Robert Iger’s return to Disney has not impressed everyone. Now, with one major investor looking to shift the company’s strategies, Iger et al are using a less-than-friendly tactic to ward such off such changes.
“Nelson Peltz does not understand Disney’s businesses, and lacks the skills and experience to assist the board in delivering shareholder value in a rapidly shifting media ecosystem.”
The investor with over $900 million of Disney stock and a penchant for beating the S&P500 in his prior endeavors is facing insults from The Walt Disney Company as he attempts to obtain a seat on the board.
A glance at Peltz’ track record via his Trian Hedge Fund may indicate why Disney — itself with a completely different ideological mindset from Petlz — is taking his attempts so seriously.
Nelson Peltz, CEO and Co-Founder of Trian Fund Management, is ranked #2 on the TipRanks Best Hedge Fund Managers list. Trian Fund Management was founded in 2005 and is a “highly engaged shareowner that combines concentrated public equity ownership with operational expertise,” according to the company’s website.
Besides for Peltz, Trian’s founding partners include Ed Garden and Peter May. Peltz currently has $8 billion worth of assets under management, that is, more assets than 99% of other hedge fund managers.
Peltz’s portfolio has gained 444.1% since June 2013 versus the S&P 500 index gaining 290.9% over the same period. The hedge fund manager’s portfolio has given an annualized return of 45.6% over a period of three years.
— Shrilekha Pethe, NASDAQ.com
When you’re rated #2 in the world, insults from Disney’s top brass about your lack of skills may just have the opposite effect. As we’ve seen with Peltz’ battle with Proctor and Gamble over the years, he’s unlikely to give up. And insulting his acumen may just harden his desire to force his way on the board one way or another. Doing so would almost certainly open his ability to view important documents and gain insights into The Walt Disney Company. That might include the real reasons for the company renewing and empowering former CEO Bob Chapek earlier than necessary last year, only to throw him out and take the golden parachute on their chin just months later. What exactly was going on?
One thing is for sure: the people running Disney are running scared with Peltz. They’ve gone to such lengths as to replace the Chair of the Board of the Directors and purposefully alter the company’ structure such that former Chair Susan Arnold’s position is not just vacated… it’s gone completely. That means there’s one less seat at the table, and may indicate the company is willing to take extreme measures to limit Peltz’ ability to get into the Board Room with real Board powers.
The latest moves from Disney included a slideshow that did little to prove the company has a strong logical basis for fighting Peltz. While simultaneously insulting the man’s prowess, the company also admitted it’s trying to implement many of the strategies he’s suggested.
Disney also acknowledged that some of the things Peltz is pushing for are already taking place, including implementing a cost-reduction plan and “streamlining our organizational structure to enhance productivity”; “prioritizing streaming profitability (in addition to revenue and subscriber growth)”; and “improving the guest experience” at its theme parks by providing “more value and flexibility.”
— Alex Weprin, THR
With a previous stated transition (again) on way for current CEO Robert Iger in less than two years, and with both the former CEO and former Chair of the Board having been removed after only one-year tenures, it seems Disney has seldom been in such a tumultuous period. The next earnings report may be even more interesting than the one before. Given what occurred just after the last, that’s really saying something.
For all the latest news that should be fun, keep reading That Park Place. As always, drop a comment down below and let us know your thoughts!
There is a war for Disney. Step back, and look at the 20,000 ft view:
*Iger weaponized Disney for a failed Presidential bid on the (D) side of things.
*The “powers that be” responded by Susan Arnold getting on the board and hiring a corporate hatchet man in Chapek to change the culture of the company.
*Iger’s people responded by leaking Chapek’s plans to DEI and ESG investors who want to push politics over profit, who then used their investor pressure to force the board to fire Chapek before the changes could take place, and on top of it which led to the eventual removal of Susan Arnold
*The “powers that be” then knew the ultimate source of the problem with Disney was confirmed to be the investors. First they had DeSantis announce investigations into Blackrock because they believe the investors pushing ESG are violating Florida law with it. Next comes an attack to capture Disney on an INVESTOR level with Peltz.
This is a chess game folks.
And why Disney?
Because of all the properties Disney owns, if “the Powers that Be” were to be able to take over and purge Disney of DEI/ESG influence, Disney owns:
*ESPN
*Marvel
*Star Wars
*Multiple different movie studios
*Their own Studio Lots
*ABC Broadcast Network
Effectively, if Disney were purged and “the powers that be” were so inclined, they could use all of what Disney has in order to set up an alternative to Hollywood and the current mainstream, and instead give people unfiltered truth instead similar to what Elon Musk did with Twitter. The Techoligarchy would no longer have a lock on “the message”, and people who have been conditioned since birth to just accept what they see on TV would be able to get counter-programming to whatever the “establishment” has deemed as a “unified message”.
Because of everything Disney owns, its the crown jewel if it can be “captured”.
Heck of a comment. Very well said.
I’d love to see a video on 2 things that you have touched on. Listeners may appreciate more clarity on this.
1. In this proxy war, how difficult will it be for Peltz to actually gain enough to force his way onto the board? There are lots of shareholders out there. If Peltz only goes for the heavy hitters, is that enough to make a difference? Will he have to go for smaller investors too? Is it possible to compare this situation with the amount that Peltz got control of vs the total amount in existence during the P&G fight?
2. If Peltz is able to force his way onto the board eventually, what would be his realistic ability to make a difference unless he can convince other board members to feel the same way as him? Even if it gives him access to see things on the inside, does it matter unless other board members share his ambitions?
I’m saving your notes for upcoming conversation with Mike Cajun we’ll be doing for YouTube later this week.
The letter is the opposite of what Disney understands about politics especially when mixed in with entertainment. Customers are rejecting Disney. Disney can’t be this stupid but they are.
Disney War III
Great! Now you’re making me nervous!
Typo alert.
“Hedge Fund may indicate whey Disney”
“whey” almost certainly should be “why”.
You’re the best!
“Bob’s Iger TSR is extremely impressive.” … the boards defense of Iger is cultish.
You can’t judge the health of Disney based on a share price from three years ago (02/25/2020)
I think Disney’s statement is correct: “Nelson Peltz does not understand Disney’s businesses…” Disney does not seem to be in the creating product business, but what could be consider a shell game. (exagerated statement)
Great comment by HK47B, too.