Disney, the most iconic of brands, has faced an uncharacteristically rocky few years. It’s been punctuated by a high-profile boardroom battle, but why did it happen in the first place?
The back-and-forth can be traced back to the contrversial tenure of Bob Chapek - who first took over as CEO in late February 2020. What ensued is media history: the disruption caused by the Covid pandemic, a controversial reorganization plan, a highly publicized battle over the release strategy for Marvel's "Black Widow" *and* a damaging backlash over Florida’s so-called ‘don’t say gay' law.
To say this was the beginning of a tumultuous period for Disney would be an understatement.
Fast-forward to August 2022 and shareholder Third Point, a hedge fund run by Billionaire investor Daniel Loeb, disclosed a stake of around a billion dollars in the house of mouse. It was something of a u-turn for the activist investor, after having exited its position months earlier. Third Point wanted changes in the boardroom, for Disney to buy the rest of Hulu and for the company to spin off ESPN. Loeb got his change in the boardroom, but that wasn’t the big story of 2022.
In November, a shock return. Bob Iger was reinstalled at the helm of a business he ran for years with great success. Top of the to-do list: get a handle on costs, and make the company's streaming business profitable. At the time, Disney shares were cratering, and had recently scraped 21 year lows. At the same time, reports swirled that another activist investor with deep pockets was circling the theme park giant.
At the beginning of 2023 it all became official. Nelson Peltz, a billionaire activist and head of Trian Fund Management, wanted to join its board and make some immediate changes. He wanted the focus back on creativity. Disney denied him a seat, saying he lacked the quote “skills and experience” needed, but changes would soon come
In February 2023, Disney, now firmly under Iger’s leadership, announced major job cuts and over 5 billion dollars in cost savings. Peltz laid down his sword, but he wasn’t done for good. The activist reignited the battle in October 2023 saying Disney's shares were undervalued. They were still trading below $100 a piece, and had been for some time. His stake in the company had increased - up to around $3 billion dollars worth of shares - and so had his vigor for battle.
At the beginning of 2024 he made it official - again. Peltz’s Trian Fund Management formally nominated Peltz as well as former Disney CFO Jay Rasulo to the board. Their mission? A successful CEO succession plan and "Netflix-like margins”. But not all activists are taking on the magic kingdom, of course: hedge funds ValueAct Capital and Blackwells Capital have stood behind Iger. So where do we go from here?
Expect the twist and turns to continue ahead of the company's shareholder meeting April 3rd. Yahoo Finance will be across it all.
Video Transcript
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- Disney, the most iconic of brands, has faced an uncharacteristically rocky few years. It's been punctuated by a high-profile boardroom battle. But why did it all happen, in the first place? The back and forth can be traced back to the controversial tenure of Bob Chapek, who first took over as CEO in late February 2020.
What ensued is a media history, the disruption caused by the COVID-19 pandemic, a controversial reorganization plan, a highly publicized battle over the release strategy of Marvel's "Black Widow," and a damaging backlash over Florida's so-called Don't Say Gay Law.
To say this was the beginning of a tumultuous period for Disney would be an understatement. Fast forward to August 2022 and shareholder, Third Point, a hedge fund run by Billionaire investor Daniel Loeb, disclosed a stake of around $1 billion in the "House of Mouse." It was something of a U-turn for the activist investor, after having exited his position months earlier.
Third Point wanted changes in the boardroom for Disney to buy the rest of Hulu and for the company to spin off ESPN. Loeb got his change in the boardroom and, eventually, Disney did commit to buying Comcast, Hulu shares. But that wasn't the big story of 2022.
In November, a shock return. Bob Iger was reinstated at the helm of the business he ran for years with great success. Top of to do list, get a handle on costs and make the company's streaming business profitable. At the time, Disney shares were cratering.
And it recently scraped 21 year lows. At the same time, reports swirled that another activist investor with deep pockets was circling the theme park giant. At the beginning of 2023, it all became official. Nelson Peltz, a billionaire activist and head of Trian Fund Management, wanted to join its board and make some serious and immediate changes.
He wanted the focus back on creativity. Disney denied him a seat, saying he lacked the, quote, "skills and experience needed, but changes would soon come." In February 2023, Disney, now firmly under Iger's leadership, announced major job cuts and over $5 billion in cost savings.
Peltz laid down a sword, but he wasn't done for good. The activist reignited the battle in October 2023, saying Disney shares were undervalued. They were still trading below $100 a piece and had been for some time. His stake in the company had increased up to around $3 billion worth of shares.
And so had his vigor for battle. At the beginning of 2024, he made it official, again. Peltz's Trian Fund Management formally nominated Peltz as well as former Disney CFO Jay Rasulo to the board. Their mission, a successful CEO succession plan and Netflix like margins, but not all activists are taking on the Magic Kingdom.
Hedge funds ValueAct Capital and Blackwells' Capital have stood behind Iger. So where do we go from here? Expect the twists and turns to continue ahead of the company's shareholder meeting on April 3rd. Yahoo Finance will be there across it all.
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