The legendary CEO of the most powerful entertainment company will have to show how quickly he can cut costs and restore profits.

To save Walt Disney Co this time, Bob Iger must show a different side of his character.

The legendary CEO who transformed Disney into the most powerful entertainment company in the world will have to show how quickly he can cut costs and restore profitability, analysts say.

Disney shocked investors late Sunday night by announcing that CEO Bob Chapek was fired and that 71-year-old Iger was given a two-year contract to help the company grow again.

The stunning development comes two weeks after Disney’s quarterly financial performance fell far short of Wall Street expectations for both earnings and revenue, a rarity, which sent shares plummeting 12 percent. Shares of The Walt Disney Co are down 40 percent this year.

Shares of the company rose 8 percent on Monday’s opening bell, with Iger’s appointment effective immediately.

The move prompted other return appointments, such as Steve Jobs’s return to Apple and Howard Schultz’s return to Starbucks in times of crisis.

“The bold move (Iger’s return) may feel like the right one. However, the company is in a different phase of growth,” said PP Foresight analyst Paolo Pescatore, adding that short-term measures may mean curtailing some operations.

Most The direct target could be Disney+, the streaming service Iger helped launch in 2019. Losses at the unit more than doubled to $1.5 billion in the last reported quarter.

The company has become a drag on revenue as Disney spends a lot of money on content to attract subscribers, testing the patience of investors.

“Disney+…could probably do better with fewer end-state subscribers, made up of superfans willing to pay high RPUs (rates per user), which would generate much higher margins,” said MoffettNathanson analysts.

They also pointed to ESPN as another target for sweeping cost cuts, including a review of all upcoming sports rights as the network loses cable subscribers.

Activist investor Dan Loeb’s Third Point had also pushed a potential spin-off from ESPN when it took a stake in the company in August, though it later abandoned the idea.

Some brokers have also raised concerns about whether the two-year period Iger has agreed to return would be enough to transform the company and find a successor.

“The problem is that Iger can’t stay forever. He already stumbled over the transition to Tom Staggs in 2016 and now (Bob) Chapek,” said Rosenblatt Securities.

Nighttime change

The uproar on top of Disney soon came with reports that Iger had first been approached by board members about a possible return on Friday.

Iger completely separated from Disney late last year after staying on board as executive chairman for two years, to help guide Chapek and ensure a smooth transition.

That transition was anything but smooth, and on Sunday Iger agreed to a two-year contract to redirect Disney’s trajectory and help find a new CEO.

Iger was the face of Disney as CEO for 15 years before handing the job over to Chapek in 2020, a period in which he amassed a string of wins acclaimed in the entertainment industry and by Disney fans.

Chapek oversaw Disney during one of the most challenging periods in the company’s history started with a pandemic and ended, at least under Chapek’s rule, with rising inflation.

But his time as chief executive was also marked by what many saw as unforced errors for a company that, under Iger, seemed to do no wrong.

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