Disney brought back Bob Iger and booted his hand-picked replacement. Here's why.

In a twist worthy of a Hollywood screenplay, the board of the Walt Disney Co. ousted CEO Bob Chapek on Sunday and replaced him with a familiar face: the popular Bob Iger, who ran the entertainment giant for 15 years and stepped aside two years ago.

Iger is widely considered entertainment industry royalty, celebrated for his management acumen and creative chops. He turned Disney into a global powerhouse by acquiring marquee brands such as Pixar, Marvel, Lucasfilm and 21st Century Fox.

In contrast, Chapek's tenure at the helm of Disney was rocky, starting...