Bob Chapek’s Cost-Cutting Caused a “Rift Between Creative and Corporate Leadership” at Disney

Bob Iger plans to make some major changes at The Walt Disney Company now that he’s back as the company’s CEO.

Bob Iger ©New York Post

Iger’s return has been closely watched by Disney fans, investors, shareholders, and the Board of Directors. Each group has its own hopes for what changes Iger will implement first. To get an idea as to Iger’s current agenda, we can look at recent reports that provide a clue about what’s going on inside the company now.

Part of the reason that the Board of Directors brought Bob Iger back was so that he could “set the strategic direction for renewed growth” at the company. In a filing with the U.S. SEC, Disney specified that “Mr. Iger will initiate organizational and operating changes within the Company to address the Board’s goals.”

©Disney | Walt Disney Company Headquarters

We previously learned that those kinds of changes would be happening, and we’ve already seen some executive changes at Disney. But now we know more about what specifically will change.

Bob Chapek’s Plan for Disney

The Wall Street Journal reported that Disney had previously been working with “consulting firm McKinsey & Co.” in order to “centralize control of major spending decisions.” Apparently, the changes recommended by McKinsey and implemented at Disney triggered “an uproar from top creative executives.”

Bob Chapek, the previous Disney CEO, was focused on cost-cutting measures in an effort to bring profits back up after the worldwide pandemic and mitigate the effect that streaming losses had on the company. Disney CFO Christine McCarthy led the “cost-cutting effort.” McKinsey was brought in as part of this plan “to review Disney’s operations and identify redundancies and cost-saving opportunities.”

©Disney

Part of McKinsey’s recommendations involved “taking decisions about spending on marketing and publicity for films and television programs out of the hands of studio executives and instead centralizing them in another part of the company.” Those decisions were made by the Disney Media and Entertainment Division (DMED) instead of by content executives. Kareem Daniel (who left Disney after Bob Iger’s return) led the DMED.

Some of the decisions made by the DMED included how films would be promoted and where they would be released (in theaters or on a streaming service). Reportedly, “Relations between Mr. Daniel’s unit and Disney’s creative leaders were often strained.”

Kareem Daniel ©Hollywood Reporter via Getty Images

The Wall Street Journal reported that these and other emerging plans “rankled some of the entertainment company’s top content executives” and “became one of several points that exposed a further rift between the creative and corporate leadership of the company during Mr. Chapek’s brief reign as CEO.” Some executives reportedly said they “felt that the changes would strip them of nearly all of their power.”

What Changes Will Bob Iger Make?

Now that Bob Iger is back, he’s already made a couple of major changes to the plan that McKinsey recommended and Chapek and McCarthy instituted. For one, Kareem Daniel has left Disney and Iger has announced that the DMED structure will be done away with.

©Alberto E. Rodriguez / Getty Images

Iger has said that his intention is “to restructure things in a way that honors and respects creativity as the heart and soul of who we are.”

WSJ reported that “the McKinsey plans weren’t completed, and it isn’t clear whether Mr. Iger will implement any of the consultants’ recommendations.” We’ll watch and see if Iger plans to continue on the path started by his predecessors.

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Iger sent a memo on his first day as Disney’s returning CEO, in which he formed a committee “consisting of top Disney executives including Ms. McCarthy, studios chairman Alan Bergman, Disney General Entertainment Chairman Dana Walden, and ESPN Chairman James Pitaro.” This committee is charged with developing “the design of a new structure that puts more decision-making back in the hands of our creative teams and rationalizes costs.”

It sounds like Iger plans to be more of an advocate for the creative teams and content leaders, although there is still a need to “rationalize costs” and cut back on spending.

©Disney

Learn more about Bob Iger’s return in the following posts:

• Disney Announces Organizational and Operating Changes as a Result of Bob Iger’s Return
• “They Brought This on Themselves” — Governor DeSantis Responds to Disney CEO Bob Iger’s Comments on Florida Legal Battles
• Every Major Change Since Bob Iger Returned as Disney’s CEO
• Will Bob Iger Reverse Bob Chapek’s Decisions?
• CEO Bob Iger Comments on Disney Park Pass Reservation System
• The FIRST Thing Disney Fans Want to See from Bob Iger

We’ll continue to watch for more news about the changes at Disney, so stay tuned for all the latest updates.

Click here to see 7 BIG challenges Bob Iger will face as Disney’s new CEO.

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