Disney is facing a proxy battle as Nelson Peltz’s operations firm Trian Fund Management pushes for a seat on its board.
Peltz spoke Thursday on CNBC’s “Squawk on the Street,” offering his views on the battle his company has chosen with Disney. He raised the issue with Disney’s $71 billion to acquire Fox in 2019 and how the company’s shareholder value has eroded in recent years.
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“Fox harmed this company,” Peltz said. Fox took the dividend. Fox turned what used to be a pristine balance sheet into a mess.
On Thursday, the operating company filed a preliminary proxy statement to put Peltz on Disney’s board.
to hit first what could be a mess proxy battle and against Trian, Disney on Wednesday announced that Mark Parker, executive chairman of Nike, will become the new chairman of the board. Disney’s board of directors will now have 11 members.
The operating company said it owns about 9.4 million shares worth about $900 million, which it first amassed a few months ago. Trian said Wednesday that it believes Disney “has lost its way to a rapidly deteriorating financial position.”
Peltz also said he wants to join the board so he can access insider numbers and notify other members if they’re missing out.
“I don’t have to overwhelm them,” Peltz told CNBC. “I don’t need more than one person on the board.”
Disney shares were up about 3% on Thursday.
Peltz’s grievances
Trian pointed to what they see as Disney’s poor corporate governance, including failed succession planning, “excessive” compensation practices, and Disney’s lack of engagement with Trian in recent months this.
In Thursday’s public filing, Trian listed numerous meetings with Disney and its board members, starting with then-CEO Bob Chapek, Peltz and their wife over lunch. in July. According to the filing, meetings and correspondence between Trian and Disney increased in frequency in November.
Peltz on Thursday said he only had one meeting with Disney’s board that lasted about 45 minutes, but he never received a response from them. A Disney representative did not immediately respond to comment.
Peltz also noted that Disney is willing to make him a board observer, allowing him to attend meetings and give operational advice but without voting privileges.
“I just need to talk to these people sensibly and explain to them where they went wrong or what opportunities they are missing,” Peltz said Thursday, noting other companies. for which he sat on the board of directors.
People close to Disney told CNBC’s David Faber that they objected to Peltz’s interpretation, saying instead that the company offered him the opportunity to enter into an information-sharing pact under a non-disclosure agreement. , along with the opportunity to meet with management and the board each quarter. Disney did not offer him the ability to attend board meetings, these people added.
In November, Bob Iger did something amazing return to the leadership of Disney, ousting Chapek – whom Iger had chosen as his successor – after a poor earnings report. Trian has said that they don’t want to replace Iger but want to work with him to ensure a successful CEO transition within the next two years.
Parker will take over as president from Susan Arnold and will be tasked with leading the succession plan, Disney announced Wednesday.
In Thursday’s filing, Trian also criticized Disney’s streaming strategy, saying it was “struggling with profitability, despite similar revenue to Netflix and a significant intellectual property advantage.” tell.” The company also criticized what it believes is Disney’s lack of cost discipline and making too much money from its theme park business to subsidize streaming losses.
Disney stock has had a rough 2022, after the early days of the pandemic, when theme parks and movie theaters closed. However, as streaming subscriber growth slows and investors question profitability, while cable cutting increases, most media stocks fell last year.
On Thursday, Peltz said Disney needs to get out of the streaming business or buy Hulu. “They had to buy Hulu, which unfortunately means the company is going to have to take on a lot of debt over the next few years,” Peltz said.
While Disney+ is the company’s main game in the streaming space, Disney also owns two-thirds of Hulu and has one option to buy the remaining shares the words Comcast as early as January 2024.
Last year, Disney also announced it would proceed with cost-cutting measuresincluding the hiring freeze that Iger maintained.
— CNBC’s David Faber contributed to this report.
Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC.
Watch CNBC’s full interview with Nelson Peltz on PRO:
