CNBC SPECIAL: Disney's Wildest Ride Part 1

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Alex Sherman (0:32)

What does a private bathroom, Oogie Boogie Bash and a hippopotamus have to do with the behind-the-scenes chaos between Bob Iger and Bob Chapek at Disney? I'm CNBC media reporter Alex Sherman. I spent many months reporting the inside drama of a CEO succession plan gone awry, a cautionary tale about how good intentions collided with ego and hubris at the highest levels of corporate America.

Welcome to Disney's Wildest Ride.

Part one. After pushing back his retirement four times, Bob Iger finally made the leap. On February 25, 2020, he announced he would step down as Disney's CEO. His handpicked successor, Bob Chapek, then Disney's Parks Chairman, would take over the day-to-day job of running the company effective immediately.

As part of the changing of the guard, the Disney board suggested the new CEO should take over Iger's expansive office at Disney headquarters in Burbank, California. There was just one problem. Iger had no interest in moving out. He wasn't truly leaving Disney anyway. His succession plan allowed him to stay on as executive chairman for 22 more months. Chapek would report to him and the board. Iger would also quote, direct the company's creative endeavors. Nebulous phrasing suggesting he would retain control of movie and TV content and operations.

There was a practical reason Iger didn't wanna move out of his office. It had a private shower built for former CEO Michael Eisner and a vanity for shaving. Iger, now 72, consistently woke up around 4:15 a.m. to work out and then shower. On evenings when Iger was heading out for a Disney premiere, award show, or benefit, he would often take a second shower, this time in the office. Iger told Chapek that he lived for those, quote, two shower days, according to people familiar with the conversation.

Iger chose Chapek, now 64, as his successor because of Chapek's integrity and business acumen, not his interest in Hollywood socialization. Chapek has the outward corporate demeanor of a Midwestern businessman, or, as one colleague jokingly put it, a tuna salad sandwich who sits in front of spreadsheets. He's a risk taker who's not afraid to upend the status quo, but he's not a schmoozer by nature.

Whereas Iger holds court around his Brentwood mansion, a short stroll from celebrities, producers, super agents, and other Disney executives, Chapek lives about an hour's drive from downtown Los Angeles in Westlake Village. Iger enjoys yachting. Chapek is more of a power boating and kayaking kind of guy.

Both men agreed Chapek wouldn't have much need for the office shower. Chapek would instead move to a smaller office on the same floor.

On the wall of Iger's office bathroom hung two posters. The first was a framed collage of newspaper front pages and magazine covers with images of Iger celebrating Disney's purchase of Marvel in 2009

The $4 billion deal was arguably Iger's shrewdest decision as CEO and one of the best media and entertainment acquisitions in US corporate history.

The second picture spoofed the movie poster from the 1975 Clint Eastwood thriller, The Iger Sanction. But the image was of Iger instead of Eastwood and the title was The Iger Sanction spelled with an I rather than EI, the Iger Sanction, which was the original title of the movie. The Iger Sanction is about an assassin who comes out of retirement for one last job. On November 20th, 2022, Bob Iger came out of retirement to become Disney's CEO once again. The board had fired Chapek. Within days, Iger fired Chapek's closest advisors, including his former chief of staff, Arthur Bachner, his assistant, Jackie Hart, and his de facto second in command, Kareem Daniel. In July, Iger extended his contract through 2026, the fifth time he has pushed back his departure as CEO.

Chapek confided to a friend that his tenure at Disney was, quote, about three years of hell, defined by one overriding theme, his unrelenting fear that Iger wanted his job back.

Iger, meanwhile, has told peers and colleagues he returned to Disney to correct what he sees as one of the biggest mistakes of his career, choosing Chapek.

When the two people at the top of a company have a dysfunctional relationship, there's no way that the rest of the company beneath them can be functional, Iger wrote in his autobiography, The Ride of a Lifetime. It's like having two parents who fight all the time. Iger wasn't describing his relationship with Chapek. He was recalling his observations living through the meltdown between Eisner and his number two, Michael Ovitz, in the 1990s. The pair got along great for years until they became the top two people at Disney. Within 16 months, their relationship had exploded and Ovitz was fired. But like a son who vows never to repeat his father's mistakes and then proceeds to do just that, Iger's relationship with Chapek followed a strikingly similar pattern. There's no company in the world more associated with storytelling than Disney. Its most famous movies are modern versions of timeless fables. The story of the Chapek era is timeless in its own way. It's a tale of how good intentions, clashed with hubris and ego, can erode one of the most famous organizations in the world. A case study in corporate dysfunction and succession gone wrong. As Iger and the Disney board resume their search for a successor, a critical question looms. Have they learned the moral of the story? This account is based on conversations with more than 25 people who worked closely with Iger and Chapek at Disney between 2020 and 2022 They declined to be named as the events and conversations were private. Many of the details have never been reported. Through a representative, Chapek defended his record as Disney CEO in a statement to CNBC. Bob is proud of the work he did in the course of his 30-year career at Disney, particularly during his nearly three-year run as CEO, steering the company through the unprecedented challenges of the pandemic and setting the course for business transformation as he and his team took the disruptive yet necessary steps for business revitalization and long-term growth, said a Chapek spokesperson. Iger declined to comment for the story.