Despite the exec’s recent LGBTQ gaffe, ”his PR problem is not a business problem,“ one entertainment attorney says
Even if you look hard, you won’t find a lot of folks in Hollywood applauding Disney CEO Bob Chapek’s public relations skills right now.
As the executive crosses into his third year as Disney chief after replacing the long-running Bob Iger in February 2020, Chapek is still facing the fallout over the company’s perceived lack of vocal support for the LGBTQ community and its failure failure to denounce Florida’s “Don’t Say Gay” bill, which Republican Governor Ron DeSantis signed into law on Monday.
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But industry experts observe the executive’s tendency to put his foot in his mouth — in this case, all the way up to the knee — hasn’t really affected stockholders’ confidence in Chapek’s business acumen.
While Chapek’s PR missteps may earn him anywhere from a C- down to an F grade, industry observers say Chapek also earns an A (or at least a B+) for growing the company’s streaming service Disney+ to an impressive 130 million subscribers worldwide since its November 2019 launch.
A Disney representative didn’t respond to a request for comment on Chapek’s second year as CEO.
And while Chapek’s initial waffling on “Don’t Say Gay” may have caused protests in the streets of Burbank, on Wall Street, experts observe that Chapek’s doing just fine financially.
“There’s bad PR, and there’s bad business,” Bryan Sullivan, a partner at Early Sullivan Wright Gizer & McRae who focuses on entertainment and investment, told TheWrap. “Chapek has a PR problem, not a business problem… Investors are not dumping Disney.”
Sullivan said he’d give Chapek a B+ or A- for overall business performance but an F for avoiding the call to step up with a statement on the Florida law.
David Offenberg, an associate professor of finance at Loyola Marymount University with expertise in entertainment, declined to give the exec a letter grade, but said Chapek’s executive future is unlikely to be threatened by PR stumbles, adding that Chapek doesn’t need to match Iger’s sterling reputation for forward-thinking ideas.
“For now, he’s the Mickey Mouse ice cream bar that the company needs: vanilla, wrapped in nostalgia, and making a ton of money,” Offenberg said. “At this point, shareholders don’t need him to innovate.”
But investors patience for basic maintenance of a profitable media brand won’t last forever. “At some point in the future, he will need to be bolder as consumer tastes, competition, technology, politics, and the economy shift,” Offenberg said.
In the entertainment industry, internal memos tend to become external very quickly — and such was the case with Chapek’s March 7 missive following a meeting with members of Disney’s LGBTQ community, in which the executive said Disney didn’t publicly condemn Florida’s “Don’t Say Gay” bill because such corporate statements “are often weaponized by one side or the other to further divide and inflame.”
A few days later, Chapek offered an apology and announced a pause in political donations in Florida, home of the massive Walt Disney World resort. However, his too-little-too late words of regret did little to quell the anger, which continued with employee protests and walkouts at Disney headquarters in Burbank.
The disgust with Chapek was not just low-level grumbling, but reached into Hollywood executive offices as well. “It’s 100% a self-inflicted wound,” one former top Disney executive previously told TheWrap. The former executive confessed to being “angry” about how the issue played out. Chapek is “missing everything — forget about whether he cares about the issue. He doesn’t understand all his constituencies, the company he supposedly runs.”
And there was more fallout: A group of Disney Imagineers — the creative team behind theme parks, attractions, cruise ships and retail outposts, which includes a significant number of LGBTQ members — demanded that Chapek reverse a decision to move the entire division to Florida because of what they have called the state’s “hateful legislation.” In the latest turn, Disney said on Monday that it will work to get the bill, which Republican governor Ron DeSantis officially signed into law earlier that day, repealed.
This “Don’t Say Gay” bill isn’t the first time Chapek has stumbled when it comes to relationships with Disney partners.
Last summer, “Black Widow” star Scarlett Johansson sued Disney, accusing the company of breaching her contract when it released the movie on its Disney+ streaming service while it was still showing in theaters, saying she was deprived of potential earnings.
While the two sides settled the dispute last October for undisclosed terms, it was an ugly and very public fight with one of Hollywood’s top stars that observers said would never have occurred under talent-friendly Iger. Chapek, who previously served as chairman of Disney Parks, Experiences and Products, was taken to task for the company’s official response to the lawsuit, which called Johansson “callous” and disclosed her $20 million salary — and suggested she was being greedy in claiming $50 million in box office-based backend compensation in the suit.
At the time, Johansson’s camp told TheWrap the actress was shocked by what one top executive called a “ham-handed” response. The “greedy” categorization also infuriated supporters of equal pay for Hollywood women who wondered if a man would have been similarly criticized for demanding that financial obligations be met.
However, the fact that Disney stock prices have remained relatively stable since Chapek’s takeover indicates the CEO’s blunders are not perceived as a threat to Disney’s bottom line. Disney’s stock price on Chapek’s first day at work (Feb. 25, 2020) opened at $133 and closed at $128. A small fluctuation, nothing dramatic — more like, well, we liked Iger better, but this guy might be OK too.
Like many companies, Disney took a hit when pandemic shutdowns began in March 2020, losing revenue from theme parks and theatrical box office. But by Feb. 25, 2021, even as the pre-vaccine pandemic raged on, the stock price had jumped to $198, largely due to new subscribers to Disney+. On Feb. 25, 2022, Disney stock stood at $150 per share — somewhat lower than the previous year, but analysts attribute that drop to the war in Ukraine, not Chapek. (The stock closed Monday at $138.72.)
Eric Schiffer, CEO of The Patriarch Organization, a private equity and venture capital firm, said he would give Chapek an A- for business performance, and a C- for nourishing personal relationships with Hollywood talent. However, Schiffer added, “Wall Street doesn’t care about creative empathy or the management of brilliant minds in Hollywood; they care about the ability to maximize shareholder value and positioning that with accordance to how investors see that value. Today, that’s largely focused around streaming.”
Still, there are some who aren’t ready to give Chapek a high grade in any category — saying that even with a positive business profile Chapek’s obvious weaknesses as a friend of Hollywood’s creatives could eventually disrupt Disney’s bottom line.
“Chapek earns a C+ in his second year,” said Tom Nunan, a and former network and studio executive who served as an executive producer on the Oscar-winning “Crash.” “The reason Chapek’s grade isn’t lower, and that he receives a plus next to his grade versus a minus, is that despite public snafus, keeping a giant company running successfully is no small task.”
Added Nunan, “Some will say Chapek’s not hurting anything except morale. But they forget that poor morale can create a massive brain drain and hobble the future. Maybe it should be a C-.”