Hi, Quartz members!
This past week, Disney released a four-slide presentation for the benefit of its shareholders. The first slide was just this:
Pretty eloquent.
On April 3, Disney’s shareholders will vote to fill 12 seats on the company’s board of directors. Nelson Peltz, whose investment firm Trian Partners controls $3.5 billion of Disney stock, wants one of those seats for himself, and another for Jay Rasulo, a former Disney CFO.
Disney’s executives don’t want Peltz and Rasulo on the board one bit. On a website set up specifically for the purpose, Disney quotes other influential shareholders (George Lucas, Jamie Dimon, and Laurene Powell Jobs among them) in support of Bob Iger, the current CEO. And it urges shareholders to reject Peltz and Rasulo come voting time. In its presentation, Disney cites a recent interview that Peltz gave to the Financial Times. It shows, the company says, “how ill-equipped he is to serve on Disney’s board.”
The showdown is a momentous one. Peltz has said several times that he doesn’t want to get rid of Iger, but clearly he thinks that Iger’s strategy in running the company is flawed. If he and Rasulo get on the board, they’ll be able to influence the future of Disney significantly — to the point that Iger may step down altogether, some investors told the Wall Street Journal.
So what’s the ballyhoo all about?
IN THE RED CORNER...
What does Nelson Peltz want? Well, there’s a white paper, called “Restore the Magic,” laying it out. It’s 133 pages long, so here are some highlights:
🎥 A more robust movie business: Disney’s films division didn’t have the best possible year in 2023. Peltz thinks it’s time for a shakeup. (He’s also not pretending he’s an industry expert. “They say we know nothing about the movie business — we don’t claim we do — but I don’t think they do, with five big losers in a row,” he told the Financial Times. “They’ve lost first place in animation, they’ve lost first place in features . . . Maybe it’s time to change management in those divisions.”
📺 “Netflix-like” returns on streaming: Peltz wants Disney’s margins on its streaming platform to approach 15-20%. In its white paper, Trian said that Disney had lost nearly $14 billion on streaming thus far, and that its margins lag significantly behind Netflix. Peltz thinks Disney+ should bring all Hulu content onto its platform, phasing out the Hulu brand altogether.
💡 More creativity. Peltz thinks (and he isn’t alone in this) that Disney has gotten less creative, and he wants a comprehensive, board-led review of its ideation processes. He wants fewer sequels, prequels, and spin-offs, for instance, and more new ideas — but at lower cost.
⏭️ A succession plan. Bob Iger’s contract runs out in 2026, and Peltz thinks the company hasn’t worked out the means of finding his replacement.
QUOTED
“Why do I have to have a Marvel that’s all women? Not that I have anything against women, but why do I have to do that? Why can’t I have Marvels that are both? Why do I need an all-Black cast?”
— Nelson Peltz, in an interview with the Financial Times
IN THE BLUE CORNER...
Perhaps the best rejoinder that Iger can give Peltz, at this point, is to point to Disney’s last earnings report. The company’s streaming division lost $138 million in the quarter, compared to a loss of $984 million in the same quarter the previous year. It was a minor coup; Wall Street analysts had expected losses of around $419 million. By the end of September, Iger believes, streaming will be profitable. Net income in the quarter rose to $1.91 billion, up from $1.28 billion a year earlier.
The earnings report also marked several high-profile announcements, including a stake in Epic Games, which makes Fortnite, and a streaming deal for Taylor Swift’s Eras concert movie. Disney’s ESPN, Fox, and Warner Bros. are also joining forces to create a gigantic new streaming service for sports, which (according to a Citi analysis) will hold 55% of all sports rights in the US.
“The last thing that we need,” Iger said in a CNBC interview in February, “is to be distracted in terms of our time or energy by an activist or activists that frankly have a completely different agenda and don’t understand our company, its assets, or the essence of the Disney brand.”
ONE 😣 THING
If Peltz’s, er, film criticism about the “Black Panther” and “The Marvels” movies puzzled you, wait for his views on Donald Trump. His Financial Times interview mentions that, after Trump supporters stormed the Capitol in January 2021, Peltz appeared on CNBC to apologize for supporting Trump’s re-election attempt. And yet, when asked whom he would be backing in this election, Peltz said: “It will probably be Trump and I’m not happy about that.” The 91 criminal charges facing Trump are, Peltz said, a “miscarriage of justice.” Joe Biden is too soft on immigration for Peltz. “It looks like Trump is all we got.”
Thanks for reading! And don’t hesitate to reach out with comments, questions, or topics you want to know more about.
Have an animated weekend!
— Samanth Subramanian, Weekend Brief editor