Jan 11 (Reuters) – Activist investor Nelson Peltz launched a boardroom challenge at Walt Disney Co (DIS.N) on Wednesday, calling it “a company in crisis” while taking aim at its succession planning, cost controls deficient and unprofitable transmission. business.
It is the second time in six months that an activist shareholder has put pressure on Disney, an entertainment giant with interests ranging from streaming and theme parks to movie studios and television. Last September, billionaire Daniel Loeb reached a truce with Disney after pushing for changes. In November, the company brought back former boss Bob Iger as chief executive.
Peltz, a billionaire activist who operates through his hedge fund Trian Partners, called on Disney to cut costs and turn a profit on his Disney+ streaming business, which has been losing money despite expanding at a fast pace.
The move puts two strong-willed business leaders, Peltz and Iger, in potential conflict and sets the stage for one of the most explosive power struggles in years. Trian said in a statement that he has tried to reach a resolution with Disney in recent months, but said Disney had rejected a request to expand the board of directors by one member.
Peltz, however, said he doesn’t want to oust Iger or break up Disney. He did not give a detailed plan for achieving his goals, many of which Iger has already set for himself.
On Wednesday, Disney named independent director and Nike Inc (NKE.N) chief executive Mark Parker as its next president, replacing Susan Arnold, who is not running for re-election. Parker will also chair a newly created committee that will advise the board on CEO succession planning.
Disney shares rose 1.4% in extended trading. Its shares plunged last year as losses in its broadcast business deepened, and the price is now less than half the shares’ 2021 high.
“THE HARD TRUTH”
“Disney’s recent performance reflects the harsh truth that it is a company in crisis with many challenges weighing on investor confidence,” Peltz’s Trian Fund Management LP said in its statement, demanding accountability for Disney’s money management. the company and the restitution of its dividend for fiscal year 2025.
Trian, who owns 9.4 million Disney shares valued at about $900 million, a stake of about 0.5%, said Disney had failed in succession planning and has “overblown” compensation practices. Trian bought out his Disney stake in the days after a lackluster quarterly earnings report from Disney.
Disney, Trian said, overpaid for the assets of 21st Century Fox and made an aggressive bid for pay-TV giant Sky PLC.
The hedge fund also criticized the company’s Disney+ strategy. The business has become a global giant but has lost a lot of money.
Peltz, often portrayed as a partner providing constructive advice to companies, fought a bitter power struggle with Procter & Gamble Co a few years ago and won a board seat. Last year, Trian acquired a stake in Britain’s Unilever Plc (ULVR.L) and hamburger chain Wendy’s (WEN.O).
Trian’s investment has typically been positive for company shares.
“To shareholders, regardless of whether or not Peltz wins his battle, his move appears to have made Disney management more aggressive in implementing improvements and adjusting its strategy,” said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors.
“I’m grabbing a box of popcorn to watch this show!” Schulman said.
Disney said Trian would file a petition with the Securities and Exchange Commission on Thursday to pick Peltz to a board seat against the company’s nominees.
Disney said that while its senior leadership and board “have engaged with Mr. Peltz numerous times over the past few months, the board does not endorse the Trian Group nominee.”
Iger, who returned in November less than a year after retiring as chairman, vowed to focus on cost reduction and profitability after the fledgling Disney+ streaming operation became a global juggernaut but lost big money. Disney had said it expected the business to break even by 2024.
Third Point’s Loeb had lobbied Disney to spin off sports television network ESPN, but later backed off that lawsuit and pushed to speed up Hulu’s planned acquisition of minority owner Comcast Corp (CMCSA.O).
Third Point, which also pushed Disney to update its board, reached an agreement in September that gave former Meta executive Carolyn Everson a seat.
Reporting by Uday Sampath in Bangalore; Written by Sayantani Ghosh; Edited by Krishna Chandra Eluri, Devika Syamnath, David Gregorio, and Leslie Adler
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