The Walt Disney Company (DIS) prevailed in its battle with activist investors Nelson Peltz and Blackwells, but that doesn't mean the fight is over.

Needham & Co. Senior Media and Internet Analyst Laura Martin says that Peltz's pressure did help spur some change at Disney, not to mention, boost the stock price. As a result, she says, Peltz "lost the battle, but he sort of won the war, if a billionaire's war is about making money." However, the fight may not be over for Disney. Martin thinks that "activists will continue to circle The Walt Disney Company unless the share price keeps going up." That means, the "pressure on Bob Iger until 2026, when his contract expires, will stay really tight."

As to why shareholders stuck with Iger and Disney over Peltz, Martins gives three reasons: preserving the Disney brand, they like Bob Iger, and that Nelson Peltz doesn't have entertainment experience.

On the issue of succession, Martin notes it is something Disney will have to deal with, but the more urgent needs are cost-cutting and revenue growth.

Watch the video above to hear what Martin says could be the catalysts to move Disney shares higher. She also weighs in on the latest news surrounding a potential deal for Paramount (PARA).

For more expert insight and the latest market action, click here to watch this full episode of Market Domination Overtime.

Editor's note: This article was written by Stephanie Mikulich.

Video Transcript

JOSH LIPTON: Disney's current board to remain intact after successfully fending off activist investor Nelson Peltz. But that does not mean the House of Mouse is in the clear. Disney still facing a checklist of concerns it has to address. For more, let's get to Laura Martin, Needham & Company Senior Entertainment and Internet Analyst.

Laura, it's good to see you. You know, Laura, listen, it was always going to be tough for Nelson Peltz to get this done when the stock's working like this. I mean, it's up 30% this year. Do you give Nelson Peltz any credit for that, Laura, for that stock move, in the sense that maybe he was there, putting the pressure on, rattling the cages, and help focusing Disney's leadership?

LAURA MARTIN: Yes. I think it was very important to Bob Iger, the CEO of the Disney Company, not to have Nelson Peltz on his board. But to do that, he had to convince the one-third shareholders that were retail investors that he was the right guy to lead this company. And therefore, he instituted a lot of cost-cutting, faster to profitability on streaming, a lot of things that Nelson Peltz would have done had he gotten on the board Bob Iger has already done, which is why the shares are up 35% and why Bob Iger bought the option-- bought his 12 directors. I mean, he did the right thing to win this battle.

I will just tell you that Nelson Peltz spent 25 million, but he made $1 billion on the $3.5 billion stake he owns, because the shares-- Disney shares are up 35% year to date, which is triple the market.

JULIE HYMAN: So he effectively got what he wanted, even though he didn't get what he wanted?

LAURA MARTIN: Exactly. He sort of won the battle but-- he lost the battle, but he sort of won the war. If the billionaires war is about making money, he won that war.

JULIE HYMAN: I guess that's a big part of what the billionaires war is about in this case. But that said, do you think Nelson Peltz now withdraws? Do you think that he continues his activism in some form and that that ends up continuing to be a motivator for Disney?

LAURA MARTIN: So recall that also Blackwells and activist was in here. Value-- ValueAct was in here. So I think activists will continue to circle the Walt Disney Company unless the share price keeps going up. So I think the pressure on Bob Iger over the net-- until 2026 when his contract expires will stay really tight. I don't know if it's Nelson Peltz specifically, but I think activists are circling this company. And they only are kept at bay if the share price keeps going up.

JOSH LIPTON: Laura, one big issue in this drama, and you know this, was succession, right? In fact, some of the folks who sided with Mr. Peltz, I'm thinking like ISS, for example, in part, Laura, they did so because they thought, all right, Nelson's going to join the board, and this time the boards actually get this right. How do you see that issue specifically playing out?

LAURA MARTIN: Right. Yeah, 31% of voters voted for Nelson Peltz. And he only owned like 3% of the shares. So all the rest were actual people voting for him on this issue of succession that they don't think the Walt Disney Company will be successful finding a successor. And frankly, based on the track record, they might be right. But that is going to be a critical question. It's an important question, but not an urgent question.

The urgent question is, how do you cut costs or drive growth at the revenue line for the Walt Disney Company from an investment frame of 2024 and 2025? Those are the most important issues that Bob Iger has to deal with. Bob Iger's contract ends in '26. So succession starts in 2027, whether you pick the right guy or the right girl or not. So I would say there are more urgent issues that Disney has to deal with based on its competitive backdrop. But ultimately, in 2027, they better have an answer to succession that is better than the last answer they had.

JULIE HYMAN: So it sounds like from what you're saying, Laura, it's not as though the issues that Peltz was bringing up were invalid. Why do you think in the end he didn't win? Was it that Disney that it's full court press was successful, using its IP to convince shareholders to vote on its behalf? Was it that Iger was already making the right moves? What do you think went on there?

LAURA MARTIN: I think there's three things. The Disney brand is iconic, and to have hostility in the boardroom is really off brand for Disney, too. 95% of shareholders voted for Bob Iger which is 100% of shareholders that weren't Nelson Peltz. So there is a lot of faith in Bob Iger as a leader. That's the second thing.

And then third, Nelson Peltz has no entertainment experience. He did a hostile on P&G and Unilever, but he has no entertainment experience. So it's not helpful to have him on the board other than as a rabble rouser. And I think that worked against him.

JOSH LIPTON: And Laura, final question to you, listen, I mean, bottom line, Laura, you do have a buy on the name. You're a believer. What are the catalysts ahead, Laura, that you see that are going to move this name even still higher?

LAURA MARTIN: Right. So I really like the ESPN-Warner Brothers-Fox joint venture. It's going after 10 million cord cutters that currently Disney earns no money from. So I like that as a catalyst. I really like streaming losses are now-- they're going to hit profitability in the September quarter instead of the December quarter.

And I definitely talk to a lot of investors who are skeptical about that ever happening. So if it happens, I think that is a catalyst for the stock. Continued margin expansion at the parks. Parks are now a third of revenue and 3/4 of profitability. So parks have to continue to do well to drive earnings per share growth, and I expect that they will. So I would say those are the three key things I'm looking for in '24 and '25 to keep these shares moving to the upside.

JULIE HYMAN: Laura, if you don't mind, I'm going to call a bit of an audible here and ask you about Paramount, because we're just getting the news here that it looks like there's some progress being made in that. Do you think that we're going to get a deal here? Seeing some headlines here that Apollo just reportedly offered $26 billion. I mean, what do you think the price is finally that gets it done, and who wins?

LAURA MARTIN: So I really thought your point was insightful, that the more complicated the deal the less likely it gets done. And this Skydance deal with the two different pieces, and they're buying the parent, and then they have to merge with the subsidiary that's public, all of that feels complicated. Apollo will just do a deal for the public entity. Everybody gets treated fairly, fewer lawsuits.

So I think-- so this $26 billion, just to be clear, is 9 billion of equity plus 14 of debt, which gets you to 23 billion. And then they're paying a 3 billion premium, which is pretty low actually for typical media companies, that little premium there. But I would say, my gut feel is, and this will not be the consensus view today, is Apollo wins, not Skydance. Too complicated a deal, just to your point.

JULIE HYMAN: All right. We're going to come back to you once it gets done and see if you're right. Laura, always great to get your insight on the media industry. Really appreciate it.