Trian Fund Management and Nelson Peltz, who are waging a proxy battle for two seats on The Walt Disney Company board, bolstered their argument by comparing the company to Netflix after the streamer had its fourth quarter earnings report.
Nelson Peltz via David Rubenstein YouTube
Financial analyst Valliant Renegade initially pointed out the disparity between The Walt Disney Company and Netflix by first noting just how different the two companies are, “Disney runs theme parks, live sports, ESPN, linear broadcast. They’ve got movies. They’ve got TV. They’ve got cruise ships, resorts, hotels, time shares, everything! Netflix is just a streamer.”
Next, he compared Netflix’s yearly earnings to The Walt Disney Company, “For the entire fiscal year of 2023, the 12 months ended December 21, 2023, $6.95 billion in operating income from $33.7 billion in total revenues. 20%. Actually right at 20%, 21% according to Netflix.”
Moving to Disney, he said, “Disney had $88 billion in revenue for the total fiscal year of 2023 and they had $8.9 billion in operating income. They made $2 billion more in operating income than Netflix did and it took them $55-$56 billion more in total revenues to get $2 billion more than Netflix.”
He concluded, “I don’t know maybe someone should try to restore the magic at Disney?”
Nelson Peltz via CNBC Television YouTube
Nelson Peltz was clearly on the same wave length as he updated his Restore the Magic website soon after by comparing Disney’s performance with Netflix. The site reads, “Netflix’s impressive performance increasing operating margins more than 5x (from 4% in 2016 to 21% in 2023) and its ability to grow free cash flow (from negative $3.3B in 2019 to positive $6.9B in 2023) highlights the significant opportunity Disney has to improve its profitability”
Furthermore, it adds, “Netflix also guided to achieving 24% operating margins next year, which stands in stark contrast to Disney’s goal of “breakeven” profitability next year, especially considering Disney’s asset quality and significant revenue scale.”
It then includes a bar graph comparing Netflix to The Walt Disney Company:
Screenshot from RestoreTheMagic.com
Peltz’s Restore The Magic website had previously used Netflix as an example of success that The Walt Disney Company should be following and one he hopes to put them on.
The site identified that The Walt Disney Company has a major problem when it comes to streaming profitability and shared Disney’s current path is “focused on achieving significant and sustained profitability” but offers “no guidance or tangible targets beyond breakeven.”
Peltz’s solution was to “target and achieve Netflix-like margins of 15-20% by FY 2027.”
Nelson Peltz via David Rubenstein YouTube
What do you make of Peltz using Netflix to hammer Bob Iger and The Walt Disney Company board in order to sway more voters to his cause?
