Investors have cheered the return of Bob Iger to Disney amid speculation he may swing the axe at the entertainment giant’s streaming division.

Walt Disney unexpectedly ousted chief executive Bob Chapek and parachuted in former boss Mr Iger, opting for a surprise shake-up as the company battles to arrest a share price decline and navigate America’s culture wars.

The Disney board announced that Mr Chapek would be leaving effective immediately after less than three years in charge and just months after his contract was extended.

A Disney veteran, Mr Chapek took over as chief executive in February 2020 and helped the films-to-parks giant navigate the Covid-19 pandemic. However, shares have struggled under his watch and the company has publicly clashed with Florida Governor Ron DeSantis.

Just a day after returning to the company, Mr Iger said Kareem Daniel, chairman of Disney’s media and entertainment distribution unit and an executive hand-picked by his predecessor Mr Chapek, would be leaving.

The unit was set up by Mr Chapek in October 2020 to centralise film and television sales and distribution and Mr Daniel was Mr Chapek's longtime lieutenant.

Mr Iger said that he planned to implement a "new structure that puts more decision-making back in the hands of our creative teams and rationalises costs."

He added: "I fundamentally believe storytelling is what fuels this company and it belongs at the centre of how we organise our business."

Mr Iger said that the changes would be “unsettling”, but would “focus on creating a more efficient and cost-effective structure."

Shares in Disney jumped as much as 10pc on news of Mr Iger’s return as analysts predicted that cost-cutting and a shake-up of its heavily loss-making streaming division would follow.

Investors have grown increasingly concerned about mounting losses at Disney+. This month, the company reported weaker than expected results partly driven by a $1.5bn loss at its streaming arm.

Steven Cahall, an analyst at Wells Fargo, said Disney’s streaming business was “over-extended”. Michael Morris, of Guggenheim Securities, predicted Mr Iger could consider divesting Hulu, another streaming app Disney owns.

The media giant has come under pressure from Third Point, an activist fund founded by Dan Loeb, to spin out its ESPN sports division among other changes, although it later backed down on some of its demands.

Mr Chapek’s exit follows a political row with the Florida Governor Ron DeSantis over the state’s LGBT+ laws and growing investor unease over Disney+.

Shares have slumped 41pc so far this year, putting the company on course for its worst annual share price performance since at least the 1970s.

Even still, the decision to replace Mr Chapek came as a surprise. In June, Disney's board voted unanimously to extend his contract for three years, a move that appeared to end speculation about his position.

The leadership change was reportedly decided only in the last couple of days. Mr Iger, 71,  has agreed to return as chief executive for at least two years, despite previously saying he had no desire to return to managing the company.

Mr Iger retired as chairman last year after more than four decades at Disney, including 15 years as chief executive. He is regarded as one of the most successful US media executives in recent history, after overseeing deals to buy Pixar, Marvel Entertainment, Lucasfilm and 21st Century Fox.

He also launched the company’s streaming ambitions with the launch of Disney+ in 2019, an effort to take on Netflix.

In a statement on Sunday night Susan Arnold, chair of Disney's board, said: "The Board has concluded that as Disney embarks on an increasingly complex period of industry transformation, Bob Iger is uniquely situated to lead the Company through this pivotal period.”

Mr Iger said in a memo to staff: "I am an optimist, and if I learned one thing from my years at Disney, it is that even in the face of uncertainty—perhaps especially in the face of uncertainty—our employees and Cast Members achieve the impossible."

Michael Nathanson, an analyst at MoffettNathanson, said Mr Iger’s return would bring back “long-lost magic”, adding that Mr Iger could “refocus” its streaming apps onto Disney’s popular core franchises.

Mr Chapek, 62, was Disney’s seventh chief executive in its 100-year history and came from the company’s successful parks business, which he ran between 2015 and 2020.

He took charge at a difficult time for the company. One of his first jobs was to steer Disney through the Covid pandemic, overseeing the shutdown of its amusement parks and aggressively expanding its streaming service to reach viewers stuck at home.

However, the company found itself at the centre of the growing culture wars in the US under his tenure. Mr Chapek struggled to handle Disney’s response to legislation in Florida dubbed the “Don’t Say Gay” bill, which limits classroom discussion of sexual orientation and gender identity.

Disney was accused by staff of remaining silent on the issue, leading Mr Chapek to issue a statement from the company pledging to fight to overturn the bill.

This prompted anger from Florida’s Governor Mr DeSantis, who ultimately stripped the company of the special tax status it had enjoyed as Florida’s largest employer.

Mr DeSantis said in April: “Disney and other woke corporations won’t get away with peddling their unchecked pressure campaigns any longer."

More recently, CNBC reported that Mr Chapek had been courting Republicans in anticipation of the party winning control of Congress in the US midterm elections.

Media analyst Ian Whittaker said this may have been a "tipping point" in the decision to replace Mr Chapek, but added: "There is likely to be multiple drivers - the streaming losses, share price performance, internal dissatisfaction."

Mr Chapek also struggled to win over creative executives and producers. Hollywood actress Scarlett Johansson sued Disney last year, accusing the company of breach of contract after her film Black Widow was released on Disney+ alongside a theatrical release. The case was ultimately settled out of court but the public row was widely seen as damaging.

Bloomberg reported Mr Chapek would be in line for an exit payout worth more than $23m.