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Business News


DISNEY FENDS OFF BOARDROOM BLITZ AS SHAREHOLDERS VOTE TO STAY THE COURSE

Despite the victory by current leadership, Disney’s challenges are real: From
the movie business to television and streaming, the stakes couldn't be higher
for the company's celebrated CEO.


The Sleeping Beauty Castle at Disneyland in Anaheim, Calif.AaronP /
Bauer-Griffin / GC Images
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April 3, 2024, 1:25 PM EDT
By Rob Wile and Daniel Arkin

Disney CEO Bob Iger on Wednesday fended off an aggressive challenge by activist
investors seeking to take the company in a new direction, averting what would
have been a stunning embarrassment for one of Hollywood’s leading executives.

The entertainment conglomerate’s corporate leadership was facing a bold attack
from billionaire activist investor Nelson Peltz, who loudly pushed the company
to come up with a concrete succession plan and derided efforts to make more
diverse movies and shows.




But that crusade fell short, as Disney shareholders approved board members
backed by the current company leadership, denying seats for Peltz and his ally
Jay Rasulo, a former chief financial officer at Disney.

Iger’s victory comes at a key juncture for a company that has found itself at
the center of wider American culture wars as it attempts to navigate dizzying
changes in the media landscape, including the rise of streaming, the decline of
traditional television and growing competition from social media.

During the pandemic, Disney saw its shares climb to all-time highs amid the
belief that streaming revenues would surge — but the stock price sank to fresh
lows soon after as the company struggled with how to succeed Iger, who left the
company in 2020 and then returned two years later.

Today, Disney's share price, at about $122, is little changed from where it was
some 10 years ago — a fact that earned the ire of so-called activist investors
like Peltz who buy up shares of companies on the open market in the hopes of
installing board members they believe can make decisions that lead to greater
investor returns.



Disney's challenges are real. The heavily marketed Disney+ streaming platform is
not profitable, though Iger has said he expects it will be by the end of this
year. Business analysts say Disney's Marvel and Star Wars franchises have lost
steam. ESPN, which Disney has effectively controlled since the 1990s, continues
to lose traditional TV viewers in the wake of the cord-cutting revolution.

"They're trying to do a lot of things at the same time, rather than focusing on
one thing and really nailing it," Rich Greenfield, co-founder of the LightShed
Partners research group, told CNBC last week.

Disney is also paying almost $9 billion to Comcast for Hulu, which has said it
plans to relaunch. NBC News is wholly owned by Comcast.

The latest anti-Iger push was led by Trian Partners, an activist hedge fund run
by Peltz, a businessman known for investing in or acquiring companies with the
goal of juicing their share prices.



In a January interview on CNBC, Peltz laid out his case for overhauling Disney's
leadership, saying that the company was not being run "properly" and that its
board lacked oversight.

“They promised they were going to improve things. I took them at their word,” he
said. “Things got worse. The stock went down. Results got worse. So, no more. I
can’t continue to give them more opportunities.”


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Peltz has also railed against Disney's efforts to produce more diverse and
inclusive entertainment. In a recent interview with the Financial Times, for
example, he took aim at Marvel projects that he said were too squarely focused
on gender and racial diversity.

"Why do I have to have a Marvel that’s all women?" he said. "Not that I have
anything against women, but why do I have to do that? Why can’t I have Marvels
that are both? Why do I need an all-Black cast?"



In the run-up to Wednesday's vote, Disney's current directors rejected the plan
by Peltz and fellow activist group Blackwells, saying that the billionaire "had
not actually presented a single strategic idea for Disney" and that he lacked
necessary subject-matter experience.

Iger's regime received public support from boldfaced names such as Star Wars
creator George Lucas; JPMorgan Chase CEO Jamie Dimon; Laurene Powell Jobs, the
widow of Apple co-founder Steve Jobs; and Disney family members like Abigail E.
Disney.

In recent days, Iger also won the support of key institutional shareholders such
as BlackRock and T. Rowe Price.

Peltz nabbed some crucial endorsements of his own, however. ISS, a leading proxy
advisory firm, sided with the activists and slammed Disney's succession
planning. The California Public Employees' Retirement System (CalPERS), one of
the largest pension funds in the country, backed Peltz as well.



Iger has long been considered one of the titans of the modern entertainment
industry, celebrated for his management acumen and creative chops. In his first
run at Disney, he turned the company into a global powerhouse by acquiring
marquee brands, such as Pixar, Marvel, Lucasfilm and 21st Century Fox.

But that reputation has been dented in his second stint amid high-profile
skirmishes with Peltz, tech mogul Elon Musk and Florida Gov. Ron DeSantis, who
waged a legal battle against the company after it publicly criticized his
state's "Don't Say Gay" law curbing classroom discussions of sex and gender.

Iger attempted to rebut Peltz and woo Wall Street during Disney's quarterly
earnings call in February. He announced a range of eye-catching initiatives,
including an investment in the maker of the "Fortnite" game, plans to launch a
sports streaming service in 2025, and a feature-length animated sequel to
"Moana" due in theaters in November.

Rob Wile

Rob Wile is a breaking business news reporter for NBC News Digital.

Daniel Arkin

Daniel Arkin is a national reporter at NBC News.

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