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Nelson Peltz, the billionaire founder of activist firm Trian Partners, has increased his stake in Disney and is set to revive a campaign for board seats at the US entertainment group.
Trian, which in February called off its fight against Disney, has in the past two months boosted its stake in the company to a position worth more than $2.5bn, making it one of its largest shareholders, according to people with direct knowledge of the matter. The firm is planning to request seats on the Disney board including one for Peltz, said the people.
“Trian believes it’s now time to have a seat at the table,” one of the people said. Disney’s shares are “significantly undervalued” and the board needs to be “more focused, aligned and accountable”.
New York-based Trian, which manages around $9bn, declined to comment. News of Peltz’s fresh push for board seats was first reported by the Wall Street journal.
Peltz called off his fight against Disney two months after Bob Iger returned as Disney chief executive and a day after the company unveiled a plan to cut 7,000 jobs and reinstate the dividend suspended during the pandemic. Trian had called Disney’s succession planning process “broken”, attacked cost inefficiencies in the streaming business, and criticised the group’s 2018 acquisition of 21st Century Fox.
Since February, however, Disney’s stock has declined by 25 per cent. Trian, which owned 6.4mn shares in August, now owns more than 30mn shares, the people said.
Peltz, known for his activist campaigns against Unilever, Procter & Gamble and Wendy’s, wants Disney to get overheads “in line” and have “a clear strategy going forward”, said one of the people familiar with the 81-year-old financier’s thinking.
Disney, like all the large streaming services, has been under pressure from investors to curtail profligate spending on TV and film content amid a slowdown in new subscribers numbers. Analysts have been concerned about “peak streaming” in markets such as the US.
Disney’s direct-to-consumer streaming operations, which includes Disney+, made a large loss last year, and the company does not expect the business to return to profit until 2024. Disney+ subscriber numbers continued to fall last quarter, more than analysts had expected. The unit’s losses included one-off charges and impairments from taking content from its streaming platforms and ending licensing agreements.
Recent big-budget movies such as Little Mermaid have underwhelmed, while forthcoming releases have been hit by the writers and actors’ strikes in Hollywood.
Investors and analysts are also questioning whether the company should sell off some of its “crown jewel” assets, such as streaming service Hulu or sports network ESPN.
ESPN has been hit by cancellations of cable subscriptions, while rivals such as Apple are seeking to acquire rights to high profile sports to show alongside their entertainment content. Trian, however, does not want Disney to sell the sports network, the person familiar with Peltz’s thinking said.
Investors have also questioned the future of the Hulu streaming service. Disney is expected to buy out Comcast’s one-third stake for at least $9bn under the terms of a so-called “put call” arrangement, but investors are concerned that the company may end up paying much more once an appraisal process is completed later this year.
Meanwhile, the company’s television business, still profitable, has also suffered, with demand eroded by online and streaming rivals as well as a sharp fall in advertising revenues.
Disney declined to comment.
Iger, 72, has said he would cut $5.5bn in costs, which has already translated into thousands of job losses. Disney has also committed to investing $60bn over the next decade in its parks, experiences and products division, which continues to grow.
Another big question concerns Iger himself. The entertainment veteran has extended his contract for another two years, raising doubts over his commitment to finding a successor. “The challenges are greater than I anticipated,” Iger told CNBC in July.
If Disney rejects Trian’s request for board seats, the activist would have the option to put forward its candidates for shareholder approval at its annual meeting next spring.
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