Management changes usually don't deserve much press coverage, even at the largest and most important companies on the market. If one ham sandwich could run the business before, another one would surely do the job just as well, to paraphrase master investor Warren Buffett. So it is usually no big deal.

The Walt Disney (DIS 0.70%) just reinstated Bob Iger as chief executive officer, ending Bob Chapek's tenure in less than three years. This unexpected move speaks volumes about Disney's strategy.

Let's have a look.

Fireworks over the Cinderella Castle at Disneyland.

Image source: Walt Disney.

The roughest "smooth transition" ever

Iger had been planning his retirement for years, setting everything up to preserve his game-changing legacy. When Chapek took Disney's rudder on February 25, 2020, Bob Iger agreed to stay on as executive chairman for another 22 months, ensuring "a smooth and successful transition through the end of his contract."

So Iger was ready to step back from a four-decade stint at the House of Mouse, including a fantastic 15-year stint as CEO. He reshaped Disney's content catalog, breathed new life into the stagnant theme parks, and launched the popular Disney+ video-streaming service. Disney's stock returns doubled the S&P 500 index's gains under Iger's steady hand, while earnings multiplied more than five-fold. It was time to relax after a historic career.

But the "smooth transition" never happened.

The COVID-19 health crisis escalated into a global pandemic two weeks later. Movie theaters, theme parks, and cruises closed down for several months. Film sets had to operate under strict health guidelines, canceling some productions and pushing others back. The coronavirus lockdowns were undeniably helpful for Disney's media-streaming services, but even that silver lining came with stormy clouds. Traditional distribution partners complained when Disney moved some titles from the silver screen to the living room, and that idea also strained the company's relationships with major stars.

That was not what Chapek had signed up for, and he always seemed ill-prepared to take on the job of a lifetime in one of the most turbulent markets since the subprime meltdown of 2008. Chapek bristled at the thought of taking long-term strategy orders from Iger, fumbled the public relations battle with Avengers star Scarlett Johansson, and raised subscription fees for Disney+ against Iger's wishes, just to name a few controversial events.

Just a couple of weeks after Disney extended Chapek's CEO role with a three-year contract, Iger considered the choice of successor among his "worst business decisions." Moreover, Disney's shares have greatly underperformed the broader stock market in the Chapek era:

DIS Total Return Level Chart

DIS Total Return Level data by YCharts

The return of a retired hall-of-famer

So here we are, four months after Chapek's contract extension, with Bob Iger running the Disney show again. This sudden shift will have massive consequences.

Iger always wanted to build a sustainable entertainment empire for the ages, willing to shoulder additional costs and limited profits along the way. Chapek's focus was on the bottom line in a much shorter time perspective, as shown in the Disney+ price increase. And after working his way up through the theme parks division over the years, Chapek grudgingly accepted the importance of media-streaming services in the ever-changing entertainment industry.

Kevin Mayer, who launched Disney+ in 2019, was quickly pushed out and briefly served as the CEO of TikTok, the Chinese media-sharing phenomenon. Iger would probably love to have Mayer back at the House of Mouse, nurturing the digital services he kick-started so effectively, but that might require another billion-dollar acquisition. Mayer has been compiling a separate media empire under the kid-friendly Candle Media banner and DAZN, a European sports media giant.

Candle Media has spent more than $4 billion on production-house buyouts of its own, backed by the deep pockets of the private company's ultimate owner, Blackstone (BX 1.19%). If Iger pulls out his checkbook and offers to buy Candle Media, it would bring back a familiar superstar to the Disney fold while continuing the CEO's legacy of platform-building buyouts. The company name may not be familiar, but any parent of young children knows all about CoComelon and Blippi.

With Iger back in charge, is Disney a buy today?

Disney's investors were quick to embrace the return of Bob Iger, driving share prices more than 5% higher on Monday. That's just a drop in the bucket, of course. The stock price is still down by 37% over the last year, and the company has a lot to prove before investors can get truly excited about Disney again.

With the proven business acumen of Bob Iger at the helm again, Walt Disney looks like a great buy at today's deeply discounted price. Don't be fooled by the stock's sky-high price-to-earnings ratio, since that metric is measured against the results from Chapek's not-so-inspiring policies.

Bob Iger is the type of legend you want to run your company for decades on end. The years ahead should be significantly brighter.