Disney Faces Activist Storm: Activist investor Nelson Peltz is ramping up efforts to instigate change at Disney, signaling a potential clash with the entertainment giant. Trian, Peltz’s investment firm, rejects Disney’s offer for a meeting but indicates a willingness to take the case for change directly to shareholders, hinting at an impending proxy fight.
Peltz has been closely monitoring Disney, expressing dissatisfaction with the company’s capital spending, streaming business performance, and succession planning. Earlier this year, Trian sought board representation but withdrew its challenge, providing Disney CEO Bob Iger time to implement turnaround plans. However, Peltz’s recent statements suggest that time may be running out.
Despite Disney’s efforts to restructure and cut costs, Trian remains unimpressed, highlighting the need for significant changes. Disney has indicated that it is on track to achieve approximately $7.5 billion in cost savings, exceeding its initial target by $2 billion. The company aims to make its streaming business profitable, elevate ESPN into a leading digital sports brand, enhance film studios’ performance, and fuel growth at theme parks with a $60 billion investment over the next decade.
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The recent addition of James Gorman, Morgan Stanley‘s soon-to-be-retiring chief, and Jeremy Darroch, a veteran media executive, to Disney’s board is seen as a preemptive move to fortify its position against potential activist challenges. However, Trian contends that these additions would not restore investor confidence or address the core issues leading to significant value destruction.
The situation echoes sentiments of a challenging period for Disney, dubbed “Disney 2.0.” Peltz, allied with former Disney executive Isaac Perlmutter, maintains a critical stance against Iger’s leadership. Despite Peltz’s push for change, other investors, like Blackwells Capital, express support for Iger’s restructuring efforts and the new board additions.
As the conflict unfolds, proxy advisers are expected to scrutinize Disney’s progress in implementing transformative changes. The looming battle may pose a tougher challenge for Peltz this time, with analysts noting the complexity of the transformation process and the need for time to gauge its effectiveness. Shareholders find themselves at the center of a brewing corporate showdown, eagerly awaiting the next developments in the evolving narrative of Disney’s future.
Our Reader’s Queries
Did Disney say Peltz lacks skills to help business as proxy battle heats up?
Disney has defended its decision to reject Nelson Peltz’s request for a board seat, stating that the activist investor did not possess the necessary skills and experience to contribute to the company’s growth. The media and entertainment giant stands by its decision, despite Peltz’s persistent efforts to gain a seat on the board.