For months, Hollywood has been engaged in a guessing game about Bob Chapek’s future as Disney’s chief executive, with detractors contending that missteps had sealed his fate with Disney’s board: His reign would soon be over.
Not so.
The Walt Disney Company’s board renewed Mr. Chapek’s contract for another three years on Tuesday. That means that Mr. Chapek could remain at the helm of Disney until at least 2025.
Mr. Chapek, 63, faces a daunting to-do list. Disney’s stock price needs to be reinvigorated, to put it mildly. The company’s balance sheet is still recovering from the pandemic. Employee morale needs improving. Disney has been struggling in China, with the Shanghai Disney Resort and Hong Kong Disneyland closing and reopening (and closing and reopening) because of coronavirus concerns, and Disney movies failing to get cleared for theatrical release by the Chinese authorities.
Disney’s domestic theme parks have been packed, with visitors spending more than ever on food, merchandise and hotel rooms. But some investors are worried that a looming recession could hurt park attendance and guest spending. Disney needs its theme parks to keep generating wheelbarrows of cash to offset losses at its streaming division; Disney+ has been growing quickly, but it is not expected to be profitable until 2024.
Nonetheless, the renewal of Mr. Chapek’s contract amounts to a major shot in the arm.
“Disney was dealt a tough hand by the pandemic, yet with Bob at the helm, our businesses — from parks to streaming — not only weathered the storm, but emerged in a position of strength,” said Susan Arnold, the board chair, adding, “Bob is the right leader at the right time for The Walt Disney Company, and the board has full confidence in him and his leadership team.”
Mr. Chapek was groomed by his predecessor, Robert A. Iger, who stepped down from the role in February 2020, a month before the coronavirus pandemic forced Disney to shut down most of its businesses. Mr. Iger remained Disney’s executive chairman until December, when he left the company altogether.
Since then, Mr. Chapek has delivered results that have surpassed Wall Street’s expectations. Crucially, his team has managed to keep Disney+ growing at a much faster rate than expected; the company’s flagship streaming service added nearly 20 million new subscribers worldwide in Disney’s last two fiscal quarters, about 60 percent more than analysts had predicted.
But three factors have caused Disney’s stock price to decline nearly 40 percent since Mr. Iger decamped.
In March, Disney became embroiled in a political storm over its botched response to a new education law in Florida, where the company has roughly 80,000 employees. The law among many things prohibits classroom discussion of sexual orientation and gender identity through the third grade, with limits on what teachers could say in front of older students. L.G.B.T.Q. organizations and a torrent of companies criticized the bill, with opponents calling it “Don’t Say Gay.”
At first, Mr. Chapek tried not to take a side, at least not publicly, prompting an employee revolt. He then forcefully denounced the bill. Right-wing media figures and Florida’s Republican governor, Ron DeSantis, began to rail against “Woke Disney.” In April, Mr. DeSantis revoked Disney World’s designation as a special tax district, a privilege that had effectively allowed the company to self-govern the 25,000-acre megaresort since 1967.
One independent survey of more than 33,000 Americans taken during the height of the debacle found that Disney’s brand was tarnished. On April 29, Mr. Chapek fired Disney’s most senior communications and government relations executive, who had joined the company only four months earlier.
