Disney's choice of parks boss as new CEO confuses the company's Wall Street narrative

Key Points
  • Disney selected Bob Chapek as its new CEO, effective immediately, replacing longtime chief Bob Iger, who will stay on as chairman.
  • Selecting Chapek over Kevin Mayer, who runs Disney's streaming services, is confusing given Disney's Wall Street narrative.
Bob Chapek, chairman of Walt Disney Parks and Experiences, stands for a photograph at an unveiling event of Star Wars: Galaxy's Edge at Walt Disney Co.'s Disneyland theme park in Anaheim, California, U.S., on Wednesday, May 29, 2019.
Patrick T. Fallon | Bloomberg | Getty Images

Disney's Wall Street narrative the past two or three years has been very straightforward: We're leaning into streaming video. Value us like Netflix, not like your father's Disney.

The story has worked. Disney racked up a whopping 28.6 million paying Disney+ subscribers in its first three months. And its multiple has crept higher — not Netflix high, but higher than its media peers. Disney's forward price-to-earnings ratio is now close to 21. Netflix's is 43. For comparison, ViacomCBS' is about 4.

That's why Tuesday's announcement that Bob Chapek, chairman of Disney Parks, Experiences and Products, is taking over as CEO for Bob Iger is surprising and confusing. Disney's future is supposed to be streaming — not theme parks. Media industry insiders almost unanimously expected Kevin Mayer to be Iger's heir. Mayer has been running Disney's streaming services as the company's chairman of direct-to-consumer and international.

CNBC's full interview with Disney's Bob Iger on why he's stepping down as CEO
CNBC's full interview with Disney's Bob Iger on why he's stepping down as CEO

Investors were not impressed, sending Disney's stock down about 2% after hours.

It's possible Iger had picked Chapek as the next CEO years ago. He said Tuesday he had "identified Bob quite some time ago as a likely successor."

But choosing the guy who runs parks over the guy who runs streaming is odd because of the signal it sends to investors. Disney is supposed to be a high-flying technology-based streaming company now. The strategy is working. Not rewarding Mayer, who has spent more than two decades at Disney, is odd.

Iger isn't going anywhere. He will remain Chapek's boss as chairman of the board and, in an unusual move, will "continue to direct the company's content creation." Iger said himself the reason for this change was to "free me up to focus on the creative side."

So will Iger's focus continue to be streaming? Does that effectively split Disney into two pieces — Iger leading content and Chapek everything else? And what does that mean for the future of Disney?

There may be more clarity in the coming days. But on the surface, it's a huge twist in the story Disney has been telling. And if there's one thing Disney knows, it's storytelling.

Watch: Disney CEO Bob Iger to step down

Disney CEO Bob Iger to step down
Disney CEO Bob Iger to step down

Correction: An earlier version misstated when Iger said he had identified Chapek as a likely successor. It was Tuesday.