It’s been a rough first two years for Bob Chapek in Disney’s top job.

First came the pandemic, which started just days into Chapek’s tenure as CEO, bringing the entertainment industry to a halt.

With moviegoing hampered by Covid even after theaters reopened, Disney started releasing movies on streaming, which led to Chapek’s second big challenge: alienating top talent. Scarlett Johansson’s lawsuit and the strongly worded public exchanges with Disney that followed drew gasps in Hollywood and raised questions over how the storied studio would treat its biggest stars under Chapek, a Hollywood outsider who came from Disney’s park division.

Now Chapek is facing his biggest test to date: discontent within his own company. The open internal revolt was sparked by Disney’s botched response to Florida’s so-called “Don’t Say Gay” bill which would ban classroom discussion about sexual orientation or gender identity in the state’s primary schools.

After days of silence that had been met internally — in Chapek’s own words — with “disappointment that the company has not issued a public statement condemning the legislation,” the CEO finally spoke up about the bill on Monday, a week after Chapek’s predecessor Bob Iger had criticized the controversial legislation on Twitter, warning that it would “put vulnerable, young LGBTQ people in jeopardy.”

Chapek’s March 7 memo, in which he explained why Disney would not denounce the bill, despite being urged to do so by LGBTQ+ employees in at least one letter to the company leadership and in a meeting with Chapek the week before, sent chills throughout the company, with staffers calling it “tone deaf.”

What came next was a week of discontent, which released pent-up anger that had been simmering for a long time. Deadline has spoken with several people who had been at Disney for at least a decade who described this as “the worst week” they’ve ever had working at the company.

According to sources, employees expressed their disappointment in private conversations and in Zoom open forums held by several Disney divisions. Some 800 people tuned in to one such meeting for LGBTQ+ staffers across the company from around the world Thursday, sharing experiences of alleged bad treatment and censorship, exposing a potential major issue in onscreen representation.

One element in Chapek’s March 7 memo that struck a chord was touting “all of our diverse stories” and listing a number of Disney movies and TV series, including several with LGBTQIA+ themes like Pose, Modern Family and Love, Victor.

“Powerful content that changes hearts and minds only springs from inclusive cultures, which not only attract and retain the best and most diverse talent, but also give those employees the freedom to bring forth ideas that reflect their lives and experiences. We must work together to ensure Disney always remains such a place,” Chapek wrote.

His comments were quickly rebuked by many associated with Disney productions. During the company Zoom calls this week, sources said, staffer after staffer shared stories of systematic suppression of gay themes in Disney content, which they said had been either watered down or outright dismissed.

A letter signed by “The LGBTQ+ employees of Pixar, and their allies,” which took Chapek to task over his response to the Florida bill, particularly resonated and was circulated within Disney, becoming an unofficial manifesto of the internal dissent. Multiple employees from various divisions tell Deadline the harsh picture painted in the letter is a truthful representation of how people there feel, and how LGBTQ+ content has been stifled for years at a company whose business is built largely on a foundation of family entertainment.

“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,” one of the letter’s most talked about statements said. “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.”

With the controversy engulfing the company and Disney-affiliated talent like The Owl House creator Dana Terrace and former Agents Of S.H.I.E.L.D. executive producer Drew Z. Greenberg publicly criticizing Disney over its response — many using the hashtags #dontsaygay and #disneydobetter — Chapek on Wednesday changed course and publicly condemned the Florida bill during the annual Disney shareholder meeting.

Just hours after Chapek told shareholders that Disney was donating to The Human Rights Campaign, the nation’s largest lesbian, gay, bisexual, transgender, and queer civil rights organization rejected the donation, calling for a greater commitment to the LGBTQ+ agenda in yet another blow to Disney’s efforts to change the narrative after the miscalculated initial response.

The comments also did little to quell the internal mutiny. As the turmoil continued, Chapek today in another memo spoke directly to the company’s employees, this time striking a contrite tone and saying, “You needed me to be a stronger ally in the fight for equal rights and I let you down. I am sorry.”

Disney’s maligned response to the Florida bill came two months into the tenure of the company’s new head of communications, Geoff Morrell, who also handled BP’s reaction to the deadly Deepwater Horizon explosion and oil spill. It also came days after Disney had earned praise for being the first Hollywood studio to pause its theatrical releases in Russia following the invasion of Ukraine.

The missteps in the handling of the Florida situation clearly played a role, but a perfect storm of factors likely contributed to the strong internal response, sources said.

“Between the pandemic, the Ukraine war and ‘Don’t Say Gay,’ emotions are pretty raw,” one insider said. The pandemic was particularly hard for Disney employees who had to face furloughs, layoffs and salary freezes.

It’s too early to tell how lasting the impact of this week’s events will be on morale within Disney. According to sources, several LGBTQ+ employees have indicated privately that they are considering leaving the company in light of its initial inaction and subsequent actions.

The discontent goes beyond the rank and file. A big Disney corporate retreat is scheduled for the end of the month in Orlando, FL with the top executives across all divisions expected to convene at Disney World, and according to sources there is talk among prospective attendees about boycotting the gathering or at least changing the pre-set agenda to hold a discussion about the issues brought forward by this week’s events.

Already rattled by the tough stance Disney took in the Johansson lawsuit (which was eventually settled), the creative community now is trying to make sense of the ‘Don’t Say Gay’ debacle. A content company like Disney needs content creators, and it will be crucial to see whether any of the biggest Hollywood names’ decision whether or not to work for Disney going forward will be influenced by the company’s reaction to the bill.

“There is a lot of apprehension out there right now over how badly they have handled this,” a top-tier director told Deadline. “I’m not saying people are turning down work there yet — the brand is damaged for sure.”

At the end of a trying week for Disney, some who have been critical of the company also see a silver lining.

The events of this week “could bring a profound change at Disney,” an insider said, referring to the long history of roadblocks to get LGBTQ+ stories to the screen that came to light in the past five days. “The sort of pushback or hesitancy that was common in the past will be greatly diminished both corporately and creatively.”

Another Disney executive noted that “this could lead to a leap forward of five to 10 years” and “a major mind-set shift.” “No one can sit on the wrong side of this anymore.”

With reporting by Dominic Patten and Justin Kroll.

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