Disney board meets with chief executive’s contract up in the air

Disney will on Wednesday launch its new cruise ship, Wish, with great fanfare from Port Canaveral, Florida, but arguably the more significant event for the company and its under-fire chief executive Bob Chapek will be a two-day board meeting that kicks off Monday.

Questions about Chapek’s future at Disney emerged this year as the company became embroiled in controversy over its handling of the so-called Don’t Say Gay bill in Florida.

Monday’s long-scheduled meeting come less than three weeks after Disney’s board gave Chapek a vote of confidence after a bruising few months.

But that show of support failed to quell the speculation in Hollywood about Chapek’s future, with former executives noting that a stronger show of support would have been to renew his contract, which ends next February. A Disney spokesperson declined to comment.

Rich Greenfield, an analyst at LightShed Partners, said Chapek has had high-profile blunders such as his handling of the Florida bill and a contract dispute with actress Scarlett Johansson. But his overall tenure has been solid.

“He’s got a bad rap in Hollywood but that’s unfair,” Greenfield said. “In terms of how they navigated through the pandemic, I don’t think Chapek is doing a poor job. The bigger question is what does Bob Chapek want Disney to look like going forward, and does he have the board support to do that.”

Chapek, 61, decided to hold the meeting in Florida despite Disney’s recent tensions with the state’s governor, Ron DeSantis. In April, DeSantis signed legislation to strip Disney of its special tax status in Florida after the company criticised the Parental Rights in Education law, which restricts discussion of LGBT+ issues in primary school.

The controversy piled pressure on Chapek from Disney’s LGBT+ employees, Republican politicians and conservative commentators. “There have been several PR nightmares,” under Chapek, said Jessica Reif Ehrlich, an analyst at Bank of America. “But I think they are past the worst. They have great brands and are managing them well.”

This month, Chapek sacked Peter Rice, the company’s top TV executive, who some saw as a potential candidate for his job. “This was all about [Chapek] trying to solidify his position,” said a former Disney executive. “This was Game of Thrones.”

Rice’s exit left no obvious Disney executives who could rise to the CEO job, though some company insiders have noted that Rice never enjoyed broad support from the group’s board. There has also been speculation that Chapek’s predecessor, Bob Iger, 71, could return to the company, which Greenfield and other analysts dismiss.

“If they’re about to fire [Chapek] there doesn’t appear to be an heir apparent,” Greenfield said. “There’s no obvious choice and I don’t buy the idea that Iger is coming back. It would seem odd for him to come back now.”

Chapek succeeded Iger as chief executive in 2020, though Iger remained at the company as chair emeritus until the start of this year. The Covid-19 pandemic broke out within weeks of his taking the job, forcing Chapek to close theme parks and other divisions. But the Disney Plus streaming network boomed during the pandemic.

Disney’s streaming business has continued to grow this year, in contrast to industry pioneer Netflix, which has lost subscribers for the first time in a decade. Disney’s theme park business is also recovering strongly, despite the continued closure of parks in China, analysts said.

But the company’s shares are down 47 per cent over the past year, compared to an 11.3 per cent decline for the S&P 500 index, as investor sentiment on the streaming industry shifted. On Wall Street, 80 per cent of analysts have a buy rating on the stock.

Ehrlich noted Disney has a strong content slate for the rest of the year, with the box office releases of Black Panther: Wakanda Forever in November and Avatar: The Way of Water in December.

“The word of mouth on the film line-up is incredible,” she said, adding that the Disney Plus streaming service has a strong season ahead with series such as Obi-Wan Kenobi and Ms Marvel. “The business is solid.”

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