Why History Says Bob Iger Will Fail

Bob Iger replaced Bob Chapek as Disney’s CEO back in November of 2022 and quite a few things have happened since.

Since the initial announcement, we’ve learned about why this decision was made, how long Iger will be around, and what his plans and goals are with the company. Many Disney fans and celebrities were excited to see Iger return, so why do some experts think Iger will fail?

It all boils down to the fact that Iger is a boomerang CEO meaning he was CEO, stepped back, and returned to the position. History actually indicates that boomerang CEOs do not have a great track record for being a success.

Burbank Disney Company Headquarters ©️LA Times

Disney is not the first to bring back a CEO in hopes to save the company from its struggles. Chapek took over as CEO in 2020 and made many changes during the pandemic which upset Disney fans including the introduction of Park Pass reservations and Genie+, plus he was involved in several controversies including the handling of the situation surrounding Florida’s Parental Rights in Education Bill, which led to the bill that will dissolve Disney’s Reedy Creek Improvement District and a Scarlett Johansson lawsuit.

We now know that Iger was asked to come back after the disappointing results for Disney+ in the Q4 earnings call for fiscal year 2022 — he was essentially brought back to save the company after the streaming service reported losing billions.

Since then, we’ve learned more about why Iger is back with the main points being to restructure the media department and find a new successor as CEO when his time is up.

In February of 2023, a major reorganization of some of the segments at the Walt Disney Company was announced. So it seems Iger has put steps in action to address that first point (restructuring the media department). Iger has noted that, in his view, the best way to spread creativity would be to make sure that the creatives at Disney feel empowered.

So, Disney is working to return greater authority to creative leaders in this new structure. But they’re also working to make creative leaders accountable for how their projects perform.

To read our full post about this major company changes, click here

But what about picking a new successor? Disney’s already working on that too. Disney has announced that Mark Parker will become the new Chairman of the Board, effective after the 2023 Annual Meeting of Shareholders.

Parker’s top priority? Finding someone to take over when Iger is gone. Mark Parker will be assisting Iger with this goal by leading the Succession Planning Committee of the Board. In an SEC filing from 2023, Disney also indicated that “Bob is simultaneously prioritizing assisting the Board
in identifying, developing and mentoring a successor CEO, a process which has already begun.”

Still, it’s hard to say if Iger’s changes and planning in these areas will be successful, especially since he said picking Chapek as his successor was a mistake. Here’s why analysts say he could fail.

According to The Wall Street Journal, 22 CEOs since 2010 have left their positions only to return later with most being asked to help get the company back on track. 13 of those 22 CEOs came back permanently while the other 9 were back on an interim basis, according to an analysis by consulting firm Spencer Stuart.

Of the 9 interim leaders, most stayed with the company for less than a year. When it comes to the 13 permanent CEOs, the stocks increased an average of 2% during their second time as CEO — the first time, stocks averaged an increase of 6%. In 2022, Disney had one of the worst years for stock prices in about 5 decades even though stock was on the rise after the announcement of Iger’s return.

But 2023 has been a bit more promising, with stock values on the rise (as of early February).

The Wall Street Journal notes that Jim Citrin, a leader at Spencer Stuart, says when a company goes downhill, they look to bring back leaders who created a lot of value in the past. Citrin said, “If things went off the rails afterward, then it’s natural for boards to think about going back, either on an interim basis or a long-term basis.”

But why is it unlikely that Iger will succeed? Citrin pointed out that CEOs who don’t perform well on the second time around usually deal with external factors including “commodity prices, deal-making conditions and the overall economy.” If CEOs return and try to stick to the same tactics, it’s more difficult to be successful.

It is also more difficult for CEOs to return to industries that evolve quickly, according to The Observer. Travis Howell, an assistant professor at the University of California, said, “In fast-changing, dynamic industries, the company has changed so much between the CEO’s two stints that sometimes they just barely recognize the company.”

What Iger does have in his favor here is that he was not gone from Disney for very long. After he stepped down, he remained on the Board of Directors and it’s only been about 3 years since Chapek took over in 2020. The Odyssey also found that the longer a CEO has been away from the company, the less likely they are to succeed. Compared to others, Iger does have time on his side.

Iger’s current contract ends on December 31st, 2024, which doesn’t give him much time, so we will be closely watching for the changes he makes to the Company. If you’d like to learn more about Iger’s return, check out some of our posts below:

Stay tuned to AllEars for updates on Bob Iger.