as other fan-focused events such as D23, shows that he values those that love the company, even when they don’t love him back. Recently he met with several folks from the Disney fan community, including a representative from Laughing Place. This off-the-record conversation exposed those in attendance to the introverted leader of Disney who has to face the onslaught of social media criticism that is sometimes warranted and often not. While a lunch meeting does not mean he always makes great decisions, the choice to take the time to meet with “fan media,” does show his understanding that Disney fans are an important part of the company’s audience. When he ran Disney’s parks business he would often meet with the fan sites during big media events that gave us unprecedented access. Whether you agree with his choices or not, we do have to appreciate the value he puts on fans.
The impending celebration may not involve the investment of the Disney Decade or Bob Iger’s park expansions, but it will give fans a reason to have fun. But while we are remembering Disney’s history, keep an eye out for where Bob Chapek plans to take Disney once the celebration is over. If lucky, that will truly be a reason to celebrate.