By R.T. Watson, Joe Flint and Ben Fritz
Robert Iger stepped aside as chief executive of Walt Disney Co., though he will retain significant power over the company that he expanded into Hollywood's biggest and most powerful entertainment conglomerate over a more than 14-year tenure.
Disney on Tuesday named the company's head of parks and resorts, Bob Chapek, CEO effective immediately. But Mr. Iger will stay on as executive chairman, overseeing the company's creative endeavors through the end of next year, when his contract expires.
Mr. Chapek will report jointly to the 69-year old Mr. Iger and to the company's board of directors, according to an amended version of his contract the company released Tuesday.
"The company has gotten larger and more complex," Mr. Iger said during a call with analysts. "I should be spending as much time as possible on the creative side of our businesses."
Mr. Chapek's experience heading key Disney units over his nearly three-decade career at the company put him ahead of other potential successors to Mr. Iger, current and former Disney executives say. He beat out internal competitors including the executive who oversees the company's streaming service, Kevin Mayer.
Though Mr. Iger had said as recently as last year that he planned to retire in 2021, the afternoon announcement caught company insiders by surprise, several Disney executives said. There had been no rumblings or whispers inside the Magic Kingdom that Mr. Iger and the Disney board had finally agreed on a successor.
"No one knew this was coming," said one senior Disney executive.
Disney employees didn't receive an internal email about the change in leadership until more than an hour after the company sent out a press release. The internal communique arrived shortly after a joint appearance by Mr. Iger and Mr. Chapek on CNBC, which followed a hastily convened conference call with Wall Street analysts.
Indeed, even Mr. Mayer was caught off guard, people close to him said. On Tuesday, Mr. Mayer held a town hall for Hulu, the streaming platform he oversees. Among other points, he touted how closely Disney works together as a company. He learned only afterward of the succession news, people familiar with the situation said.
Mr. Iger started making his mark on Disney almost as soon as he took the reins in 2005. He led the purchase of Pixar Animation a few months later, the first of several multibillion-dollar acquisitions that transformed the company. Deals followed for Marvel Entertainment and Lucasfilm, giving Disney three of the best-known brand names in the entertainment business and making it the leader in the franchise-focused approach to film production that currently dominates the movie business.
In 2018, Mr. Iger led his biggest deal of all, the $71.3 billion purchase of the entertainment assets of 21st Century Fox, including its film and television studio. That deal was part of Mr. Iger's final shake-up of the company, repositioning it to distribute entertainment directly to consumers online and compete with companies like Netflix Inc., rather than simply sell programs and films to streaming-video services.
The Fox deal gave Disney significantly more content to stream and majority control of the subscription video service Hulu, which is being aimed at adults. In the past year, Mr. Iger has also overseen the launch of ESPN+ for sports fans and Disney+, which many in Hollywood consider one of the most credible rivals facing Netflix, just a few months after it launched.
One of his other major initiatives has been the company's expansion in China, particularly the opening of a theme park in Shanghai in partnership with that country's government.
Mr. Iger's succession planning has long been enigmatic. He has announced four separate retirement plans in the past, beginning with an announcement in 2011 that he would step down as CEO in 2015. Since then, Mr. Iger has announced and then delayed his retirement a total of four times.
In the process, other potential successors have left, including most notably former Chief Operating Officer Tom Staggs in 2016.
Mr. Iger said that naming Mr. Chapek CEO effective immediately made the transition "frictionless," allowing Disney to avoid "endless months of speculation, anxiety or competition."
Mr. Iger's record as one of the most successful CEOs in modern entertainment history is widely acknowledged. Disney's share price has increased more than fivefold under his tenure, its annual revenue has more than doubled and its annual net income has more than quadrupled.
He also earned a reputation as one of the most controlled and polished executives in Hollywood, nearly always on-message and beaming with charisma. He has been a frequent speaker at company events for fans and was regularly stopped by park visitors asking to take selfies with him while he walked around Shanghai Disneyland the week it opened.
Mr. Chapek, by contrast, is described by colleagues as less charismatic and polished, but highly intelligent and organized. In an interview Tuesday, Mr. Iger said Mr. Chapek "has all the qualities we look for in a CEO."
The 60-year-old executive has spent 27 years at the company, most recently atop the division that includes theme parks and consumer products, where he stewarded the opening of the Shanghai resort and nearly doubled Disney's fleet of cruise ships. Mr. Iger called those moves the largest capital expansion in the division's history. Mr. Chapek also oversaw the recent opening of Star Wars attractions Galaxy's Edge and Rise of the Resistance, installations of each beginning to operate at Disneyland and Walt Disney World.
Before the two divisions were combined, Mr. Chapek ran theme parks alone and, before that, consumer products. Prior to 2011, he was a senior executive at Disney's movie studio, overseeing the home-entertainment division, which at the time meant primarily oversight of the company's DVD business, followed by a brief stint as head of all distribution. People who worked with him at the time said the executive focused primarily on business matters, rather than the creative process.
Mr. Chapek said he will lean on his extensive experience in consumer-driven areas.
"I feel that I know the company extremely well," Mr. Chapek said during the call with analysts on Tuesday. "Everything in my career has been a consumer-oriented bsiness. That's where I've played."
The list of potential contenders for the top job included Mr. Mayer, who as chairman of Disney's direct-to-consumer and international operations oversees the company's recently launched streaming platform Disney+.
While Mr. Mayer has been on a fast-track at Disney and is charged with guiding its digital future, he doesn't have the breadth of operating experience that Mr. Chapek has, having spent much of his career in strategic planning.
In addition, Mr. Mayer is still piecing together Disney's digital strategy, which is crucial to the company's long-term hopes to remain an entertainment colossus. Finding a successor for him would be an added burden for the company, people at Disney said.
Mr. Iger said the decision to name a successor now will provide the time needed to groom Mr. Chapek for the day when he leads Disney on his own.
"This gives him the opportunity to work with me over the next number of months to create the smoothest possible transition," said Mr. Iger. "So that when I leave he'll be familiar with all elements of the company, not just those that he's already managed."
In recent years Mr. Chapek's work as head of parks and resorts exemplified a model of consistency. The division's annual income growth averaged about 13% between 2015 -- the year he took over -- and 2019. In 2017, under Mr. Chapek's stewardship parks and resorts was the only division to escape ending the year in a deficit.
"Bob was somebody who could look at a marketplace and identify where the business is," said Ann Daly, a former Disney colleague.
Starting last year, Mr. Chapek's responsibility expanded as his segment added consumer products, previously a separate division. Before running parks Mr. Chapek also did stints presiding over both home entertainment and the studio's theatrical distribution.
Mr. Chapek signed a new three-year contract with the company that sets his target compensation at a minimum of $25 million annually.
Mr. Iger, an active Democrat, has previously said that he considered running for president but decided against it. People close to him have said they could envision him working in the administration of a Democratic president. He also led a failed attempt to build a National Football League stadium near Los Angeles, was a contender to become commissioner of Major League Baseball and has been building a sailboat on which he told colleagues he might spend time following his Disney tenure.
--Erich Schwartzel contributed to this article.
Write to Joe Flint at email@example.com and Ben Fritz at firstname.lastname@example.org
Corrections & Amplifications
This article was corrected on March 5, 2020 because an earlier version incorrectly stated in the 17th paragraph that the share price increased more than sixfold under former Chief Executive Robert Iger's tenure. It increased more than fivefold.