Nelson Peltz, founder and chief executive officer of Trian Fund Management, through the Future Investment Initiative (FII) Institute Priority Summit in Miami, Florida, on Thursday, March 30, 2023.
Marco Bello | Bloomberg | Getty Images
Company boards are inclined to wish to stay out of the highlight. Activist investor Nelson Peltz could also be intent on ensuring Disney directors do not get that luxury.
Peltz’s Trian Fund Management has oversight of about $2.5 billion of Disney shares and might be paying close attention to Disney’s fiscal fourth-quarter earnings report after the bell Wednesday, in keeping with people conversant in the matter. Nearly all of the shares controlled by Trian belong to Ike Perlmutter, the previous boss of Marvel Entertainment and a Peltz ally who has clashed with Disney Chief Executive Bob Iger up to now.
Trian hasn’t made a public statement because it ended its last activist campaign against Disney in January. The fund has purposefully waited until Disney reports earnings before deciding whether it would move forward with a proxy fight to nominate recent board members, said the people, who asked to not be named since the discussions are private. Trian declined to comment.
It’s unclear if Disney can or will say anything during Wednesday’s earnings conference call that may push Peltz to back down. While Disney has cut 7,000 jobs this 12 months, Trian should want to see evidence that the job reductions and other content spending cuts are improving earnings. Disney named longtime PepsiCo executive Hugh Johnston as its recent chief financial officer earlier this week. Disney declined to comment.
Peltz would ideally wish to be added to the board without going through a nomination process, which could be time-consuming and expensive. He tried earlier this 12 months to get himself on the Disney board, only to be rebuffed by Iger and eventually walk away in February. Shareholders must nominate directors, to be voted on at Disney’s annual meeting, between Dec. 5 and Jan. 4, in keeping with a Disney filing.
If Peltz does move forward with a nomination slate, Trian will likely attack Disney’s sagging share price. Disney’s stock is hovering near 10-year lows. Every board member, except for Iger, has presided during a time where shareholder return has been negative.
That is true for several other media corporations. The legacy media industry – which incorporates corporations corresponding to Paramount Global, Comcast‘s NBCUniversal, Warner Bros. Discovery, AMC Networks and Lions Gate Entertainment – has been rocked in recent times by tens of tens of millions of cable TV cancellations and billions of dollars of streaming video losses in an try and reinvigorate growth.
Trian has decided to focus on Disney because the corporate’s shares haven’t got a controlling owner, and because of a belief in Disney’s best-in-class brand, in keeping with people conversant in Peltz’s pondering. Peltz successfully agitated to get a seat on Proctor & Gamble‘s board in 2017, drawn to the corporate’s brand strength.
Disney’s board has also struggled to groom a successor to Iger, who has five times renewed his contract to stay around as CEO. While Iger did leave Disney in 2022 after stepping down as executive chairman, he returned 11 months later as CEO after the board fired his hand-picked successor, Bob Chapek.
Iger again renewed his contract in July to remain at Disney until 2026. Peltz could argue Trian can bring accountability to a board that has given Iger permission to stay around so long as he’d like. Several board members, including Nike Executive Chairman (and Disney Chairman) Mark Parker and General Motors CEO Mary Barra, are particularly close with Iger, CNBC reported in September.
Still, to sway Disney shareholders to vote for Peltz or other board members, Trian might have to push for specific ideas or financial engineering that Disney hasn’t already articulated. Iger has said he’ll explore options to sell ABC and other linear networks and is fascinated about taking over strategic investment partners for ESPN. Peltz could also be desperate to hear if there’s been any progress on either of those fronts from Disney management during its conference call.
If not, his next move could possibly be a public fight to get himself and others on Disney’s board.
Tune in: CNBC’s Julia Boorstin will interview Disney CEO Bob Iger at 4:05 p.m. ET on “Closing Bell: Additional time.”
Disclosure: NBCUniversal is the parent company of CNBC.
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