Peltz calls truce with Disney after media giant unveils £4.5bn cost-cutting plan


Activist investor Nelson Peltz called off his battle with Walt Disney yesterday as he welcomed plans to revive the 100-year-old company.

The 80-year-old billionaire, whose daughter Nicola is married to David Beckham’s son Brooklyn, sought peace just weeks after launching a so-called “proxy” battle demanding a seat on the board.

“The proxy fight is over,” Peltz declared hours after Disney chief Bob Iger discussed the changes his hedge fund Trian Investors was lobbying for — even pledging to reinstate the dividend by the end of the year.

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The move will come as a relief to Disney’s top executives after Iger unveiled his turnaround plan after his shock return as CEO last year.

Iger said he would cut 7,000 jobs, or about 3 percent of the workforce, and restructure the sprawling Disney empire to save £4.5 billion over the next few years, including £2.5 billion in content excluding sports, and £ 2 billion in non-substantive cuts.

The company will be split into three: an entertainment unit that includes film, television and streaming; a sports-focused ESPN unit; and Disney parks, experiences and products.

“This was a great win for all shareholders,” said Peltz, who owns approximately 9.4 million Disney shares worth about £740 million. “Management is now planning to do everything we wanted them to do.”

Peltz has worked his way up the boards of directors of Procter & Gamble and Unilever in recent years and has built up large stakes in Mondelez and Heinz.

But his comments mean he and Iger will no longer go head-to-head at the annual shareholder meeting in April, putting what could have been one of the biggest corporate battles in years to bed.

Aside from cost cutting, the 71-year-old Iger said streaming was now a primary focus, despite Disney+ posting its first quarterly drop in subscriber numbers since its launch in 2019 and again failing to make a profit.

“We’re in a very interesting transition period, but I think it’s inevitably moving towards streaming,” he said.

Hargreaves Lansdown analyst Susannah Streeter praised Disney’s ability to gain Peltz’s support, especially when it comes to reducing content.

While this will be painful at a time when competition for on-screen eyes is so fierce, the company has a huge back catalog under its belt and should be able to win legions of new younger fans for its classics through cross-selling on amusement parks,” she said.

Nelson Peltz

Bob Iger

Face off: Nelson Peltz (left) owns about 9.4 million Disney shares worth about £740 million in Disney, which is run by Bob Iger (right)

Iger took the opportunity to announce that sequels to popular franchises Toy Story and Frozen are in the works, cashing in on his hit list.

While Disney+ surged in popularity during the pandemic, it has struggled to gain support as the world reopened and competition intensified.

It was this background that sealed the fate of Bob Chapek, who succeeded Iger in the top job in 2020 but only lasted two years.

Not only did Chapek fail to convince investors he could steer Disney post-Covid, but he was seen misreacting to Florida’s Don’t Say Gay laws that banned discussion of sexual orientation or gender identity in elementary schools .

He was replaced by Iger, who retired in November to get Disney back on track.

Often referred to as entertainment industry royalty, Iger’s first tenure as CEO began in 2005, where he spearheaded Disney’s acquisitions of some of the most powerful entertainment brands, including Toy Story creator Pixar, superhero studio Marvel and Lucasfilm, home of Star Wars.

Paolo Pescatore, at PP Foresight, warned that despite Iger’s credentials, he still faces an uphill battle. “There are numerous challenges, including the current economic climate and the uncertainty surrounding consumer behavior,” he said. All streamers are in for a roller coaster year.”

But analysts supported the cuts as a positive step for the company and showed a clear focus on profitability. Evercore analyst Vijay Jayant said the news of cost cutting was Disney “restoring the magic.”

Disney shares are up 26 percent year-to-date but fell 1.1 percent yesterday.

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