Activist Nelson Peltz declares war on Disney

A power struggle has broken out at Walt Disney as activist investor Nelson Peltz tries to shake up one of the world’s best-known entertainment giants.

The 80-year-old billionaire went straight to shareholders yesterday to demand a seat on the board of directors after he was turned down a request by CEO Bob Iger.

Peltz, whose daughter Nicola is married to David Beckham’s eldest son Brooklyn, owns a 0.5 percent or £750 million stake through his investment fund Trian Partners.

A notorious activist, he has worked his way onto the boards of directors of Procter & Gamble and Unilever and has built up large stakes in Mondelez and Heinz.

But he may have found his match in Iger, 71, who took on the role in November after ousting Bob Chapek.

Disney took steps to anticipate what will likely be one of the biggest US boardroom battles in years, and this week named Nike veteran Mark Parker chairman in an effort to bolster his defense.

He will lead the search for a CEO to replace Iger when his two-year contract expires.

But in a sign that Peltz is in no mood to back down, he this week described Disney as “a company in crisis” with “self-inflicted” problems.

His firm, New York-based Trian, blamed the Nasdaq for reckless spending for the Magic Kingdom’s troubled time, where shares are at an eight-year low and are down nearly 40 percent in the past year. .

In particular, the fund took issue with Disney’s “poor judgement” in acquiring Fox’s entertainment assets for £60bn in 2019, and “over-the-top” executive pay.

“Fox hurt this company. Fox took away the dividend. Fox turned what was once a pristine balance sheet into a mess,” Peltz said as he filed a proxy statement to win a seat on the board.

Disney’s streaming company has been bleeding money as it expands and tries to keep up with tech rivals Netflix and Amazon Prime Video.

Losses more than doubled to £1.25bn in the last quarter. Paolo Pescatore, a technical analyst at PP Foresight, said the “streaming pandemic party is really over,” explaining that all companies need to invest heavily to gain market share.

But a failure to gather momentum sealed Chapek’s fate. Not only did he fail to convince investors he could steer Disney in the wake of the pandemic, but he sparked culture wars over Florida’s Don’t Say Gay law, which banned discussions of sexual orientation or gender identity in elementary schools.

While Iger – who previously served as Disney’s CEO for 15 years – said it was “ridiculous” that he would ever return, Chapek’s passing meant he was back by Christmas.

Wedbush tech analyst Dan Ives said any major fight between Iger and Peltz would spell even more “tumultuous times.” “This is the moment of truth for Iger,” he said.

There’s also the sense that Disney is trying to hold its own after being swayed by another activist less than six months ago.

While Third Point’s Daniel Loeb failed to spin off cable sports channel ESPN, the notorious investor, who owns a stake of more than £800 million, did manage to get media veteran Carolyn Everson onto Disney’s board in October.

Hargreaves Lansdown analyst Sophie Lund-Yates said Disney’s strong response to Peltz shows the company doesn’t want to be “bullied.” “It doesn’t look good for a company to play corporate chess,” she said.

She said Parker’s appointment was for Disney to “move all his chess pieces” to push back against Peltz. But if Peltz keeps investing, Disney won’t be able to ignore his requests in a world where money talks.

Michael Gartenberg, an analyst at Flash Advisory & Research and a former Apple executive, said Iger’s best bet would be to control costs to satisfy Peltz. It could stop streaming or buy competitor Hulu.

He added, “While Peltz won’t take over Disney any time soon, he’s still a thorn in Iger’s side and could become more of a nuisance than help as Iger tries to get the little kingdom back on the path to global media powerhouse.” instead of a princess palace with crumbling walls.’