Disney's wildest ride: Iger, Chapek and the making of an epic succession mess

Key Points
  • What did a private bathroom, Oogie Boogie and a hippo have to do with the behind-the-scenes chaos between Bob Iger and Bob Chapek at Disney?
  • Here's the inside story of a CEO succession plan gone awry — a cautionary tale about ego and hubris at the highest levels of corporate America.
  • This article is based on conversations with more than two dozen people who worked closely with Iger and Chapek between 2020 and 2022.

In this article

Illustration by Elham Ataeiazar

After pushing back his retirement four times, Bob Iger finally made the leap. On Feb. 25, 2020, he announced he would step down as Disney's CEO. His hand-picked successor, Bob Chapek, then Disney's parks chairman, would take over the day-to-day job of running the company, effective immediately.

As part of the changing of the guard, the Disney board suggested the new CEO should take over Iger's expansive office at Disney headquarters in Burbank, California.

There was just one problem. Iger had no interest in moving out. He wasn't truly leaving Disney, anyway. His succession plan allowed him to stay on as executive chairman for 22 more months. Chapek would report to him and the board. Iger would also "direct the company's creative endeavors" — nebulous phrasing suggesting he would retain control of movie and TV content and operations.

There was a practical reason Iger didn't want to move out of his office. It had a private shower, built for former CEO Michael Eisner, and a vanity for shaving. Iger, now 72, consistently woke up around 4:15 a.m. to work out and then shower. On evenings when Iger was heading out for a Disney premiere, award show or benefit, he would often take a second shower — this time in the office.

Iger told Chapek that he lived for those "two-shower days," according to people familiar with the conversation.

Iger chose Chapek, now 64, as his successor because of Chapek's integrity and business acumen, not his interest in Hollywood socialization. Chapek has the outward corporate demeanor of a Midwestern businessman — or, as one colleague jokingly put it, "a tuna salad sandwich who sits in front of spreadsheets." He's a risk-taker who's not afraid to upend the status quo, but he's not a schmoozer by nature. Whereas Iger holds court around his Brentwood mansion — a short stroll from celebrities, producers, super-agents and other Disney executives — Chapek lives about an hour's drive from downtown Los Angeles, in Westlake Village. Iger enjoys yachting; Chapek is more of a power-boating and kayaking kind of guy. 

Both men agreed Chapek wouldn't have much need for the office shower; Chapek would instead move into a smaller office on the same floor. 

On the wall of Iger's office bathroom hung two posters. The first was a framed collage of newspaper front pages and magazine covers with images of Iger celebrating Disney's purchase of Marvel in 2009. The $4 billion deal was arguably Iger's shrewdest decision as CEO and one of the best media and entertainment acquisitions in U.S. corporate history.

The second picture spoofed the movie poster for the 1975 Clint Eastwood thriller "The Eiger Sanction," but the image was of Iger instead of Eastwood, with the title "The Iger Sanction."

LMPC | Getty Images

"The Eiger Sanction" is about an assassin who comes out of retirement for one last job.

On Nov. 20, 2022, Bob Iger came out of retirement to become Disney's CEO once again. The board had fired Chapek. Within days, Iger fired Chapek's closest advisors, including his former chief of staff, Arthur Bochner; his assistant, Jackie Hart; and his de facto second-in-command, Kareem Daniel. In July, Iger extended his contract through 2026, the fifth time he has pushed back his departure as CEO.

Chapek confided to a friend that his tenure at Disney was "about three years of hell," defined by one overriding theme: his unrelenting fear that Iger wanted his job back. 

Iger, meanwhile, has told peers and colleagues he returned to Disney to correct what he sees as one of the biggest mistakes of his career — choosing Chapek. 

"When the two people at the top of a company have a dysfunctional relationship, there's no way that the rest of the company beneath them can be functional," Iger wrote in his autobiography, "The Ride of a Lifetime." "It's like having two parents who fight all the time."

Iger wasn't describing his relationship with Chapek — he was recalling his observations living through the meltdown between Eisner and his No. 2, Michael Ovitz, in the 1990s. The pair got along great for years, until they became the top two people at Disney. Within 16 months, their relationship had exploded and Ovitz was fired. 

But like a son who vows never to repeat his father's mistakes and then proceeds to do just that, Iger's relationship with Chapek followed a strikingly similar pattern.

There's no company in the world more associated with storytelling than Disney; its most famous movies are modern versions of timeless fables. The story of the Chapek era is timeless in its own way. It's a tale of how good intentions clashed with hubris and ego can erode one of the most famous organizations in the world — a case study in corporate dysfunction and succession gone wrong. As Iger and the Disney board resume their search for a successor, a critical question looms: Have they learned the moral of the story?

Disney's succession mess: The inside story of Iger and Chapek
Disney's succession mess: The inside story of Iger and Chapek

This account is based on conversations with more than 25 people who worked closely with Iger and Chapek at Disney between 2020 and 2022. They declined to be named, as the events and conversations were private. Many of the details have never been reported. 

Through a representative, Chapek defended his record as Disney CEO in a statement to CNBC.

"Bob is proud of the work he did in the course of his 30-year career at Disney, particularly during his nearly three-year run as CEO, steering the company through the unprecedented challenges of the pandemic, and setting the course for business transformation as he and his team took the disruptive yet necessary steps for business revitalization and long-term growth," said a Chapek spokesperson.

Iger declined to comment for this story.

Iger's succession plan

Iger's decision to step down as CEO not only shocked the entertainment and media worlds, it took even his close associates by surprise. Disney's head of streaming, Kevin Mayer, whom many outsiders had pegged as Iger's likely replacement, found out minutes before Iger's public announcement. "I didn't know that was coming at all," Mayer told CNBC in 2021.

In February 2020, as Disney's head of streaming, Kevin Mayer, was in the line of succession for CEO. But Mayer, seen here on Sept. 29, 2022, and colleagues were stunned when Iger announced Bob Chapek would replace Iger immediately.
Bryan van der Beek | Bloomberg | Getty Images

But Iger figured the timing was right. He was getting close to 70 and he'd been CEO for almost 15 years. The company's recently launched streaming service, Disney+, was an instant success. And Iger was convinced Chapek was the right caretaker to continue his legacy.

Chapek grew up in Hammond, Indiana, "the son of a World War II veteran and a working mother," as he has described it. His family took annual trips to Walt Disney World when he was young, seeding his genuine love for the company's theme parks. He studied microbiology at Indiana University and got his MBA from Michigan State University. He joined Disney in 1993 and by 2015 had risen to become chairman of the parks division. 

For more than two decades, Chapek earned Iger's respect as a shrewd cost-cutter and a low-drama manager. Iger especially valued Chapek for his integrity and operational expertise. At each of the divisions Chapek led at Disney — home video, consumer products and parks — profit and revenue soared under his watch. He also benefited from some good timing, running the home video division when Disney animation hits such as "The Little Mermaid," "Aladdin" and "Beauty and the Beast" were first sold on VHS, and piloting consumer products just as "Frozen" launched. 

Chapek cemented his reputation with Iger and the board during the construction of Shanghai Disney, the $5.5 billion theme park that opened in 2016 after months of delays. Iger and Chapek traveled to Shanghai, China, together more than 10 times as Chapek got cost overruns and construction headaches under control. His success helped Iger move on from former Chief Operating Officer Tom Staggs, who was then in line to take the CEO job after Iger. Staggs left the company just before Shanghai Disney finally opened.

Tom Staggs, then Disney COO, announces the Iron Man Experience planned for Hong Kong Disneyland in 2016. Staggs had been promoted to the job specifically to be Iger's heir apparent.
Walt Disney Parks and Resorts

It was Iger's experience with Staggs — who didn't secure Disney's top job after being promoted to COO specifically to be Iger's heir apparent — that made Iger decide Chapek should start as CEO immediately. Iger told board members he didn't think Chapek needed to audition for the role. 

Years later, Iger would tell others he mistook Chapek's stellar operational track record for leadership skills.

This was a striking admission for Iger, who prides himself on his emotional intelligence. He's charming with co-workers and at ease with celebrities — a Hollywood star in his own right. These traits paid dividends over the years. He convinced Steve Jobs to sell him Pixar, cajoled Ike Perlmutter into selling him Marvel, and persuaded George Lucas to sell him "Star Wars" and its bounty of associated intellectual property. In 2017, he struck a deal with Rupert Murdoch to buy most of Fox. 

Some Disney executives have privately speculated that Iger chose Chapek because he wouldn't rival him in either charisma or celebrity — or, more cynically, because he was unlikely to eclipse Iger's glittering record at the company. 

What's clear is Iger didn't know Chapek as well as he should have. On a day-to-day basis, Iger worked far more closely with Mayer and Staggs. Iger doesn't mention Chapek once in his 2019 autobiography outside of the prologue — even though by then Chapek was at least tentatively in line to be Iger's preferred successor. For comparison, Iger spends more than five pages of his 236-page book discussing the TV show "Twin Peaks."

The entire process of naming a successor was bumpy. For a start, Iger kept delaying his retirement: In 2013, 2014 and then twice in 2017, he renewed his contract after saying he intended to walk away.

In 2017, according to people familiar with the matter, Iger first told Chapek he was in the running to be his potential successor. The vetting process for CEO would begin with Chapek flying across the country to meet one-on-one with board members — not unlike contestants' hometown dates on Disney's hit reality show "The Bachelor." Iger had gone through a similar process, taking 15 meetings with directors before securing the CEO position in 2005.

But Chapek never did the meetings. Iger agreed to buy the majority of Fox's assets in a $71 billion deal and renewed his contract as a condition of the purchase, pushing back any talk of succession.

In January 2020, Iger told Chapek the plan was back on. This time, Iger told him that instead of the one-on-one board interviews, Disney's lead independent director, Susan Arnold, would be in touch. Days later, Arnold delivered the news to Chapek over lunch at The Rotunda, Disney's executive dining room. She and Iger had both recommended Chapek for the job, and the board had approved. Chapek sat on the secret for six weeks before the public announcement.

Peter Rice, seen here on May 3, 2017, was head of Disney's TV entertainment business in 2020. He was one of several executives passed over for the CEO job in favor of Chapek.
David Paul Morris | Bloomberg | Getty Images

In choosing Chapek, Iger and the directors had passed over Mayer and Peter Rice, then head of Disney's TV entertainment business. The board felt the leadership styles of both men were too brash, according to people familiar with some of the directors' thinking. Also, Mayer had never run a business of scale, and Rice had joined the company from Fox less than two years earlier.

However, Iger never consulted anyone who worked directly for Chapek in the runup to naming him CEO, according to people familiar with the matter.  

He had pegged Chapek as someone who would accept his somewhat unusual succession plan, in which Chapek would serve both as CEO and CEO-in-training while Iger remained his boss and ran "creative endeavors" for 22 months as executive chairman. 

"Any of the big creative decisions that have to be made, I fully intend for Bob [Chapek] to be at my side," Iger told CNBC's Julia Boorstin on the day of the announcement. "What this is about, really, is, we believe, a really good succession process and a really smart transition process."

WATCH: Bob Iger steps down as Disney CEO and announces Bob Chapek will take his place

Bob Chapek, Disney's new CEO, says he will follow path laid by Bob Iger
Bob Chapek, Disney's new CEO, says he will follow path laid by Bob Iger

Iger needed full buy-in from the board for his plan, but that did not prove difficult. Over the past 15 years he had become the gold standard of legacy media and entertainment CEOs. From the time he'd taken over at Disney in 2005 to the end of February 2020, Disney's share price increased about 420%, far outpacing the S&P 500 index, which gained about 150%.

By 2019, Iger had personally selected every member of the board, which is surprisingly lacking in media and entertainment experience. Iger is personally close with several directors, including Nike Executive Chairman Mark Parker and General Motors CEO Mary Barra. In addition, the wife of another board member, Michael Froman, then vice chairman of Mastercard and now president of the Council on Foreign Relations, had been housemates with Iger's wife, Willow Bay, at the University of Pennsylvania.

It was from Parker that Iger got the idea for his succession plan, according to people familiar with the matter. In October 2019, Parker, who was then CEO of Nike, announced he would remain as executive chairman of Nike while passing the CEO torch to John Donahoe.

That structure also happened to be nearly identical to one that Iger's predecessor Eisner tried and failed to secure for himself. In 2004, Eisner floated a plan in which he would step down but remain as chairman, while Iger would take over as CEO. 

But unlike Iger, Eisner had lost his grip on the board. Directors Roy Disney, a nephew of Walt Disney, and Stanley Gold resigned their seats and in a blistering letter objected to the notion of Eisner remaining as chairman. "[His] 'succession plan' is for a company led by Michael Eisner and his obedient lieutenant, Bob Iger, to be handed over to ... Michael Eisner and Bob Iger," they wrote. "Any arrangement that permits Mr. Eisner to remain as Chairman after relinquishing his position as CEO is contrary to best governance practices." 

Michael Eisner, former Disney chairman and CEO, is seen here on July 11, 2023. In 2020, Iger came up with a succession structure that was nearly identical to one his predecessor Eisner tried and failed to secure for himself in 2004.
David A. Grogan | CNBC

Eisner gave up his chairman role in March 2004 after 43% of Disney shareholders withheld their votes to reelect him to the board the year before. He resigned as CEO in September 2005. Iger assumed leadership of the company without anyone hovering over his shoulder. This allowed him to move quickly on decisions that Eisner might not have agreed with, such as buying Pixar. Iger describes the acquisition process at length in his autobiography.

Chapek wouldn't have nearly the same degree of freedom. 

Big Bob and Little Bob

In "The Ride of a Lifetime," Iger recalls watching Eisner leave the Disney lot on his last day at the company: "It's one of those moments, I imagine, when it's hard to know who exactly you are without this attachment and title and role that has defined you for so long." 

Just weeks after Iger announced his departure, Chapek began to wonder if Iger had regrets, according to people familiar with his thinking. Equally soon, Iger started to think he'd made a mistake. 

At first, the signals were tiny. When Iger announced his departure to staff on Disney's Burbank studio lot, he jokingly called himself "Big Bob" and Chapek "Little Bob," a light reminder to employees about who was still the boss.

On March 10, 2020, about two weeks after the handoff, Chapek, Iger, Chief Financial Officer Christine McCarthy and a small handful of other Disney executives flew from Los Angeles to Raleigh, North Carolina, for Disney's annual meeting. 

At the front of the plane, Iger and Chapek were going over logistics and fretting about coronavirus. Iger caught Chapek off guard with some news. Chapek, not Iger, would lead the question-and-answer portion of the meeting, an annual ritual Iger called "stump the CEO." 

During his 27 years at the company, Chapek had only attended one annual meeting — as a guest in the audience. 

Chapek, then Disney CEO, speaks during a media preview of the D23 Expo, on Aug. 22, 2019.
Patrick T. Fallon | Bloomberg via Getty Images

Since Chapek's background at Disney had been in parks, consumer products and distribution, he knew little about the inner workings of ABC, ESPN or the movie studio. He'd been given a large binder of background material by the investor relations team, but now he had to be ready to answer questions on any topic, which could range from Disney's stance on the environment to the future of ABC News. 

After a couple of hours of general preparation, Chapek retreated to a private area in the back of the plane and closed the door to study. Iger was perplexed and expressed his confusion to McCarthy. He assumed the men would run through possible questions and answers throughout the flight. Iger walked to the back of the plane to see if Chapek needed help preparing.

"Isn't it all in here?" Chapek asked, holding up the binder, according to a person on the plane.

The basics, yes; but not the nuances, Iger replied. Chapek, who prefers to learn by reading and memorizing material — and thought he'd already spent the first hour or two prepping with Iger — said he'd rather stay in back and study. (The first question Chapek would receive was whether he thought there was bias within ABC News — a topic about which he knew little but had prepared for on the plane, according to people familiar with the matter.)

Iger would later relay this fleeting exchange to friends as one of the first moments it occurred to him that he may have made a mistake. He had thought he was handing off the company to a collaborative leader who would work with him, side by side, for the next 22 months. Iger began to worry about whether Chapek had plans of his own. 

Chapek's first concerns that Iger might be having regrets came during the next day's flight back to Los Angeles, after a brief stop in Orlando for a Disney town hall.

Coronavirus fears had billowed into a full-fledged panic. On this flight, Chapek stayed up front with McCarthy and Iger, who got on a call with California Gov. Gavin Newsom to discuss whether Disneyland should be shut down; it would be by the morning of March 14

Christine McCarthy, seen here on April 29, 2019, was Disney's chief financial officer. As Iger's departure from Disney prompted other executives to leave, Chapek worked overtime to make sure he retained the veteran McCarthy.
Michael Kovac | Getty Images

At some point, amid the chaos, McCarthy suggested to Chapek that they do their first weekly CEO-CFO meeting. They were around the third agenda point when Iger snapped. It was disrespectful to conduct this meeting right in front of him, he complained curtly, according to a person familiar with the exchange. 

It was rare for Iger to show Chapek a side of himself that wasn't "Disney nice" — the term many executives use for a corporate culture that emphasizes kind and respectful interactions. Chapek and McCarthy quietly finished their meeting, but Chapek told others after the flight he left with the distinct impression that Iger was having second thoughts about relinquishing the job he'd held for 15 years. 

These dueling perceptions that manifested themselves on that March round-trip flight — Chapek as bumbling and isolated; Iger as unwilling to give up control — would define the next 2½ years.

Relationship breakdown

Just days later, the two men had their first strategic disagreement. Chapek wanted to furlough about 100,000 parks employees after Disney World closed its gates. Iger advocated waiting for the government's Covid-19 relief act to kick in so the furloughed employees would have some government money to hold them over. Iger called then House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer, both Democrats, to ask them how close the U.S. government was to passing the bill. Ten days, they told him. Though it wasn't a creative issue, Iger overruled Chapek. Disney didn't furlough employees until April.

Around the same time, then New York Times media columnist Ben Smith published a story about the pandemic's disastrous impact on Disney. After "a few weeks of letting Mr. Chapek take charge," Smith wrote, Iger had "effectively returned to running the company." Iger didn't deny this. "A crisis of this magnitude, and its impact on Disney, would necessarily result in my actively helping Bob and the company contend with it, particularly since I ran the company for 15 years!" Iger said in an email to Smith.

Chapek was furious. He called Iger and told him he didn't need a savior, dropping a carefully placed expletive or two, according to people with knowledge of the call. It was the first time in more than 20 years that Chapek and Iger had had a major argument. Iger would tell people no colleague had ever spoken to him like that before in his life. 

Chapek also complained to the Disney board about the story, demanding to be given a seat immediately; Disney had already promised him one but had not set a date. Chapek did not want Iger and the board talking about him or his job status while he wasn't there, according to people familiar with his thinking. Three days after Smith's story ran, Disney complied. Arnold privately had a strongly worded conversation with Iger about setting Chapek up for success rather than undermining him, according to people familiar with the conversation.

Arnold declined to comment for this story.

WATCH: How Bob Iger returned as CEO: Disney's succession saga

Disney's succession saga: Bob Iger's wild ride to return as CEO
Disney's succession saga: Bob Iger's wild ride to return as CEO

The relationship only deteriorated from there. Iger began privately grumbling that Chapek wasn't involving him in company decisions. Iger told colleagues that he felt like he was on a bus that the other passengers wanted him to drive but he couldn't reach the steering wheel. He began to understand that Chapek was not going to be an "obedient lieutenant," as Roy Disney and Stanley Gold had once theorized Iger, himself, would be as Eisner's chosen CEO.

At the end of a June board meeting, conducted via Zoom, Disney directors asked Iger — but not Chapek — to stay on the call for a customary "executive session." According to people familiar with this conversation, Iger told the board his relationship with Chapek had soured and that Chapek wasn't exhibiting proper leadership qualities. The pandemic was shaking Disney to its foundations, and Iger believed Chapek should be working more closely with the man who had run the company for the last 15 years. 

Bob Iger, Disney CEO, during a CNBC interview, Feb. 9, 2023.
Randy Shropshire | CNBC

After Iger left the call, the board brought back Chapek and asked him if employees were aware of how bad things had gotten between the two men. Chapek said he didn't think so, but he knew Iger had been complaining about him to Disney confidants and Hollywood executives and agents. 

Iger and Chapek never participated in a face-to-face mediation about their working relationship. The board never demanded it. Privately, Arnold counseled Chapek to be patient, something she'd continue to do for months to come in a series of coaching sessions. Let Iger run creative, she said. In 18 months, Chapek would have control of everything. Until then, don't engage in turf wars.

In less than four months, Iger's plan for a managed succession had gone up in flames. 

Dividing the company

When Chapek took over Disney, it was clear that Wall Street cared more about its streaming results than any other division of the business. Iger had already begun to reposition the company accordingly: "We're all in," he said when he unveiled Disney+ in April 2019. Disney+ added more than 10 million paying subscribers in 24 hours

However, Chapek saw two major problems with the streaming operation. First, he believed there were too many people making decisions about what content was slated for Disney+. Iger and Mayer had tasked this responsibility to Agnes Chu, senior vice president of content, and Ricky Strauss, president of content and marketing for Disney+. Both Chu and Strauss have since left Disney.

Others wanted a say, including Mayer, Chu and Strauss's boss, as well as Marvel Studios President Kevin Feige, Lucasfilm head Kathleen Kennedy, and the heads of Walt Disney Television and Walt Disney Studios. Mayer told Chapek the structure was messy and needed fixing.

Chapek brought a business school mentality to this challenge, which naturally rubbed creative executives the wrong way. He often cited the concept of ARCI — which stands for "accountable, responsible, consulted and informed" — as a framework for ensuring clear decision-making structures. Chapek would often say, "Who's got the A?" — referring to accountability. With streaming, the answer wasn't clear.

Second, Chapek understood that streamed movies were still seen as less prestigious than those with a traditional theatrical release. The chair of Walt Disney Studios, Alan Bergman, and his direct reports were reluctant to give projected hits to Disney+ or Hulu. Actors and directors overwhelmingly still wanted a box-office release. Even during Covid, Disney didn't abandon exclusive theatrical releases, unlike WarnerMedia, which put each of its 2021 films on HBO Max and in cinemas on the same dates. 

Alan Bergman, chairman of Walt Disney Studios, at the D23 Expo, Sept. 10, 2022. Bergman lost some decision-making power under Chapek.
The Walt Disney Company via Getty Images

But box-office returns weren't driving investor sentiment — streaming was. And during the early months of Covid, Disney had limited inventory because production on new TV series and movies had ground to a halt. Chapek wanted to put premium programming on Disney+ as soon as possible. 

His idea was to implement a "make-sell" model, a phrase Chapek borrowed from Iger, who had discussed it with former YouTube executive Robert Kyncl in 2018. The idea was to create a clear division between people who make shows and movies and people who sell them. Studio heads and content division leaders would still choose which projects to greenlight, but someone else would have the authority to bring needle-moving content to Disney+ or Hulu.

Companies such as Netflix, Amazon and Apple also separate distribution divisions from content creation, and Chapek hoped that adopting a similar structure would move Disney away from its legacy media habits. Investors valued Netflix far higher than legacy media because of its growth profile; if Chapek could get investors to view Disney as a technology company, they might reward him with a share price multiple bump. 

To this end, Chapek created a new group called Disney Media and Entertainment Distribution, or DMED. To lead the division, he chose Kareem Daniel, then a 46-year-old executive who had worked closely with Chapek for years, first as a Stanford MBA intern in home entertainment and later in both distribution and theme parks. The reorganization gave Daniel — and Chapek — veto power over movie and TV show budgets.

Chapek had a series of meetings with Iger to discuss the restructure, including conversations in Iger's Brentwood house and walks around the neighborhood. Despite the unaddressed tensions between the two, the conversations were cordial, according to people familiar with their interactions. 

Iger didn't try to stop Chapek's plan, but he also didn't give it his full endorsement. His opaque communication style frequently confused Chapek, according to colleagues. Chapek couldn't tell whether Iger's questions were a passive-aggressive way to signal disapproval or a genuine attempt to get more information.

Inside Disney, many executives saw the reorganization as a way for Chapek to shift the power balance away from Iger's base — TV and movie executives. Chapek had long felt that Disney's culture, under both Iger and Eisner, treated non-creative executives like him as second-class citizens, according to people familiar with his thinking.

But Daniel rankled many company leaders, who thought he lacked the industry experience or humility for the job. Daniel was known for his intelligence, but he was prone to harshly shooting down opinions with which he disagreed, according to colleagues who worked with him. Chapek tried, unsuccessfully, to coach him to be more "Disney nice." 

Daniel declined to comment for this story.

Kareem Daniel was hired by Chapek to lead a new group called Disney Media and Entertainment Distribution. The reorganization gave Daniel — and Chapek — veto power over movie and TV show budgets.
Source: Business Wire

As agents and major Hollywood players realized Daniel was Disney's new power broker, his inexperience in the entertainment world surfaced in ways that embarrassed some colleagues. He'd enlist several members of his communications team to help him navigate the red carpet at premieres, causing some executives to chuckle about his self-importance. His team would also prepare documents advising him how to act during these events, complete with talking points for impromptu conversations with celebrities, press or producers on the carpet. The DMED communications division eventually ballooned to more than 100 employees, which some on the team felt was wildly excessive. Given DMED's importance to the future of the company, Chapek didn't intercede. 

Still, some of Daniel's colleagues felt veteran Disney executives were being unfairly dismissive of him. It was Daniel's responsibility to set cost controls, so irritating studio executives was practically a requirement of his job. Chapek adjudicated dozens of conflicts between Daniel and Bergman, according to people familiar with the matter. Both men got used to walking away frustrated.

Bergman declined to comment.

Directors, producers and actors panned the reorganization. In a town where relationships matter, they didn't know Daniel. They wanted clarity on whether their movie would go straight to streaming or get a theatrical release, and their usual contacts on the creative side could no longer give them answers. 

When it came to TV, there was less resistance to the organizational changes, because streaming wasn't associated with inferior quality. While creative executives were cut off from important data they used to judge the performance of their shows, in an era of declining broadcast ratings, landing on a streaming service often increased the total audience and extended the lifetime of TV series.

One exception was ESPN. Rights deals are the sports network's lifeblood, and ESPN executives were used to hammering them out directly with leagues. After the reorganization, ESPN executives lost their budget power and gained layers of bureaucracy.

ESPN Chairman James Pitaro, seen here on July 25, 2023, contemplated leaving the company after Chapek's reorganization.
Jesse Grant | CNBC

Chapek was trying to rearrange the company at a time when nearly all employees were working from home. Virtual meetings ballooned in size. Conversations became unwieldy. Junior executives from Daniel's distribution team, who were now involved in meetings because ESPN+ was being sold alongside Hulu and Disney+, asked questions of league officials that exposed their lack of business knowledge, according to people involved in the talks. 

ESPN Chairman Jimmy Pitaro was so demoralized he contemplated leaving the company, according to a person familiar with the matter.

Pitaro declined to comment. 

Awkward situation

Throughout all this, executives who had lost power under the new structure were frantically complaining to Iger, who told them he didn't agree with the reorganization — an assessment Chapek heard only indirectly — but that there was little he could do.

Many veteran Disney creative executives viewed the reorganization as an example of poor decision-making. Chapek loyalists saw it as a necessary change to modernize Disney, which they felt was being sabotaged by petulant TV and movie executives, with Iger's tacit backing, according to people who were directly involved in the reorganization.

Around this time, in late 2020 and into 2021, Disney executives throughout the company started to feel increasingly awkward about the Iger-Chapek relationship. McCarthy warned Chapek that Iger's criticism was reaching an increasingly wide audience.

McCarthy declined to comment for this story.

Most tried to ignore the rift and just do what they were told. 

Zenia Mucha, who had been Disney's head of communications since 2002, before Iger started as CEO, took a more active approach. Reminding Chapek of his predecessor's legacy and stature, she urged him to portray a united front with Iger. 

But Chapek didn't trust Mucha, who was so close to Iger that some at Disney referred to her as his second in command. Chapek felt she was Iger's communications advocate and not his. Others close to Chapek felt Mucha wasn't championing him as much as a communications head should be celebrating a new CEO. Mucha argued the country was being ravaged by coronavirus and it wasn't the right time for puff pieces in Hollywood trade magazines, according to people familiar with the matter. 

Zenia Mucha, then Disney's head of communications, left, seen here with Barbara Walters on April 23, 2012, urged Chapek to portray a united front with Iger. But Chapek didn't trust Mucha, who was so close to Iger that some at Disney referred to her as his second in command.
Charles Eshelman | Filmmagic | Getty Images

Chapek felt he couldn't fire Mucha with Iger still lurking as chairman, according to people familiar with the matter. On the advice of the board, who agreed that Chapek needed communications help, Chapek began soliciting advice from external communications firm Brunswick Group in early 2021 — without informing Mucha. He hoped Brunswick could improve his image in Hollywood, where he was growing increasingly unpopular with frustrated content creators and agents. 

Mucha declined to comment. 

The Scarlett Johansson controversy

The first half of 2021 was good for both Disney and Chapek. The share price was rising. Disney+ topped 100 million subscribers in March, blowing away Netflix's gains throughout the year. The world was getting vaccinated and returning to theme parks. 

During a June board meeting in Hawaii at Disney's Aulani resort, members heaped praise on Chapek, according to people familiar with the proceedings. This time, instead of asking Iger to stick around at the end for a private executive session, they asked Chapek. It was a small gesture, but one Chapek interpreted as the board viewing him as the true leader of the company, according to people familiar with his mindset at the time.

Chapek told colleagues he was finally feeling more comfortable in the job. More specifically, Chapek felt as though Iger had lost his path to return. 

In hindsight, it may have been the peak of Chapek's tenure. Only a month later, Chapek found himself back on shaky ground. 

In March, Chapek and Daniel had made the decision to launch "Black Widow" — a Marvel movie starring Scarlett Johansson — for a premium additional price on Disney+ and in theaters on the same day, July 9, 2021.

Scarlett Johansson and Florence Pugh star as Natasha and Yelena in Marvel's "Black Widow." Johansson sued Disney for breach of contract after it released the film in theaters and streaming on the same day.

There was one hitch: Johansson's contract stipulated that her compensation was based on an exclusive theatrical release for up to four months. Since her contract was negotiated before Covid, this type of issue hadn't arisen before. Her agent, CAA partner Bryan Lourd, spent months negotiating with Disney executives throughout the organization, warning Bergman and Chapek that Johansson would sue for remuneration if they proceeded with their plan, according to people familiar with the discussions. 

Chapek viewed Johansson's contract as a creative issue and therefore Iger's territory. Iger had a long relationship with Lourd and knew Johansson. This was Iger's arena, Chapek thought.

Iger, however, wasn't involved in any of the conversations with Lourd, who thought Iger would have quickly resolved the situation given the value he historically placed on creative relationships, according to people familiar with the matter.

Lourd declined to comment.

If Chapek wanted to be CEO, he should be CEO, Iger reasoned. To Iger, this was a clear business matter — a contract dispute — and not a "creative endeavor," according to people familiar with his thinking.

By this time, Chapek and Iger were barely speaking to each other.

In July, after multiple warnings from Lourd, Johansson sued. Disney's lawyers walked through the company's options in a virtual meeting attended by about 20 executives, including Iger and Chapek. Iger didn't speak, but he felt the meeting was "amateur hour" — a meeting "run by children" — with far too many people weighing in on how the company should respond, according to a person familiar with his thoughts. 

Iger and Chapek both signed off on an aggressive public statement that accused Johansson of "a callous disregard for the horrific and prolonged global effects of the Covid-19 pandemic" and revealed her $20 million salary for the film. The clear implication was that she was only seeking more money out of greed.

Mucha argued Disney needed to have a forceful response because the lawsuit specifically named Iger and Chapek as financial beneficiaries from a stronger Disney+.

Yet, both Iger and Chapek disagreed with the tone of the statement, according to people familiar with the matter. Neither one stopped its release because each believed the other should be in charge. 

Iger called Chapek and told him he should issue a public apology, according to people familiar with the call. Chapek refused, said the people. Iger never even considered apologizing, according to people familiar with his thinking.

Hollywood talent and agents largely blamed Chapek for the statement. Chapek suspected Mucha was pushing this narrative to the press. To defend himself, Chapek solicited other members of the communications team to help him call reporters, without informing Mucha.

Disney settled the lawsuit in October 2021.

Bob Iger speaks during a CNBC interview at Disneyland in Anaheim, California, Dec. 16, 2021.
David A. Grogan | CNBC

That November, Iger threw himself a goodbye party at his Brentwood house. After 26 years, he was finally leaving Disney. He invited about 70 guests, including director Steven Spielberg, famed sports broadcaster Al Michaels, ABC broadcasting anchors David Muir, Robin Roberts and Michael Strahan, and many former and current Disney leaders.

Iger reluctantly invited Chapek. When he found out Chapek had a speaking engagement at Walt Disney World set for that day, he was relieved, according to people familiar with his mindset at the time. He didn't want Chapek to attend — and the feeling was mutual. Chapek's first impulse was to decline. But he knew it would look terrible if he didn't attend, so he canceled his plans in Orlando. 

At the party, the tension between the two was palpable. Iger sat next to Spielberg, while Chapek sat far away at the opposite table, visibly miserable. It did not escape attendees that Iger thanked dozens of people in his speech — but not Chapek. It was humiliating, but Chapek told friends he felt relieved the tension was out in the open. 

With Iger gone, Chapek could finally run Disney his way. He moved into Iger's larger office, the one with the private bathroom — but he never actually used the shower, as Iger predicted, according to people familiar with the matter.

Chapek turned to some executive housekeeping that Iger's presence had prevented. He combined government relations with media communications, naming former BP corporate affairs boss and onetime Defense Department press secretary Geoff Morrell as chief of corporate affairs. That decision effectively forced out Mucha, as well as general counsel Alan Braverman, whom Chapek viewed as a diehard Iger loyalist. 

Other veteran executives left to coincide with Iger's departure. They included Alan Horn, Disney's chief creative officer and chairman of Walt Disney Studios from 2012 to 2020, and Jayne Parker, the head of human resources who had been at Disney for more than 30 years. Chapek also fired Rice, the well-respected head of TV, in June, telling him that he wasn't a cultural fit. Rice had been at Disney for about three years after coming to the company via Disney's acquisition of 21st Century Fox.

To combat the outflow of institutional knowledge, Chapek worked overtime to make sure he retained McCarthy, the CFO. McCarthy, who had joined Disney in 2000 and who was in her late 60s, was a master of internal politics and had close ties to the board, according to colleagues. Chapek jokingly offered McCarthy a lifetime contract after he found out she had bought a house in Montana, a sign she was thinking about retiring, according to people familiar with the matter. 

By this point, Chapek's inner circle had shrunk to a handful of senior executives. He didn't trust most of the existing leadership, largely because of their ties to Iger, and primarily relied on Daniel, Chief of Staff Bochner (later replaced by Claire Lee), Chief Human Resources Officer Paul Richardson, McCarthy and the new head of parks, Josh D'Amaro.   

Chapek did feel he had an ally in Arnold, who had become the new board chair, according to people familiar with his thoughts. Arnold represented the post-Iger power center of Disney, and she was now also Chapek's boss. It wasn't long, though, before she found herself in the center of a firestorm.

A fight in Florida

A little more than a month into Chapek's tenure without Iger at the company, Florida Gov. Ron DeSantis, a Republican, introduced the Parental Rights in Education Act — which critics called the "Don't Say Gay" bill. The legislation would prohibit "classroom instruction by school personnel or third parties on sexual orientation or gender identity." 

Disney is one of the largest taxpayers and employers in Florida, and Chapek and Morrell were soon fielding media inquiries about the company's stance on the matter. And employees — particularly animators at Pixar and Disney Animation — wanted to know how the company planned to react.

Iger tweeted his thoughts. "If passed, this bill will put vulnerable, young LGBTQ [lesbian, gay, bisexual, transgender and queer] people in jeopardy," he wrote.

During Iger's tenure as CEO and chairman, he had freely pontificated about an array of causes, including climate change, diversity and abortion. In a series of virtual meetings after the killing of George Floyd, Iger had told Disney employees that making their voices heard was the best way to bring about change, according to people on the calls.

Florida Gov. Ron DeSantis, a Republican presidential candidate, speaks in Rye, New Hampshire, July 30, 2023. Chapek decided not to take a public stance on DeSantis' legislation known as "Don't Say Gay," prompting backlash from Disney employees.
Reba Saldanha | Reuters

Chapek wanted to chart a different path. Weeks before DeSantis introduced his planned legislation, Morrell had outlined a new communications strategy to the board. He wanted Disney to stay out of political skirmishes entirely and instead signal its values through "three Cs": content, culture and community organizations supported by Disney. 

Chapek and Morrell had assumed they'd have months to explain their strategy internally. But Iger's tweet dialed up the pressure on Chapek to say something.

On March 7, 2022, Chapek and Morrell put their new public relations strategy into action. They penned a memo to all staff, approved by the board. It explained that the company would not take a public stance on the bill.  

Arnold, who is openly lesbian, signed off on the statement but told Chapek that Disney should also sign a public letter by the Human Rights Campaign, or HRC. The letter, which had already existed for months, compiled a list of U.S. companies generically "united in opposing the wave of anti-LGBTQ+ legislation." Chapek intended to sign the HRC letter but didn't want to undercut the message of the initial statement. Morrell and Chapek agreed that doing so would conflict with the company's new strategy of staying away from external conflicts, according to people familiar with their thinking.

In the memo to staff, Chapek wrote: "Corporate statements do very little to change outcomes or minds. Instead, they are often weaponized by one side or the other to further divide and inflame. Simply put, they can be counterproductive and undermine more effective ways to achieve change."

Disney employee Nicholas Maldonado holds a sign outside Walt Disney World on March 22, 2022, during a companywide walkout to protest Disney's response to the "Don't Say Gay" bill.
Octavio Jones | Getty Images News | Getty Images

The blowback was swift. Employees chastised Chapek with hashtags such as #Disneydobetter and #Disneysaygay. But Chapek and Morrell were convinced this was the right thing for the company. They didn't want Disney in a culture war with DeSantis, with whom Chapek had a solid relationship at the time. 

They were also thinking about China, according to p