Can Bob Chapek recover from his latest PR crisis? The complicated legacy of Disney's most contentious CEO.
As widespread public opposition to Florida’s “Don’t Say Gay” bill mounted, the silence from Disney was deafening. Critics called on the Walt Disney Company, one of the most influential corporations in the world, to speak up against the proposed legislation forbidding instruction on sexual orientation and gender identity in kindergarten through third grade, which is expected to be signed into law any day.
The backlash came from all corners. Some employees felt their best interests were not being looked after, especially as Disney is forcing many California-based employees to move to Florida — or lose their jobs. Some fans felt it was hypocritical of the company to stay silent when Disney sells gay pride merchandise, profits off its large LGBTQ fan base and touts itself as progressive by featuring openly gay characters in its recent movies. Other critics said Disney, as a major donor to many of the key players in passing the legislation, had a moral obligation to speak out.
But Disney CEO Bob Chapek held off responding, later saying he didn’t want Disney to be a “political football” in the debate. Then came a letter to Disney employees on March 7. “Because this struggle is much bigger than any one bill in any one state,” Chapek wrote, “I believe the best way for our company to bring about lasting change is through the inspiring content we produce, the welcoming culture we create, and the diverse community organizations we support.”
The fallout to what many felt was a non-response was swift. Pixar employees wrote an open letter to Chapek, alleging that Disney executives demanded censorship of gay characters.
“We at Pixar have personally witnessed beautiful stories, full of diverse characters, come back from Disney corporate reviews shaved down to crumbs of what they once were,” the letter reads. “Nearly every moment of overtly gay affection is cut at Disney’s behest, regardless of when there is protest from both the creative teams and executive leadership at Pixar.”
That same day, the Walt Disney Company held its annual shareholder meeting. Chapek touted the company’s “relentless pursuit of innovation” and the smash success of “Encanto” as emblematic of its focus on diverse representation. But before he took questions from the shareholders, the CEO made an uncharacteristic statement.
“I'd like to take a moment to address some concerns that I've heard from many about the legislation impacting the LGBTQ plus community in Florida, while we've been strong supporters of the community for decades,” Chapek said. “I know that many are upset that we did not speak out against the bill. Now, we were opposed to the bill from the outset, but we chose not to take a public position on it because we thought we could be more effective working behind the scenes, engaging directly with lawmakers on both sides of the aisle.” He then pledged to donate $5 million to the Human Rights Campaign and similar organizations.
“I understand our original approach, no matter how well intended, didn't quite get the job done, but we're committed to support the community going forward,” he added.
The speech didn’t work. Shortly afterward, the Human Rights Campaign refused Disney’s $5 million gesture of goodwill. “The Human Rights Campaign will not accept this money from Disney until we see them build on their public commitment and work with LGBTQ+ advocates to ensure that dangerous proposals, like Florida’s Don’t Say Gay or Trans bill, don’t become dangerous laws, and if they do, to work to get them off the books,” the organization said in a statement.
The next day, Chapek issued another apology to employees. “I let you down,” he said. “I am sorry.”
While this is the first time employees have publicly criticized Chapek on this scale, dissatisfaction is already common among fans. Even before this scandal, disenchantment with the company from die-hard Disney lovers has been at what seems like an all-time high. Massive price increases in everything from food to ticket prices to accommodations have made a Disney vacation more difficult to afford than ever, to the point where a suite at the Disneyland Hotel costs more than staying at the Palace of Versailles in France. At the same time, the company has eliminated perks like the formerly free Magical Express transportation to and from Walt Disney World from the Orlando airport. Genie Plus has made stand-by lines regularly exceed an hour for rides that used to average a 15 minute wait.
Chapek, and to a lesser degree his predecessor Bob Iger, who is seen as more of a “nice guy” who prioritizes fan experience over money, have come under harsh criticism for treatment of cast members, what Disney calls its park employees. Many full-time park employees struggle to provide food and basic necessities for their families. Earlier this year, Abigail Disney, grand-niece of Walt Disney and granddaughter of company co-founder Roy Disney, released a documentaryabout the Walt Disney Company’s obligation to do better for its employees.
“It's just hard for me to imagine,” Disney says in the film. “... I cannot see [Roy Disney] taking $66 million home for a year's work in the same year when at the same company, people can't afford food. I don't see that happening.”
Profit, though, has been Chapek’s main defense. He took over as CEO of the company on Feb. 25, 2020, as the pandemic was just starting to be taken seriously as a significant global concern. Less than a month later, he took the unprecedented step of closing all Disney theme parks around the world. In Florida, the shutdown lasted from March to July of 2020. In California, it lasted 13 months.
Despite taking control in the worst possible conditions, Chapek has steered the company through the pandemic, marking record profits along the way. “It's not fair to say whether he's doing a good job or bad job,” Rick Munarriz, senior analyst at the Motley Fool, who frequently reports on Disney stocks, told SFGATE. “But I know that he's kept the company going.”
“The compromise is never going to make everybody happy,” he added, “but the fact is that the Disney parks are open, and they're doing either record or near-record results right now.”
On the first quarterly fiscal 2022 earnings call, on Feb. 9, Chapek reported $7.2 billion in revenue from Disney parks, experiences and products, saying the division “achieved all-time revenue and operating income records” in the previous three months.
Munarriz said that while posting that kind of profit is helpful to Disney stock, it’s not the largest indicator of how well the company is doing overall, especially in its stock valuation. In fact, he noted, Disney was the worst-performing stock of the Dow 30 in 2021, which he attributed to last year’s slower-than-expected subscriber growth in Disney Plus.
“The stock … had a rough end of 2020 because once the Disney Plus subscribers stopped growing at the pace that people expected it to, that hurt Disney stock,” he explained. “It wasn’t so bad, but it obviously wasn’t a banner year.”
Record profits in the parks division still do not mean the company is profitable overall.
“Disney has said that Disney Plus is not going to turn a profit until fiscal year 2024,” Munarriz said. “That's a long [time] to wait for something to be profitable. And the rest of the divisions have to make up for that slack.”
In a way, perk cuts and added costs in the parks are making up for the investment in Disney Plus. But the cuts, and what some fans perceive as unabashedly putting profits over people, has led to discontentment among fans reaching such a fever pitch that it’s extending far beyond the echo chamber of Disney blogs.
“When you spend the most amount of money you’ve ever spent and you go and have a substandard experience worse than before — and this is multiplied by the fact that it’s so crowded — these are all things that kind of entice this … extreme dissatisfaction,” theme park expert Scott Smith told the Washington Post.
Chapek, though, is in a unique position as far as CEOs of multibillion dollar corporations go. Disney is, first and foremost, in the business of making money. But it doesn’t want to be seen that way. People feel as though they have a personal investment in Disney because Disney markets itself as having a personal investment in the happiness of every customer.
The CEO of Universal theme parks doesn’t come under anywhere close to the same scrutiny, but that’s because the rival theme park doesn’t position itself as a company that has a close personal relationship with every guest. When people check into a Disney hotel, they’re greeted, every time, by a cast member saying, “Welcome home.” There are countless pieces of merchandise for sale that identify Disney as “home” and that the relationship between the company and its fans is a familial rather than transactional one.
By creating the idea that Disney is a safe place for people, a place where they will feel loved and supported the same way they do (or want to) in their own homes, they create a higher standard of relationship between the company and its customers. That’s why Disney doesn’t use that term at all. Rather, customers are “guests” always. But it’s also why, because Chapek has been so transparent in his monetary motivations and so apparently blind to guests’ unhappiness, so many of the people who have bought into this idea feel like he is letting them down.
As of press, a Change.org petition to fire Bob Chapek had more than 108,000 signatures.
“I've seen the complaints,” Munarriz said. “I'm on social media all the time. I know a lot of people paid for Genie Plus and are upset that they didn't get enough rides. There are so many people going for that system that there's not enough of that supply to go around to have it be a pleasant experience.”
“Is a solution to increase the hours in the parks that people who are staying at the best resorts can go in? Every move that would offset that will infuriate a segment of the Disney theme park fans,” he added. “And that's understandable, but Disney hasn't come to the point where the pricing elasticity goes snap. They haven't gone to the point that they've gone too far.”
Chapek isn’t the first Disney CEO to face widespread public criticism. Under Michael Eisner’s leadership, Disney opened Euro Disney, initially considered a “cultural Chernobyl.” Spending on the park, which was an early financial failure, was so extensive that Disney was forced to cancel many other projects, like Westcot, the canceled Disneyland version of Epcot. One of Michael Eisner’s most ill-fated moves was the Superstar Limo ride at Disneyland, drastically diminished by limited funds like the rest of Disney California Adventure, which was described by the New York Times as “the schlockiest attraction” in the parks. The ride was so hated that another review said, “Burn this ride to the ground and start over.”
Paul Pressler, former theme parks chairman, faced similar widespread criticism for attempting to end an admission discount for disabled guests and for massive cutbacks in the park experience, like shutting down rides and attractions early and reducing customer service training. Under his tenure in the early 2000s, park attendance declined because customer dissatisfaction was so high, though parks remained profitable because of the cutbacks.
Twenty years later, it sounds like history is repeating itself. Despite public sentiment that the Disney parks provide a diminished experience, profits are soaring.
Another aspect of why Disney parks are not up to the standard fans expect is one that many businesses are facing: a labor shortage. In the early days of the pandemic, Disney parks cut 32,000 jobs. Many of those employees did not return as the labor market tightened, and while Disney does not release this information, anecdotal conversations with cast members at Disneyland indicate the park is not hiring back as many people as they employed before the pandemic, despite needing more personnel than they currently have to operate the park. Understaffing, leading to unusually high ride breakdowns and lessened park maintenance, remains an issue.
Though Disneyland has been claiming labor shortages and has hosted several job fairs recently, only three of the 57 jobs listed on DisneyCareers.com as of press are for park custodian positions; only one is full time.
The question now becomes whether Chapek can keep his job or whether Disney’s board will try to save face in the Don’t Say Gay public relations crisis by ousting what could be one of the most hated CEOs in the company’s history. Before that shareholder call last week, rumors circulated widely on the internet that shareholders were going to use the call as an opportunity to call for Chapek’s termination from the board, though 94% of voters voted to keep him. Former Imagineer Jim Shull, one of the designers of Disneyland Paris, is even publicly speculating that Chapek could go in the wake of Don’t Say Gay.
Chapek’s changing response throughout this scandal could be an indication that even he’s concerned.
Chapek has long kept silent on public criticism, even as resentment for what some call blatantly money-grabbing tactics at the parks have longtime Disney fans reconsidering their allegiance. He didn’t even address comments made by Disney chief financial officer Christine McCarthy when, in the fourth quarter earnings call of fiscal year 2021 on Nov. 10, she said that the less-for-more philosophy of smaller portions and increased food prices would be “good for some guests’ waistlines.” Many read the remark as fat-shaming the park guests responsible for providing those record profits, especially in a place that uses “smellitizers” to waft sugary scents into the air to entice people to buy unhealthy treats.
The Don’t Say Gay controversy, though, is the first time Chapek has publicly apologized — but only after an enormous public outcry, mutiny within the company and being publicly shamed by other key players in the situation.
Two days after Chapek’s speech at the shareholders meeting, the message he emailed Disney staff took a different tone: He apologized, and also said the company would pause and reevaluate political donations in Florida. “Speaking to you, reading your messages, and meeting with you have helped me better understand how painful our silence was,” Chapek said. “You needed me to be a stronger ally in the fight for equal rights.”
Parks, though, don’t seem to be feeling the hit. Earlier this week, Thrill Data reported that Hollywood Studios at Walt Disney World was averaging an 81-minute wait time across the park, the highest it had been in a year.