And the longtime CEO’s influence is already being felt upon his return.
On Monday, Iger made his first big move as CEO — firing Kareem Daniel and restructuring Disney’s Media and Entertainment Distribution (DMED) division. DMED was one of Chapek’s first big flings as CEO, but the reorganization has been branded a controversial move that has long upset veterans and reportedly “confused” workers.
“Over the coming weeks, we will begin to implement organizational and operational changes within the company,” Iger wrote in an internal memo obtained by Yahoo Finance and sent to employees Monday afternoon.
Egger added: “As you know, this is a time of change and tremendous challenges in our industry, and our work will also focus on creating a structure that is more efficient and cost-effective… Our goal is to have the new structure in place in the coming months. Without a doubt, DMED elements will remain, But I think fundamentally storytelling is what fuels this company, and it’s part of how we organize our business.”
At first glance, Wall Street analysts seemed optimistic that Iger’s return would improve the fortunes of stocks that had lagged behind during the bumpy tangle. But the decision still comes with its own set of risks.
“The transition creates some uncertainty that we all need to keep in mind in terms of strategic changes,” Kotgen Maral, an analyst at RBC Capital Markets, told Yahoo Finance Live early Monday, before news of Daniel’s departure was announced.
“While the long-term opportunity remains very attractive, we still need to know the next steps to better assess the near-to-mid-term effects on stocks depending on which path Eger takes for his state for ‘renewed growth,’” Maral said, stressing. However, the Board of Directors’ decision indicates more urgency in setting the company for the next decade.
Maral referred to the company’s press release, which noted that Iger will serve as CEO for two years, with a mandate from the board to “set strategic direction for renewed growth and work closely with the board in developing a successor to lead the company at the end of his term.”
“I think investors would like to see, over the next couple of years, a bit more detail and reshaping [Disney’s] planning with the creative side of the business,” said the analyst, adding that pricing strategy and the evolution of its direct-to-consumer portfolio will also be our top priority.
However, Maral said, “The reality is that with Egger coming in, there is only so much he can do in practice within his two-year tenure.
“The most important thing is: What is it actually doing to change the strategic direction of the company? That’s what we’re looking forward to discovering.”
Chapek’s departure comes just months after Disney’s board of directors voted unanimously in June to extend his contract for another three years, through 2025. At the time, the board noted that Chapek’s leadership was essential in helping the company weather adverse pandemics.
However, his tenure has been one of controversy – from political battles and top-tier talent woes to contentious reorganizations and the looming shadow of Egger, who has spoken out against some of Chapek’s decisions.
Since Chapek took over as CEO of Disney in late February 2020, Disney shares are down about 19%; The S&P 500 is up about 34% over the same period.
Alexandra is the chief media and entertainment correspondent for Yahoo Finance. Follow her on Twitter aliecanal8193 and email it to email@example.com
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