Corporate raider Nelson Peltz has aggressively pushed for two seats on the Walt Disney Co. (NYSE: DIS) board of directors. He believes that Bob Iger, who is CEO at the company for a second time, has poorly managed Disney’s assets. Peltz recently received some support. Well-known proxy advisory firm Institutional Shareholder Services recommended that shareholders vote to add Peltz to the board. ISS is not supporting another Peltz nominee or those of another activist investor, Blackwell Capital. (See why three activist investors are gunning for Disney CEO Bob Iger.)
The competition for Disney’s board seats is a proxy for Iger’s management. Over the past two years, Disney stock has been down 16%, while the S&P 500 has been up 15%.
Peltz is head of Trian Partners, which often takes on the boards of large companies. While ISS has helped his case, Barron’s described his Disney 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 also doubt that Peltz can get enough shareholders to vote for him because he does not have any entertainment company management background.
Peltz has 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, the company’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 the sector leaders Netflix and Amazon, as well as several other well-funded streaming services, including Apple+.
ESPN, the leading cable sports network, has had to contend with people dropping their cable service for streaming. Disney, Warner Bros. Discovery, and Fox 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 the board and who is not will be disclosed then. Regardless of the outcome, its investors may be stuck with a stock that has performed well below the market for two years.
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