Bob Iger’s return as Disney’s CEO once sparked hope inside the company. Now, insiders are anxious and losing faith.

• Disney employees are searching for clarity about CEO Bob Iger’s long-term plan for the company.
• Iger has been besieged by business challenges and external pressures his first year back.
• He’s making broad changes, but a falling stock price could agitate more investors.

On October 16, staffers gathered on the famed Burbank lot to snack on tacos, pose for photos with Goofy and other costumed characters, and watch a screening of a short film, “Once Upon a Studio,” featuring Disney characters from across the decades.

What should have been a triumphant moment for the entertainment behemoth was overshadowed by low staff morale and questions about what comes next. Just a week before, the company’s stock price had dropped to its lowest level in more than nine years, following the layoff of 7,000 workers in the spring as part of a $5.5 billion cost-cutting effort.

And CEO Bob Iger, who oversaw the company’s explosive growth during his first 15-year tenure, was nearly a year into his second term and facing increasingly difficult questions about how to stabilize Disney.

Iger’s unexpected return last November was met with surprise, but also with joy. Bob Chapek, his chosen successor, had made structural decisions and cultural gaffes that were unpopular both inside and outside the Mouse House.

But Iger, 72, is no longer the popular figure he once was on Wall Street or within Disney, where layoffs, talk of selling linear Disney TV assets like ABC, and uncertainty about the company’s future have all shaken people’s confidence. He’s also more isolated, as many of his closest confidants have left, including communications chief Zenia Mucha, top lawyer Alan Braverman, film chief Alan Horn, HR lead Jayne Parker, and CFO Christine McCarthy.

“There was a lot of excitement and hope at Bob Iger’s return a year ago,” a current Disney employee told Insider. “As far as I can tell, a lot of that, if not all of that, has dissipated.”

Other Disney offices held more subdued 100th anniversary celebrations outside of Burbank. In addition, the company sent all employees a centennial badge and a lithograph featuring Disney’s extensive roster of iconic characters, from Mickey to Ariel, as well as a letter from Iger extolling the company’s creative storytelling. “No one was like, ‘Whoopee,'” grumbled a second employee.

The commemorative gift highlighted Disney’s rich history at a time when its future is becoming increasingly uncertain.

Disney did not respond to this story.

‘Fear-based hesitation’ is rattling Disney insiders

Inside the company, reactions to Iger 2.0 are mixed. Upon his return, he restored authority to creative executives, undoing Chapek’s unpopular reorganization that prioritized streaming. The reorganization had alienated both Disney creative executives, who had lost control of their budgets as a result of the transition, and Hollywood power players outside the company.

According to a top Hollywood agent, “it feels very positive there” following Iger’s restructure. While there was some uncertainty during the Chapek era about how projects would be approved, the agent stated that “now everyone is clear on what the process is.”

However, other insiders describe a lingering fear and organizational confusion. Some in the television and film industries are concerned that, with Iger threatening to sell ABC and cable networks, a downsizing of Disney’s studios will follow, according to another Hollywood agent. “They all feel super nervous and super confused; are they going to have more layoffs?”

Uncertainty about the company’s future and who decides what on the creative side has left executives in a state of inertia, according to an entertainment lawyer familiar with Disney’s operations.

“Internally, there isn’t clarity,” the lawyer explained. “Most executives are stuck and don’t believe they can move forward.”

“It’s not just strike-related,” this source added, noting that much of Hollywood is still paralyzed by the ongoing actors’ strike. “There is a lot of fear-based reluctance to advocate for something.” In some cases, the hesitation is self-imposed. In other cases, people are unsure where to turn.”

Iger’s first term was distinguished by his unwavering optimism and ambition. One longtime Disney executive remembered him as a “phenomenal” leader and “the model of a CEO — calm and confident, and comes across like he’s got a plan.”

He was also known as a fan of content and creators, with a deft touch with talent and in-depth knowledge of the Disney product line. “The rare times I’d see him, he’d compliment one of my smaller projects — ‘Nice ratings on that!’ — some little show I couldn’t believe was on his radar,” the exec who worked for the show said. “He really knew the nuances.”

But, in an interview with CNBC over the summer, Iger surprised industry observers by calling the actors’ and writers’ strikes “disruptive” and their demands “unrealistic” (the Writers Guild of America has since approved a deal with the Hollywood studios; the actors remain on strike).

“His comments during the strike and the renewed focus on IP raise questions about what value talent will play in the future,” the attorney said.

Similarly, Iger’s statement to CNBC that linear TV assets “may not be core” to Disney surprised both Hollywood and Wall Street. “He probably could have done a better job of messaging that in a way that didn’t rankle as many people, and didn’t send as many shockwaves through the investor community and the board,” Insider Intelligence analyst Paul Verna observed.

According to one recently departed executive, Disney’s painful layoffs — foreshadowed by Chapek last fall and finally carried out over several weeks this spring — are the clearest indication that Iger isn’t the same CEO he was during his first tenure.

“Bob would have announced layoffs and done them the first week,” said this source. “However, not doing it for months on end created uncertainty and anxiety.” The aftershocks are still being felt, and I believe he has lost the trust of many people. Right now, it doesn’t seem like a fun place to work. It’s difficult to do your best work when you’re constantly off balance.”

Iger is facing a perfect storm of internal challenges and outside antagonists

During Iger’s first CEO tenure, from 2005 to 2020, he acquired entertainment and intellectual property powerhouses Pixar, Marvel, Lucasfilm, and 21st Century Fox. Back then, conventional wisdom held that legacy media needed to bulk up in order to compete with the likes of Google and Facebook, let alone newcomers like Netflix. Iger was widely regarded as Hollywood’s most successful businessman. During his tenure, Disney’s stock price nearly tripled.

But Iger will need a new strategy in 2023. Legacy media companies are losing ground to cash-rich tech behemoths in the streaming wars. They’ve poured billions of dollars into building streaming businesses, but Netflix has pulled ahead of the competition. After years of encouraging people to spend money to watch Netflix, Wall Street is now demanding that media companies make their streaming services profitable.

Iger must transform Disney at a time when some of its prize assets are showing signs of weakness. Right now, the company’s most consistently profitable business is its theme parks, which are thriving post-pandemic and in which the company recently announced plans to invest $60 billion over the next decade.

However, in the film industry, where Disney has traditionally been a reliable hit machine, it has recently had high-profile box office misses in Pixar’s “Elemental” and Disney Animation’s “The Little Mermaid”; even the mighty Marvel has stumbled. The company’s declining linear TV business culminated in a dispute with Charter Communications over the terms of a new contract for carrying Disney’s cable channels. And, since the launch of Disney+ in 2019, the company’s streaming business, which was supposed to compensate for the decline in cable revenues, has lost $11 billion.

Externally, Iger is embroiled in a battle with Florida Gov. Ron DeSantis, whose feud with the company began under Chapek over Florida’s so-called “Don’t Say Gay” law and has only grown under Iger, and activist investor Nelson Peltz. And, despite extending his contract for another two years this summer, through 2026, the CEO and his board must still find a successor to lead Disney without much certainty about the company’s future.

Disney’s board hoped Iger could resume his role as the deft political power broker he was during his previous stewardship of the company, but that hasn’t worked out, according to Verna.

“They wanted someone who had a steady hand, who was politically savvy, who was going to be able to solve some of these sorts of business model quandaries or some of the difficulties in making the streaming business model work,” Verna said in an interview. “Iger hasn’t done any of that.” He’s been treading water for the past year, going from crisis to crisis.”

Iger is focused on acquiring Hulu, selling assets, and finding an ESPN partner.

Iger is now focused on reducing Disney to its film studios, parks, and streaming businesses, which he believes have the greatest growth potential.

He’s moved forward with plans to make Disney the sole owner of Hulu, acquiring Comcast’s one-third stake in the streaming service for at least $8.61 billion, while also laying out product plans to make Hulu content available in the Disney+ app. He’s put the TV group, which includes ABC and cable networks like FX and National Geographic, up for sale, which could help pay for the Hulu deal. He is also looking for content or distribution partners to assist ESPN in going direct-to-consumer.

Iger hopes to create options for Disney in this manner. According to a source familiar with the discussions, one of those options could imply a significant shift: splitting the company into two parts — a streaming content company and a consumer products and experiences company — with a long-term licensing agreement between them.

Streamlining Disney makes it more appealing to potential buyers. Some analysts have long regarded Apple as the most likely buyer of all or a portion of the entertainment conglomerate. With other tech companies rumored to be circling ESPN, some industry observers believe Apple is more likely than ever to make a bid for the sports platform, not only to boost its own services business, but also to prevent a rival tech company from getting there first.

There’s no guarantee Disney will find a buyer or get a good price for the linear TV assets, because there aren’t many buyers for a fading business, let alone buyers willing to pay what Disney wants.

Disney faces the same challenges as other media companies in making streaming financially viable. Customers have already been trained to cycle in and out of streaming services as hits come and go, and as the platforms all raise their prices, cancellations may rise.

According to some Disney streaming employees, churn is a major concern. Streaming employees have been informed that the kid-focused DisneyNow app will be discontinued and its games ported to Disney+, ostensibly to help the streamer become more appealing to consumers. The move has fueled reports that Disney has discussed acquiring a major game publisher such as Electronic Arts.

Iger ‘has no choice but to be different kind of leader’

If Disney’s stock price continues to fall, Iger will be agitating even more investors.

Iger is already at odds with ex-Marvel executive Ike Perlmutter, one of Disney’s largest individual shareholders, who has joined activist investor Peltz’s fight to improve Disney’s results by gaining greater control over its strategy and operations.

Perlmutter has told people that he wants to break up Disney as much as possible and gain control of some of the intellectual property, and “people underestimate Ike at their peril,” according to a source familiar with Perlmutter’s conversations.

Disney’s largely liberal stance on hot-button social issues may entice other activist investors with political as well as financial motivations, such as Elliott Investment Management’s Paul Singer, a major GOP donor. There are people who “would love to take down the ‘woke’ company,” according to the source.

Perlmutter’s lawyer did not respond to requests for comment.Members of Iger’s inner circle have described him as “overwhelmed and exhausted” by the battles he’s fighting on so many fronts, according to Bloomberg. Several sources, however, questioned who else could lead the company through this perilous time in the entertainment industry — and one of the most pressing questions he and the board have yet to address is who will take over when his extended tenure ends in 2026.

According to Puck, Iger enlisted two former top Disney executives, Kevin Mayer and Tom Staggs (both onetime successor candidates who were passed over), in the summer to evaluate the company’s assets, and some company watchers saw their appointment as a step toward them taking on larger roles at the company. However, Bloomberg reported in October that earnings at Mayer and Stagg’s Blackstone-backed rollup Candle Media would be roughly half of what was forecast for 2023, which is not the kind of track record the Disney board is likely looking for in its next CEO.

Many people who spoke with Insider about Disney’s challenges believe that Iger is the best person to address them. Some speculated that his newfound CEO demeanor was simply a result of the circumstances.

“I think he has no choice but to be a different kind of leader,” Verna of Insider Intelligence said. “But he has stumbled in numerous ways — and I’m not sure if he was prepared, or if he’s truly capable of resolving all of these issues.” To be honest, I’m not sure if anyone is.”