Activist investor Nelson Peltz wants a seat on Disney’s Board of Directors. He also wants former Disney CFO Jay Rasulo to have one. With his Trian Partners, Peltz is pushing for just that. This last week it appeared that these efforts got quite a bit harder. With Disney announcing stronger than expected earnings coupled with other news including a partnership with Epic Games, Taylor Swift, an ESPN stand-alone service arrival timeline, and other projects that are in the works. The result was the best day for Disney stocks since 2020 with its stock raising 10%. This year alone, Disney has seen 22% growth. However, it is still 40% below its high point in 2021. With that in mind, Peltz is speaking his mind and says Disney’s efforts are simply throwing “spaghetti against the wall.”
“With the stock waning and Disney facing another proxy contest, Disney appears to again be trying to distract shareholders with what we see as a fanciful tale, claiming it has ‘turned the corner and entered a new era,’” Trian wrote in a letter to shareholders. “And with that, Disney announced a slew of new promises and ideas — most still in the process of being developed — hoping that shareholders would just believe all was well and improving.”
One effort that the letter singled out was Disney’s partnership with Epic Games. It said that “lacks a product roadmap or expected return targets.” It also pointed out that the joint effort by Disney, Fox Corp., and Warner Bros. Discovery “likely confused consumers, surprised important content partners and competes with the company’s own services.”
Nelson Peltz also appeared on CNBC in an interview that was timed with the letter’s release. During the interview, he was asked if he would sell his Disney shares if his efforts weren’t successful. “Oh, come on. We’re not going to lose, OK? Let’s get that straight,” he replied. “The people who own this stock, they want action. They don’t want promises, OK? That’s not what they want. We’re gonna win. We never plan and state what we’re going to do if we lose because we don’t lose.”
Ironically, this letter and interview came as Disney released new casting and release date information about The Fantastic Four. Almost immediately, it was grabbing attention online and on social media. However, Peltz and Trian Partners see all of this news as something less exciting.
“Frenetic activity, in the face of a proxy contest, is not a substitute for a well-considered corporate strategy. Nor is throwing spaghetti at the wall going to feed shareholders who have been starved of returns for so long,” Trian’s letter concluded, adding a cartoon depicting current board members actually throwing spaghetti against the wall. “Disney shareholders need the company to consistently perform under the watchful eye of a vigilant board. That is the recipe for good eating.”
The accusations in the letter and interview against Disney point out perceived faults. It should be noted that Peltz has yet to provide actionable stragies for moving the company forward and into a place where they believe the company should be. Peltz’ Trian Partners have simple stated where they would like the company to be, without saying how despite Disney’s efforts to reach out and work with Peltz.
What do you think about this most recent update in this proxy fight for the future of Disney? Do you think Peltz has a point? Do you think his efforts will succeed? Share your thoughts and opinions in the comments below!
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