Oct 9, 2023 - Economy

Nelson Peltz reignites Disney proxy battle

Nelson Peltz, founder and chief executive officer of Trian Fund Management, during FII Institute Priority Summit in Miami, Florida, US, on Thursday, March 30, 2023. Photographer: Marco Bello/Bloomberg via Getty Images

Nelson Peltz, co-founder of the activist hedge fund Trian Fund Management, has increased his firm's stake in The Walt Disney Company and plans to seek board seats, a source familiar with his plans told Axios.

Why it matters: It's the second proxy fight Peltz has waged with Disney in the past 12 months, and it adds pressure as Disney assesses major strategic changes.

Details: Peltz has increased his stake in Disney to about 30 million shares, worth roughly $2.5 billion, according to a source familiar with Trian's position.

  • That's up from the roughly 6.4 million shares at the end of the second quarter, per Trian's 13-F filing. The Wall Street Journal was first to report news of Trian's latest move.
  • Peltz believes Disney's shares are undervalued and is hoping to get more representation on Disney's board, the source said.
  • The window for shareholder nominations opens Dec. 5th.

Catch up quick: Peltz first pressured Disney last November, arguing for a board seat in the wake of a weak earnings report that drove Disney's stock down to its lowest point in 21 years.

  • Peltz met with then-CEO Bob Chapek, per the New York Times, shortly before Disney CEO Bob Iger returned to the company as CEO.
  • Peltz has been vocal about disapproving of Iger's $71 billion acquisition of Fox's entertainment assets and cited the 2019 deal as a major driver of his previous proxy fight.
  • Peltz finally called off his last proxy battle in February after Iger announced a restructuring that included 7,000 layoffs and a return of the annual dividend for shareholders.
  • During that campaign, Disney named Nike executive Mark Parker as its new board chairman.

Of note: Activist investor Dan Loeb's Third Point also engaged in a short-lived proxy battle last summer that was resolved following the appointment of ex-Facebook executive Carolyn Everson to the company's board.

Be smart: For now, it's unclear which strategic changes Trian and Peltz are looking to see made at Disney, other than receiving more board representation.

  • The last time it engaged in a proxy battle, Trian said Disney's streaming strategy lacked cost discipline, and it criticized the firm for over-relying on profits from its parks division to subsidize its streaming costs.
  • It also blamed Disney's board and leadership for consistently failing on succession planning.
  • Disney extended Iger's CEO contract through 2026 over the summer.

The big picture: Disney's stock is down 12% in the past year and down 57% from its pandemic-era high, shortly after it launched Disney+.

  • Iger said in August the company was on track to exceed the $5.5 billion in cost savings that he outlined last year.
  • The entertainment giant is under enormous pressure to make its streaming bets profitable as its legacy broadcast and cable networks face viewership declines due to cord-cutting.
  • The company has cut back on production during the Hollywood writers strike, which was resolved last month, and the ongoing actors strike.

Disney declined to comment on this story.

Go deeper: A timeline of Peltz vs. Disney

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