Nelson Peltz
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After Disney delivered strong quarterly earnings results, including cutting streaming losses and reaffirming a profitable streaming business this summer, CEO Bob Iger said the “last thing” the company needs is activist investors like Nelson Peltz interfering in the business.
In an interview on CNBC Wednesday after Disney reported its first-quarter earnings, Iger was asked if the positive results would assuage the concerns of Peltz, who is trying to nominate his own board members to the Disney due to what he says is the company’s lagging stock performance and a push for the company to achieve “Netflix-like margins.”
Iger said that when he returned to the company it faced “considerable challenges,” including a streaming business that had “no path to profitability” and a “questionable balance sheet” with no ability to increase dividends or do stock buybacks. But he said patience, and a great team, have been key to turning around their fortunes and that the team should be allowed to continue without distraction from activist investors.
“I think if you look at the results that we just announced, and all the things that we’re talking about, that is the result of a team that is motivated, that is focused, and now all of us are very optimistic. The last thing that we need right now is to be distracted in terms of our time, our energy, by an activist or activists that, frankly, have a completely different agenda and don’t understand our company, its assets, even the essence of the Disney brand,” Iger said.
Asked whether Peltz’s call to have Disney achieve “Netflix like profitability margins of 15 percent to 20 percent by fiscal 2027” is even possible, Iger noted that Netflix had a head start of 10 years and that Disney streaming had launched four years ago.
But again, he said that Disney is already working towards many of the factors that are already in place at Netflix, including password-sharing, customer acquisition and retention costs and technology that lowers churn. And he said Disney knows more “than any outsider is going to tell us.”
“All of those things are things that not only do we aspire to but that we’re working towards in terms of delivering,” Iger said. “You don’t snap your fingers and get there, and as I said a moment ago, I’m not suggesting we’re patient about it. We’ve got a lot of work to do. Some of it takes time. The fact that we’re guiding to profitability by the end of this year, and that I’m saying to you, we’re going to turn that business into a business that we’re proud of in terms of margins. We know a lot more about it how to do that than any outsider is going to tell us.”
Peltz’s firm Trian Partners is targeting Disney directors Michael B.G. Froman and Maria Elena Lagomasino, and recommending Peltz and former Disney CFO Jay Rasulo for board seats instead.
Disney has continually pushed back on this, recently saying “in a two year quest for a seat on the Disney Board, Mr. Peltz had not actually presented a single strategic idea for Disney; that his assessment of Disney seemed oblivious to the ongoing secular change in the media industry.” In turn, the company has pushed shareholders to vote for its own slate of nominees and recently sent out a video, led by Professor Ludwig Von, guiding them through the voting process.
Disney also faces a fight from smaller activist firm, Blackwells Capital. The firm wants Disney to think about spinning off some of its real estate holdings into a real estate investment trust and to invest more money in virtual and augmented reality.
Blackwells is nominating Craig Hatkoff, Jessica Schell and Leah Solivan for board seats.
Asked if he had spoken to Peltz, ahead of the company’s April 3 shareholder meeting, where the board seats will be decided, Iger said he had “no plans to speak to him.”
“I have not spoken to Mr. Peltz in a while. I have no plans to speak to him,” Iger said.
