Disney CEO Bob Chapek Supported Peter Rice. Until He Didn’t.


The decision by

Walt Disney Co.

Chief Executive

Bob Chapek

to fire top lieutenant

Peter Rice

from his position as head of the company’s General Entertainment Content unit last week had been under consideration for months, say people familiar with the matter.

Yet it came less than a year after Mr. Chapek had endorsed Mr. Rice’s leadership with a large bonus and a new multiyear deal that ran through 2024, people close to Mr. Rice said.

Like most slow rolling C-suite dramas, there was no one dramatic moment, but rather a series of events both small and intense, culminating in Mr. Rice’s dismissal in a conversation that ran less than 10 minutes, according to people familiar with the meeting.

Mr. Rice was one of the most senior executives at the company,  tasked with managing a budget of $10 billion annually and overseeing some 300 TV shows. The unit developed content for

Disney’s


DIS -3.71%

ABC network, cable channels such as Freeform and streaming services

Disney


DIS -3.71%

+ and Hulu.

In certain corners of

Disney,

Mr. Rice was seen as a malcontent who could be condescending to colleagues, acting more like he ran his own fiefdom than a good corporate soldier. Some executives at Disney said they felt Mr. Rice wasn’t as transparent as they wanted in how he was allocating financial resources.

Others counter Mr. Rice was an impassioned executive fiercely battling for his creative team and unafraid to challenge the status quo. He was willing to go over the head of his colleagues and take his battles all the way to the CEO’s desk, say these people, who add he was forthcoming about his business unit’s dealings.

In the high-stakes entertainment industry, where you are only as good as last week’s television show or movie, abrupt firings of seemingly secure executives aren’t uncommon. Stability isn’t a hallmark of Hollywood employment.

The firing of Mr. Rice had the backing of Disney’s board of directors, with Chairman

Susan Arnold

issuing a statement of support for Mr. Chapek after the dismissal.

In his recent contract renewal, the company cut Mr. Rice’s compensation by $5 million or 20%, people familiar with the matter said. The change was a reflection of Disney’s desire to bring the high cash compensation of executives who came over in 2019 as part of its $71.3 billion acquisition of the 21st Century Fox entertainment assets closer to the more-modest salaries at Disney, they said. His pay was still in the range of $20 million annually, some people familiar with the matter said.

Soon after arriving at Disney, Mr. Rice made waves by removing several Disney veterans and promoting Fox executives, which upset some long-timers, people close to both Mr. Rice and other Disney executives said.

At the time,

Robert Iger

was still chairman and CEO of Disney, and Mr. Chapek was heading Disney’s theme-parks division.

Under Mr. Iger, Mr. Rice had a fair amount of autonomy, said some people who were there at the time. When Mr. Chapek took over as chief executive in 2020, he restructured Disney’s entertainment operations, a move that meant Mr. Rice would have less ability to call shots without being questioned.

Dana Walden, a top lieutenant under Peter Rice, was promoted to run the entertainment unit.



Photo:

Steve Granitz/WireImage/Getty Images

Mr. Rice’s new role also required a lot of collaboration with other units and executives across the vast Disney empire, and that is where Mr. Rice’s challenges intensified. He wasn’t a Disney lifer and was viewed with suspicion by other unit leaders, current and former Disney executives said.

There were tensions with other senior executives including

Kareem Daniel,

the head of Disney’s Media and Entertainment Distribution unit;

Rebecca Campbell,

who was chief of the Disney+ streaming service and now heads international content operations; and Chief Financial Officer

Christine McCarthy,

people close to the situation said. Mr. Rice had also clashed on occasion with former senior Disney executive

Kevin Mayer,

the people said.

Last year, when Mr. Rice had money left over in his programming budget, he wanted to take some of those unused funds and spend them on marketing and promotion for a handful of shows including the ABC comedy “Abbott Elementary” and the Hulu limited series “Dopesick” and comedy “Only Murders in the Building,” some people said.

Such a move was unusual since there were already separate budgets for marketing and promotion for Mr. Rice’s shows, and the idea met with resistance from the distribution and finance groups, they said. Mr. Rice made his case to Mr. Chapek, who gave his approval to the request, they said.

That left a bad taste in the mouths of some at the company who said Mr. Rice would at times get upset if he didn’t get his way and would go to the boss.

There also were tensions about how Mr. Rice was allocating resources and his decision-making on programming, some of these people said.

A senior Disney official cited Mr. Rice’s decision to renew two struggling shows on the Disney+ streaming service—“The Mighty Ducks” and “Big Shot”—as examples of questionable deal-making. Both shows cost more than $50 million and neither had shown the type of success that merited additional seasons, this official said.

But people familiar with Mr. Rice’s thinking countered that the shows were renewed in part because the Covid-19 pandemic had made it challenging to develop and produce new programming and both were well reviewed.

Also, Mr. Rice believed there wasn’t enough stability on the platform and it was important to have some consistency so viewers wouldn’t get frustrated at series coming and going, they said.

People close to Mr. Rice say the narrative being put forward is the result of typical strains between creative executives spending money and their counterparts in the finance divisions watching the money. Mr. Rice also had his share of allies among creative executives and producers who respected his willingness to go to bat for them even at the risk of alienating the business side of the company, they said.

Since 1967, the Florida land housing Disney’s theme parks has been governed by the company, allowing it to manage Walt Disney World with little red tape. WSJ’s Robbie Whelan explains the special tax district that a Florida bill would eliminate. Photo: AP

That inherent tension was accentuated by Mr. Rice’s British mannerisms, which some at the company said could make him appear standoffish and aloof.

All these tensions might have added to mere petty annoyances if they weren’t happening in the backdrop of the growing frequency in which Mr. Rice’s name would appear in media coverage as either a candidate for a senior position at another company or as a successor to Mr. Chapek.

Mr. Rice has long been admired in the Hollywood community, where he is viewed as talent-friendly and Mr. Chapek is seen as an outsider. Disney’s high-profile fight with actress Scarlett Johansson last summer contributed to that perception of Mr. Chapek, as did having to follow in the footsteps of the admired Mr. Iger.

When Mr. Iger was still chief executive, there was chatter that Mr. Rice could ascend to the top of Disney, although insiders dismissed such talk as absurd speculation.

Mr. Chapek’s stumble with Ms. Johansson, his flip-flop on taking a public stance against Florida’s Parental Rights in Education Bill and the company’s declining stock price reignited the talk of Mr. Rice being a potential CEO.

It started to become believable with Mr. Chapek under siege, said one veteran Disney insider, who added that a rumor with no merit was suddenly seen as a possibility by outsiders and Wall Street.

Colleagues of Mr. Rice said he didn’t promote himself for the chief executive spot. However, he also did little to stop the speculation, some of those colleagues said, adding that harmed his status at Disney.

In addition, the continuing challenges of playing referee between Mr. Rice and other executives helped lead Mr. Chapek to conclude a change needed to be made, people familiar with his thinking said.

Mr. Chapek promoted

Dana Walden,

a top lieutenant under Mr. Rice, to run the entertainment unit, saying she was a better fit for the role, the people said.

Ms. Walden herself is a former Fox executive. People close to her said she has made it a point in her time at Disney to shake off a looser approach to management and is collaborative with her Disney teammates. She has often joked that at Fox, “we were raised by wolves.”

Disney’s Clash With Florida

Write to Joe Flint at joe.flint@wsj.com

Corrections & Amplifications
In his recent contract renewal, Disney cut Peter Rice’s compensation by $5 million or 20%. An earlier version of this article incorrectly said the company cut his base salary by 5%. (Corrected on June 13)

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