- Bob Iger's surprise decision to hand the CEO reins over to parks chief Bob Chapek in February will give Chapek his first major challenge as CEO: Dealing with the fallout from the coronvirus outbreak.
- Iger had been expected to leave the role at the end of his contract in 2021.
- The company announced Thursday that it will close Disneyland Park and Disney California Adventure from the morning of March 14 through the end of the month.
After 15 years in the post, Iger made the surprise announcement to hand over the reins to the head of Disney parks, experiences and products Bob Chapek on Feb. 25, effective immediately. Though Iger had promised he really would step down when his contract expired this time (having extended it twice during his tenure), that wasn't expected until the end of 2021.
Iger told CNBC, "With everything else falling into place, the time seemed right," referring to the launch of Disney+ and the close of the Fox entertainment business acquisition. Iger plans to stay on as executive chairman through the remainder of his contract, with Chapek reporting to him.
Now as COVID-19 has risen to the level of a pandemic, according to the World Health Organization, the stock market has taken a dramatic turn as investors grasp the potentially longer-term implications of the crisis. The Dow Jones Industrial Average plunged 10% on Thursday and the S&P 500 fell 9.5%, bringing both into a bear market.
The pandemic will have obvious implications on many businesses, including Disney's. With local and state governments banning large gatherings and warning against close contact, Disney will likely take a hit at its theme parks and at the box office. The company announced Thursday that it will close Disneyland Park and Disney California Adventure from the morning of March 14 through the end of the month. Disney's one saving grace could be its new streaming service, Disney+, as an increasingly remote workforce looks for entertainment options.
Chapek's experience in the parks business could make him particularly well-suited to handling these logistical challenges as Iger continues to focus on making sure the company's creative pipeline stays filled -- in other words, focusing on the future.
By the time of Iger's announcement, COVID-19 had been in the news for a couple months, but was nowhere near as widespread as health officials now report. As of Thursday afternoon, there are more than 127,800 global cases of the virus and at least 4,718 global deaths, according to data compiled by Johns Hopkins University.
On the day of Iger's announcement, Chapek, the new CEO addressed the potential impact of the coronavirus on Disney's business in an interview with CNBC's Julia Boorstin.
"We're always very conscious of disruptive elements, socioeconomic, social elements that could come in at any time and disrupt our business," Chapek said. "But I think when you have the core assets that we've got, those franchises, the Disney brand, once again, we'll sort of see our way through all those disruptive elements. Doesn't mean that we won't get surprised tomorrow, but we've got the strength to get through them all."
With shares of Disney down 13% just on Thursday alone, the Chapek and Iger will have to reassure investors of the company's long-term potential. Before the leadership change announcement in February, Disney's stock closed at $128.19 per share. As of Thursday's close, Disney's stock is priced at $91.81 per share, a drop of about 28%. During that same period, the S&P 500 saw a drop of nearly 21%.