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Disney's midnight CEO ouster: A tale of corruption, ESG, politics, & possible FTX contagion

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by Rebel Capitalist
Monday, Jan 02, 2023 - 15:27

On Nov 20, a Sunday night, there was a sudden surprise ouster of Disney CEO Bob Chapek. He was fired & replaced with former CEO Bob Iger.

This is bizarre & very suspicious. This kind of thing just doesn't happen by coincidence.

The government equivalent would be a midnight military coup to overthrow the current president and reinstall the prior president.

At a corporate level, this is the most dramatic development took place at the Disney board since the death of Walt Disney himself.

Bob Igar and Bob Chapek

We don't know the real story behind this move, but there is circumstantial evidence that this is a story of corruption, ESG control, politics connected to the Democrats, and maybe even fraud connected to FTX.

The media seems to be downplaying the significance of this, and it also looks like they are writing propaganda to make Bob Chapek out to be the fall guy for everything. This whole incident smells fishy.

To emphasize how bizarre, sudden, and extreme this ouster was, it happened:

  • On a Sunday evening.
  • In the middle of Elton John's farewell concert being live-streamed by Disney & with Disney executives attending.
  • It was rumored Bob Chapek was going to introduce Elton John that night.
  • Disney executives got the notice of the ouster on their phones in the middle of the concert.
  • Disney had released their earnings report 11 days prior to Chapek's ouster. It was a terrible report, which the entire board had to have already signed off on before its release.
  • The Disney board unanimously renewed Bob Chapek's contract only five months ago.

So it implies that something had to have happened in the short 11-day period between the earnings report and the ouster.

Part 1: Backstory

Bad things have been brewing at Disney for years now, starting under prior CEO Bob Iger's watch (2005-2020).

It's hard to pick an exact date, but going back to around 2015, when the evils of wokeness and cancel culture were really beginning to take hold, seems prudent.

I don't have the time to cover the backstory of Disney for the last decade, so I need to take a lot of shortcuts and present a very opinionated view (derived from the evidence from the last decade) to be succinct enough to present here.

In a nutshell, during the CEO reign of Bob Iger, he installed and transformed Disney into a woke institution.

As CEO, his strategy was to spend like a drunken sailor and buy up other companies that had great intellectual properties, while neglecting all the properties that Disney already owned.

While this strategy was initially extremely profitable for Disney (particularly in the early days of the Pixar and Marvel acquisitions), over the long haul, the IPs acquired began to deteriorate in quality because of their chronic woke hiring practices. All told, these woke employed lacked the skills to create compelling content.

Pixar & Marvel stagnated, the Star Wars/Lucasfilm acquisition has become a net loss, and the FOX acquisition is now a boondoggle.

Furthermore, Bob Iger's spending spree put Disney into high levels of debt.

For context:

  • Pixar $7.4 billion
  • Marvel $4 billion
  • Star Wars / Lucasfilm $4.05 billion (even Disney's own internal actuaries told Bob Iger he overpaid by almost $1 billion at the time).
  • Disneyland Shanghai $5.5 billion and bowing to the Chinese Communist party to get movies shown in China.
  • Disney+ (steaming) is losing money every quarter. Just this last quarter, its operating loss was nearly $1.5 billion. And anybody following the financials of Netflix knew this was going to be a ridiculously expensive venture that would lose gobs of money for years to come.
  • FOX $71.3 billion

FOX was an exceptionally large boondoggle for Disney because it was magnitudes more expensive than all the other acquisitions combined.

Furthermore, it was poorly planned on Bob Iger's part restart, because he personally said that the crown jewel of the FOX deal was Sky TV, which would give Disney broadcast access to Europe. But due to other acquisitions going on, Sky got sold to Comcast, so Disney did not get the main thing they were after when buying FOX.

Meanwhile, in the mid-2010s, Bob Iger was considering a US Presidential run on the Democratic ticket. He built his base around the powerful Hollywood elite and media.

As an example, he secured a major endorsement from Oprah Winfrey. And it appears he started embracing woke culture within Disney to further his image and political goals.

He gave free rein to woke-ists in the company and put them in charge of critical, creative endeavors, which eventually led to a train wreck in the quality of the shows and movies they produced.

"The Force is Female" and "The M-she-U" are terms that reflect the attitudes at the company.

YouTubers who have done a good job covering "Dismal Disney News" over the past decade include (but are not limited to):

  • Midnight's Edge
  • Doomcock
  • Nerdrotic
  • The Critical Drinker
  • Clownfish TV
  • Valliant Renegade
  • Geeks & Gamers
  • Anna That Star Wars Girl

Even our favorite lawyer, Robert Barnes (who is helping George Gammon sue The Fed), has done live streams with some of these people. I think Barnes is a Star Wars fan and can geek out with the best of them.

The Critical Drinker has the most succinct & eloquent summary of the destruction of Disney that has happened in the last decade.

When the COVID-19 lockdowns started, the game changed entirely. Prior to COVID-19, the parks division was the company's #1 revenue generator, followed by the TV studios division (e.g., ABC, ESPN) at #2, and movie division at #3 .

With both the parks and movie theaters shut down, Disney's #1 and #3 biggest revenue generators were crippled, but the company still needed to service the massive amount of debt Iger created.

When the lockdowns started, Bob Iger conveniently decided it was time to get out of dodge and announce his retirement.

Bob Chapek was hastily picked as the Disney CEO successor in a surprise move. Chapek was head of the parks division and had a reputation as a cost-cutter.

While the narrative spun that Bob Iger hand-picked Bob Chapek, the evidence suggests that many on Disney's board were upset with Iger's wild spending, so they pushed for the penny-pinching Chapek.

But it also looks like the rest of the board was loyal to Iger, and was setting Chapek up to be the fall guy to deal with all the problems that were on the horizone.

Even though Iger was supposed to be leaving, he didn't actually leave for over a year. They spun it as a transition to help Chapek get up to speed during such a difficult period.

Behind the scenes, there seemed to be a conflict of both Bobs fighting for control. Iger left many of his loyalist in high positions, who all seemed to oppose Chapek.

Did Iger actually leave? Rumor has it that he never really left. He is still the largest shareholder and very well-connected to the people he left in top positions.

As recent as this past July, Iger has publicly thrown shade at Chapek, saying that naming Chapek as his successor was one of his "worst business decisions."

Because of this, Chapek had an uphill fight during his entire tenure. He had only been at the helm for less than a year fighting all the insurmountable problems the company was facing.

The employees were hired for wokeness, and the shows and movies in production were previously green-lit by Iger years prior. These projects still had yet to work their way through the system.

Yet Chapek got the blame when they bomb at release. He had to deal with the company's massive debt and was served a unique problem called a pandemic.

But unlike Iger, who is slick and elegant, Chapek is clumsy and unlikeable.

Don't Say Gay Bill

Chapek's instinct was to stay out of politics. However, the most famous example of his weakness was what the propagandists called the "Don't Say Gay Bill".

At first, Chapek tried to stay out of the whole thing, but then woke Disney employees organized a protest against him. Chapek caved and made a controversial that prompted Florida officials to repeal several laws that favored Disney.

Despite all of this, Chapek's contract was renewed for another three years, unanimously, in June 2022. So Chapek was now sufficiently in control to the point where he could finally start instituting his own changes.

Unfortunately for him, now that he has been ousted, the effects won't be seen for another few years.

The Ouster:

It appears that the ouster was led by CFO Christine McCarthy. The mainstream media narrative had framed Chapek as someone who had to be removed because of his mishandling of both Disney+, and book keeping.

This story doesn't add up for multiple reasons:

CFO Christine McCarthy
CFO Christine McCarthy

 

  • Regulations prevent the CEO from getting direct access to the books.
  • The CFO is the person who prepares the books and preps the CEO on how to present things for the financial reports. It is impossible for CFO McCarthy to not know everything better than and before Chapek.
  • The entire board had to have signed off on the earnings report. They should have known what's coming.
  • Disney+ is Iger's boondoggle. Everybody paying attention should not be surprised at the horrific losses in streaming. Nobody in the industry is actually profitable.
  • The accounting gimmicks used to allegedly "cook the books" by Chapek are standard "Hollywood accounting".

    This is an actual term because every studio does it as standard practice. A CFO not doing this and not walking the CEO through this would be considered malpractice.

    This is the industry where officially, Return of the Jedi still has not officially made a profit, and [famously screwed David Prowse (guy in the Darth Vader suit) by never paying him any residuals.](https://www.techdirt.com/2011/09/13/hollywood-accounting-darth-vader-not-getting-paid-because-return-jedi-still-isnt-profitable/)
  • Chapek was dismissed "without cause". This means Disney has to payout his contract and golden parachute. If Chapek was doing something really bad, they would fire him "for cause".

The Two Best Theories That Explain What's Really Going On

 Theory 1 - WDW Pro ESG Theory

WDW Pro, a long time Disney reporter who understands both the entertainment and financial/business side of the company, presents a conservative theory:

As part of the earnings report, Chapek announced there would be layoffs. He put together a small “cost structure task force” which included himself, McCarthy, and general counsel Horacio Gutierrez.

WDW Pro suggests that after the earnings report, Chapek was going to start cutting sacred cows that were important to both McCarthy/Iger's factions and also powerful majority shareholder interests, particularly ESG concerns.

The largest shareholders of Disney are powerful companies like Blackrock, which are known to be deeply entangled in the ESG movement.

In order for Chapek to get ousted suddenly in this manner, it would have required powerful shareholders pressing their influence on the board.

Theory 2 - Kamran Pasha FTX Theory

Kamran Pasha, screenwriter, Hollywood insider, and also once an intern for the SEC, presents a highly speculative theory.

He admits it is highly speculative and relies heavily on circumstantial evidence, but it is the only thing that fits together all the strange data points.

Pasha believes Disney has a dirty connection to FTX. He believes that under Iger and McCarthy, money may have been used inappropriately and given to FTX.

Chapek wasn't aware of this FTX connection, so there was a risk he was going to discover it very soon.

Out of panic, McCarthy went to the board to remove Chapek in an attempt to cover their tracks. Members of the board were also in on it, so everybody needs to cover their tracks.

Under short notice, Iger is the only person they could get back as CEO without creating a lot of suspicion.

Pasha predicted 2 things would have to happen if this theory was correct. Both may be coming true.

  1. A large company such as Apple needs to buy Disney. This could obfuscate the books enough so nobody will ever notice. And sure enough, just a 2 days after Iger returned, there was a media leak that Disney was in talks with Apple to be acquired.

    Also, Iger has an existing relationship with Apple and Steve Jobs (Pixar acquisition, ITunes TV partnership, etc.), so bringing back Iger to make an Apple deal happen would be Iger’s unique qualification over all possible CEO replacements.
  2. Disney/FTX Coverup. As part of bankruptcy proceedings, creditors are listed in the court documents as part of the public interest.

    Pasha predicted Disney would try to get that list censored so nobody could see that Disney was involved with FTX. And sure enough, the judge decided to censor the list (for now).

Other pieces that fit the puzzle:

  • Disney did announce awhile back they were thinking about entering the crypto market. It would make sense for a big US company like Disney to seek out a company like FTX because of its positive reputation at the time.
  • There was also a SEC whistleblower in 2017 which claimed Disney had a $3 billion/year padding in their finances. Disney sued the whistleblower. The SEC never did anything with this. Disney just dropped their lawsuit against the whistleblower at the end of September. Very coincidental timing.

    It’s hard to make a connection between this alleged accounting fraud and FTX, but the size of the numbers are large enough that one could speculate they could have been using this padding to hide large expenses elsewhere.
  • Kevin O'Leary, who is trying to save his trashed reputation, gave an interview on CNBC and tried to deflect criticism by saying that there were much bigger investors who got caught up in FTX.

    He said "Iger", before he got cut off. Bob Iger never came up as a topic, so O'Leary had to be thinking about Iger for some reason on his own. And if Iger is the top name in his head, this implies Iger was the biggest contributor to FTX. But at a minimum this establishes there is a connection between FTX and Iger.

 Starting at 3:25. Listen for “Iger”.

https://www.cnbc.com/video/2022/12/08/kevin-oaleary-on-why-he-invested-in-ftx-and-his-recent-conversation-with-sam-bankman-fried.html

  • Since FTX is a well known money laundering operation to fund Democrats, it also fits that Bob Iger, who had presidential ambitions, may have used FTX to help fund Democrats, both for personal gain, and also for regulatory to benefit Disney.
  • Pasha got leaked a tip from a Disney insider who said the executives freaked out after people noticed Kevin O’Leary’s “Iger slip” after Pasha pointed it out. There is an internal memo that is warning executive level directors.
  • “They are not to comment on anything related to FTX other to say that Disney is not involved and Iger’s personal finances are not relevant to his job as CEO.”
  • “If they hear anyone under them talking about FTX, the names are to be forwarded, so it can be brought into line with Disney core values.”
  • Normally the practice is to simply ignore random speculation.
  • And “re-educating” employees (in an Orwellian fashion) is real extreme.
  • So this indicates desperate behavior.

Conclusion

It’s too early and hard to sum up what's taking place at Disney. But legendary investor Jim Rogers has pointed out that often when a crisis happens, everybody says, “Nobody could have seen it coming”.

But in reality, there were tons of signs, but everybody just ignored all of them. Disney being so big and woven into the economy, politics (corruption), possibly FTX, American culture, and to some extent China (because of Iger's push), may be one of those signs that Jim Rogers talks about that everybody ignores. 

My feeling is this is at least a reflection of a greater systemic corruption that is going on in the entire economy, driven by the ESG movement, and those corrupt political powers driving it.

This is a war being fought on two different fronts: an economic (control) war and a culture war, and Disney is unique that it is powerful in both ambits.

If Disney is connected to fraudulent activity regarding FTX, we should hope to cast sunlight on this and expose just how deep this kind of corruption is, and hopefully begin to turn the tide against this movement.

- Scrooge (Rebel Capitalist Pro)

Contributor posts published on Zero Hedge do not necessarily represent the views and opinions of Zero Hedge, and are not selected, edited or screened by Zero Hedge editors.
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