Drew Angler
This seems to be a story as old as time.
Disney Again (NYSE:DIS) board is under siege from an “activist investor” who wants to change the status quo, and CEO Bob Iger once again needs to quell resistance With some type of Jedi mind trick. However, this blow is a little different, and it may be harder for Egg to resist with a simple wave of his hand.
First, as always, some background.
If you follow Disney in the market, this isn’t a new scene or a brand new challenger to the throne. During his first term at the top, Iger often had to face activist investors, as did Bob Chapek after him.
Now it’s back to square one.
Trian Partners, led by Nelson Peltz, comes into play again as they explain “Bringing back the magic,” but this time he brought in former Disney CFO Jay Rasulo. Together, the two are determined to turn things around (as they see it), and while they may be more dangerous to Iger than they were in the past, some of their ideas and suggestions aren’t so far-fetched.
I’m talking about some… not all.
Pelz and Rasulo were smart in that they spoke out loud about what some people thought about Disney’s plans, but the problem was that their solutions were also a mixed bag.
The pair’s key recommendations – outlined in new 130 pages Documents released this week – Topics surrounding Disney’s sports promotions, linear networks and the quality of its movies.
Let’s start with the sports push in order, since that’s Trian’s biggest foothold. This has been an area of debate among some in the investment community and entertainment industry. No one disputes the value that sports bring to a company’s portfolio, but it’s more about the way the portfolio is structured.
It’s a fair point.
As discussed in past articles, Disney is right to double down on sports. This view has not been challenged as it is a proven money machine and has access to nearly every major sports league through ESPN’s links, giving it a strong competitive advantage. Trian’s argument that Disney does too much and thinks too much.
Trian thinks we should skeptical ESPN’s viability as a standalone direct-to-consumer product should instead focus on maximizing its value through ESPN+. Add in the joint ventures with Fox and WBD, and in some ways it’s become too much, too fast an argument.
I tend to agree.
For me though it’s more about uncertain joint venture. We don’t have any details beyond the three main partners. There’s no price point, product list or even name…let alone an explanation of how being a sports fan really is when you exclude Paramount and Comcast’s (CMCSA) offerings, which include everything from football to golf to NASCAR. One-stop shop” for half of the NFL teams.
There are also reports (I reported last month) that Disney and the NFL have teamed up to reach a deal that would bring NFL Studios, NFL Network, RedZone and streaming media under the Disney umbrella. That in itself is a game changer, and all combined leaves a lot to the imagination, and for some people who have invested heavily here, it’s not an option. If anything those deals I mentioned/covered before now play a bigger role in the grand scheme of things.
I probably see it more deeply and differently than Trian seems to, but I’m not the only one, and that’s the point. Trian has seized on the doubts in the space surrounding Disney’s roadmap (which have only grown since last month’s news) and is running on it.
In addition to sports, the team also wants to go further, proposing merging Hulu into Disney+, reassessing the value of Hulu’s live TV business, and “right size” The studio’s business and products (especially sounds like it’s in a linear space).
Then there are intellectual property rights issues, where some of the biggest franchises’ products appear to be outdated and key brands have become overexposed.To be fair, Disney itself has admit There is a problem and steps are being taken to fix it, but the problem is these movies take years to make and it’s not a quick fix.
similar movies Light years, strange world and hope There are some glaring issues that should be addressed before production, not before release. All of the films underperformed for a variety of reasons, chief among them being that audiences felt like they’d seen something similar before.No real value added, and in this case light years.Audiences were really confused about what it was supposed to be and how it fit into a hugely popular and profitable market Toy Story Franchise.
Some people want to point out “Woke,” but in many cases it’s really just of poor quality.
Although it’s important to realize that Trian’s doubts are nothing new… there was a pattern that preceded Iger’s return. The difference this time is that Peltz has Rasulo as his partner, which adds some extra credibility.Rasulo worked at Disney in 2015 leave After being ruled out as chief operating officer (backed by Tom Staggs) and possible CEO successor.
Speaking of “successor,” another element of Peltz’s plan is to highlight the uncertain succession plan for Iger, who was only supposed to stay on for a year but will now be at the helm for much longer. What better way to demonstrate the lack of hierarchy than by working with someone who knows it very well and has been a part of Disney internally? game of Thrones Type battle?
These areas are hot topics among investors and some of the company’s more frustrated shareholders. Peltz was playing to them and saying what they wanted to hear.
What Trian does is take a traditional complaint, add some new elements, and repackage it into a whole. The idea here is to strike while Disney is still in stealth mode and putting the various elements of its plan together.
The problem for Peltz, though, is that while he’s done a good job of addressing the pain points, you place Morgan Stanley, for example, on March 3 cited “realistic optimism” in Iger’s approach and the rebound in stock prices. Another problem is that some arguments don’t hold up as well as others, and many of them are ones Disney has discussed outright.
Peltz also appears to have adopted some of the most improbable suggestions he and others have previously made, including the popular “Let’s partner with Netflix” as a bundle partner.
It seems like every week there’s a new rumor about Disney and Netflix – usually about one company acquiring the other, and it’s getting tiresome. Overall, there’s no reason for Netflix to partner with Disney for a variety of reasons, let alone ESPN, which is in the live sports type of deal that Ted Sarandos and company have gone to great lengths to avoid. You also get the sense that “right-sizing” is codename for divesting from Disney’s stable of non-ESPN linear channels, which Iger seemed to have attempted but then pulled back on when he determined the value wasn’t there.
They are not the only ones taking part in this fight, activist investment group Blackwells Capital has also been making its voice heard.Granted, their advice seems more off-center, like Disney’s tilt Using artificial intelligence to create new characters — this essentially goes against Disney’s core model and feeds directly into the current hornet’s nest in Hollywood.
Complicating things further for Iger is that he had previously paid some attention to these activists in an attempt to appease them, but this time he did not, and recently famous Let them be “distractions.” The company even launched a somewhat tongue-in-cheek “how-to” video Use Professor Ludwig von Drake’s character as your guide to help investors understand how to vote. Neither of these things will likely ease any tensions.
However, Egger knows where he is, which may explain the change in approach. He saw a positive tide turning, but he didn’t have time to play the game and stay at the helm. He may also feel more empowered as the heirs to Walt Disney and his brother Roy both come out as gay. favor His, among them no Always been this way.
It’s an interesting power grab that’s going on much longer than it’s been allowed to go on in the past, and will now likely last until the April 3 board vote.
borrow a line Star Wars – “Always moving is the future.”
