Walt Disney Co. (NYSE: DIS) investors are likely losers no matter what happens in the board fight between Disney and Nelson Peltz of Trian Partners. Over the past two years, Disney’s stock has fallen 20% while the S&P 500 is 15% higher. Disney CEO Bob Iger may block Peltz from getting two board seats, but shareholders may look back and wish the raider had won. (See why failing Disney CEO Bob Iger made $31 million.)
It is too early to predict Trian’s performance. Barron’s describes the effort as a “long shot.” Iger has major support from several business leaders, the most recent of which was Jamie Dimon, the head of JPMorgan Chase, America’s largest bank. There is doubt that Peltz can get enough shareholders to vote for someone without any entertainment management background.
Peltz attacked Disney’s management based on its poor earnings, and much of what caused those has not gone away. At one point, before the pandemic, Disney’s studio was a hit-making machine. Since then, most of its largest films have underperformed at the box office.
Disney’s streaming business, led by Disney+, has over 150 million subscribers. However, this company division has lost billions of dollars and continues to post red ink. It is up against sector leaders of Netflix and Amazon and several other well-funded streaming services, including Apple’s.
ESPN, the leading cable sports network, has had to contend with people dropping their cable service for streaming. Walt Disney, Warner Bros Discovery, and Fox Corp. will launch a sports streaming network, but it is far too early to say how that will do.
Disney’s shareholder meeting is on April 3. The vote on who is on Disney’s board and who is not will be revealed then. Unless Disney’s share shares soar, its investors will still be stuck with a stock that has performed well below the market for two years.
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