Walt Disney Co. (NYSE: DIS) management is up against a take-no-prisoners activist investor. Nelson Peltz of Trian thinks Disney is poorly run and that returning CEO Bob Iger is partly to blame. Peltz wants a board seat. Disney’s board said no. The smart money is on Peltz, who has never seen a management team at a target that he liked.
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Peltz had torn into Procter & Gamble and DuPont when he disagreed with their management strategies. His pressing got him board seats at Kraft Heinz and Unilever. Disney’s board rightly fears the effects of his efforts and says it will ward off his attempt to take his criticism to shareholders. It will be a bitter fight that will cost Disney millions of dollars and vast amounts of time for both the board and management.
Peltz has the advantage that he is correct. Disney was badly run when Iger was the chief executive officer for the first time. His hand-picked successor, Bob Chapek, did even worse. This is particularly true with losses in Disney’s streaming business. Peltz also has criticized Disney’s string of M&A results. He says Disney paid too much to grow. (See how Disney was involved in one of the biggest scandals of 2022.)
Iger is back at Disney to fix things. The new CEO, who was the old CEO, believes that the primary step to do so is to eliminate people. Investors doubt Iger’s plan is sufficient. Disney’s shares are off 40% in the past year and have not improved since Iger returned. Perhaps this is why Peltz wants Iger out when his two-year contract as CEO is over.
Among the things that Peltz has pointed out correctly is that Iger’s return has little chance of improving Disney’s fortunes. He is the author of the failed Disney streaming strategy. Subscriptions were priced too low. Despite rapid growth in subscriber count, the business was doomed to lose money.
Odds are that Peltz will win the fight to influence Disney’s plans. Disney’s shareholders are lucky to have him.
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