Disney Returns Fire After Management Criticisms by Activist Investor Nelson Peltz

When a company becomes as massive as Disney, there are many things to criticize and attack. Nelson Peltz did exactly that when he launched his battle to get a board seat at Walt Disney Co. Peltz went after everything from the entertainment giant’s failed succession planning to its overspending on the streaming business.

Disney’s failures are the focus. Peltz’s Trian Partners LP, which filed the preliminary proxy statement asking shareholders to support the nomination, pointed out that the company’s stock is near its lowest point in eight years. Trian said, “Disney’s recent performance reflects the hard truth that it is a company in crisis.”

While the company’s streaming strategy and succession planning were mentioned, Peltz also spoke about the entertainment giant overpaying for Fox’s entertainment assets. The assets were purchased in 2019 for $71 billion.

The battle for power between Peltz and Bob Iger. Peltz has quite a notorious reputation in corporate America, often working his way onto boards even if he has to force it with a proxy battle. However, his actions this time have pitted him against one of the most popular executives in Hollywood.

• Iger recently returned as the CEO of Disney, leaving retirement to lead the company once again.
• Considering Iger’s track record and popularity, many believe he has a good chance of prevailing.

The two clash when it comes to the direction to take, including the streaming business. Iger is expected to devote effort to improving the performance of Disney+, which has been losing money. Meanwhile, Peltz said that the business should be tossed aside completely or that Disney should buy the rest of Hulu.

• Disney+ lost around $1.5 billion in its last reported quarter.
• The company owns a majority stake in Hulu, with the rest belonging to Comcast Corp.
• The entertainment giant expects the streaming business to start making money by 2024.

They both agree on some points as well, including cutting costs and properly managing the parks business. Peltz said the ticket prices were likely raised “too hard” in an interview with CNBC, and Iger has already started to roll back some of the price increases made under former CEO Bob Chapek.

Disney claims Peltz does not understand its business. The company has not been silent after the criticisms, outright denying that the Fox assets were overpriced by pointing out that the deal “was critical to better positioning Disney to address key secular shifts in the media sector.” It was meant to strengthen programming resources prior to the launch of Disney+.

During the same security filing in which it revealed its reasoning behind the Fox deal, the company presented data that showed growth in its stock under Iger. It also struck back against Peltz, saying he had “no strategy, no operating initiatives, no new ideas and no plan.”

Peltz had long aimed for a seat on the board. For more than half a year, Peltz has been lobbying for a seat. He even had lunch with Bob Chapek in Paris last July, back when he was still Disney’s CEO.