After Disney posted strong quarterly earnings results, including cutting streaming losses and reaffirming its profitable streaming business this summer, CEO Bob Iger said the “last thing” the company needed was activist investors like Nelson Peltz meddling in the business.
In an interview on CNBC on Wednesday after Disney reported its first-quarter earnings, Iger was asked whether the positive results would allay the concerns of Peltz, who is trying to nominate directors to Disney's board over what he says are the company's delays. Stock performance and push the company to achieve “Netflix-like margins.”
Iger said that when he returned to the company, it faced “significant challenges,” including a streaming business that had “no path to profitability” and a “questionable balance sheet” with an inability to increase dividends or buy back stock. But he said patience and a great team were key to turning their fortunes around and that the team should be allowed to continue without the distraction of activist investors.
“I think if you look at the results that we just announced, and all the things that we're talking about, this is the result of an enthusiastic, focused team, and now we're all very optimistic. The last thing we need right now is to be distracted in terms of our time, our energy, by an activist or activists.” “Frankly, they have a completely different agenda and don't understand our company, its origins, and even the core of it,” Iger said. “The Disney brand.”
Asked if Peltz's call to make Disney achieve a “Netflix-like 15 to 20 percent profit margin by fiscal year 2027” is possible, Iger noted that Netflix had a 10-year head start and that Disney's streaming launched four years ago .
But again, he said, Disney is already working on many factors that Netflix already has, including password sharing, customer acquisition and retention costs, and technology that reduces churn. He said Disney knows more “than any outsider will tell us.”
“All of these things are things that we not only aspire to, but are working towards in terms of achieving,” Iger said. “Don't snap your fingers and get there, and as I said a moment ago, I'm not suggesting we be patient about it. We have a lot of work to do. And some of it takes time. The fact that we're heading toward profitability by the end of this year, I'm telling you, we're going to turn this around.” Work into a business that we're proud of in terms of margins. We know a lot more about how to do it than any outsider tells us.
Peltz's firm Trian Partners is targeting Disney executives Michael B.J. Vrooman and Maria Elena Lagomasino, recommending Peltz and former Disney CFO Jay Rasulo for board seats instead.
Disney has been pushing back on this, recently saying: “During his two-year pursuit of a seat on the Disney Board of Directors, Mr. Peltz did not actually advance a single strategic idea for Disney; his assessment of Disney seemed oblivious to ongoing secular change.” In the media industry.In return, the company pushed shareholders to vote for its slate of nominees and recently sent out a video, led by Professor Ludwig von, guiding them through the voting process.
Disney is also facing a fight from a smaller activist firm, Blackwells Capital. The company wants Disney to consider turning some of its real estate holdings into a real estate investment trust and investing more money in virtual and augmented reality.
Blackwells is nominating Craig Hatkopf, Jessica Schell and Leah Sullivan for board seats.
Asked if he had spoken to Peltz, ahead of the company's shareholder meeting on April 3, where board seats will be decided, Iger said he had “no plans to talk to him.”
“I haven't spoken to Mr. Peltz in a while. “I have no plans to talk to him,” Iger said.
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