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9 months ago
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Activist Disney investor Nelson Peltz, whose Trian Capital is at war with CEO Bob Iger, blasted the company’s spree of announcements timed to its earnings report last week as “spaghetti against the wall.” He also guaranteed victory in the proxy fight.
Trian is seeking to have Peltz and former Disney CFO Jay Rasulo elected to the board of directors. Disney formally rebuffed their request to be put forward as official nominees, so the company is going to put the matter to a vote at its April 3 shareholder meeting. Two other firms have also been rattling cages ahead of the meeting, but Trian, which has waged successful proxy battles against Procter & Gamble and other companies, has been the most vocal. Former Marvel chief Ike Perlmutter has endorsed the Trian effort and enabled it to leverage his shares in the fight.
“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 Wednesday. “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.”
Perhaps not coincidentally, as the Trian letter was hitting the wire, Disney announced Fantastic Four casting and release date news, which immediately became a trending topic on social media.
The letter singled out one move in what it called the company’s “spaghetti-against-the-wall ‘plan,'” a $1.5 billion investment in Fortnite maker Epic Games. According to Trian, the initiative “lacks a product roadmap or expected return targets.” In a similar fashion, Disney’s joint sports streaming venture with Fox and Warner Bros. Discovery “likely confused consumers, surprised important content partners and competes with the company’s own services.”
In an interview on CNBC timed to the release of the letter, Peltz was asked whether he would sell his shares and retreat if he loses the proxy fight. “Oh, come on. We’re not going to lose, OK? Let’s get that straight,” he responded. “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.”
In addition to Epic and the streaming venture, the company’s announcements included Taylor Swift’s Eras Tour documentary coming exclusively to Disney+, ESPN setting a date for its direct-to-consumer streaming launch; and an animated sequel to Moana. The news, plus a solid set of financials, boosted Disney stock more than 10% the following day. It has risen steadily since the start of the year, though it remains more than 40% below its 2021 peak.
“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. “Disney shareholders need the company to consistently perform under the watchful eye of a vigilant board. That is the recipe for good eating.”
