Disney CEO’s no good, very bad week: Josh D’Amaro is dealing with 3 major headaches in his first week

Josh D’Amaro stepped into that corner CEO office at Walt Disney with a clear goal, pledging the company would focus “on coming together as one Disney to deliver a more connected, personalized, and immersive experience to our consumers.”

D’Amaro described a world of Disney entertainment that consolidates its vast intellectual property of movies, games, experiences, and more under one roof. It took a week for some of the biggest bets underpinning that vision to collapse.

The vision of a sweeping field of Disney content relied on multiple external partnerships worth billions of dollars. Several of them unraveled entirely. 

D’Amaro, a veteran leader in Disney’s theme park division, was brought in to steady the ship after a period of uncertain leadership. But three major developments, mostly stemming from decisions made far away from the Magic Kingdom, have made his debut at the top of the company memorable for all the wrong reasons.

OpenAI pulls out the rug

A watershed deal Disney struck with OpenAI late last year dissolved suddenly on Tuesday when the tech company announced it was closing down its Sora video generator app, part of OpenAI’s wider efforts to contain spending ahead of a possible IPO later this year. That ended what was supposed to be a three-year $1 billion partnership, under which some 200 Disney characters from Star Wars, Marvel, and other brands would populate short-form AI-generated videos on Disney+. 

OpenAI’s decision came as a shock to Disney executives, who learned that Sora would be shut down just 30 minutes after they had been meeting with OpenAI about the video generator’s future, according to Reuters. One anonymous source called OpenAI’s decision a “big rug-pull.” 

OpenAI’s CEO Sam Altman is reportedly planning a strategy shift to refocus on business fundamentals and a more streamlined product lineup. Sora was wildly popular in terms of downloads and engagement, but proved difficult to monetize despite high operating costs, making it an obvious target if OpenAI was looking to cut costs. Disney may choose to pursue deals with other AI-powered video platforms, but at least for now, its ambitions of fully integrated AI video populated with Disney characters have effectively become collateral damage in another company’s pivot.

Fortnite isn’t so fun anymore

Also on Tuesday, Epic Games—the videogame developer of Fortnite fame—announced it was laying off 1,000 employees after updates to its hit signature product failed to translate to higher engagement. That’s bad news in general. For D’Amaro, it’s personal.

D’Amaro was the chief architect of Disney’s $1.5 billion investment in Epic, announced in 2024. The deal gave Disney a large equity stake and called for the creation of an entirely new digital universe built around Disney characters and stories, where users could engage in immersive entertainment and shopping. As part of the deal, D’Amaro also joined Epic’s board as an observer. The partnership was the cornerstone of his fan-engagement mission: a Fortnite-powered Disney metaverse where Marvel heroes and Star Wars villains lived alongside players.

“He sees the digital realm—and Epic is a manifestation of that—as a very important place for fans to interact with their favorite characters, franchises and brands in a comprehensive way that you can monetize,” Kevin Mayer, a former head of strategy, told the Hollywood Reporter about D’Amaro’s ambitions in February.

In a memo to staff, Epic founder Tim Sweeney said a downturn in Fortnite engagement had left the company in a financial rut, though he added that $500 million in cost cuts should position Epic for major launch plans toward the end of the year. Whether those plans still include Disney’s digital universe remains to be seen.

A Bachelorette scandal

If the tech wreckage weren’t enough, D’Amaro also inherited a reputational fire at ABC, the network company owned by Disney. Last week, ABC cancelled the already-filmed 22nd season of The Bachelorette amid domestic violence allegations directed at Taylor Frankie Paul, the planned star this season.

It was a messy and widely covered distraction that arrived precisely when the new CEO least needed one. It’s the latest in a string of controversies surrounding The Bachelorette and its companion show, The Bachelor, both of which have long been criticized for underrepresenting people of color in their lineups and promoting sexist stereotypes. But ABC’s move last week is the first time it has cancelled a season of one of its signature franchises after having already filmed it, a call that could cost the company millions.

Disney stock has dipped more than 4% over the past week and underlines the challenge behind D’Amaro’s vision of technology as a growth engine. The developments at OpenAI and Epic may have been out of his control, but they have regardless undermined the universe D’Amaro described so keenly just a week ago.

This story was originally featured on Fortune.com