Disney shareholders rejected board nominations for a coalition with activist investor Nelson Peltz on Wednesday, ending a contentious months-long proxy battle that focused on the company’s direction during the tumultuous beginnings of the streaming era.
Instead, most shareholders voted in favor of Disney’s proposed list of 12 board candidates, which the company announced at its annual shareholder meeting.
(Disney is the parent company of ABC News) Trian Partners, the hedge fund founded by Peltz, took advantage of its position as a major Disney shareholder to run a high-profile campaign criticizing the company’s growth strategy and highlighting plans to develop a successor to the current 73-year-old CEO, Bob Iger.
Addressing activist pressure at the Morgan Stanley investor conference earlier this month, Iger touted recent strong stock performance and dismissed Peltz’s campaign as an attempt “to distract and guide us.”
“Many businesses are feeling the impact of disruption,” Iger added. It requires a significant amount of knowledge, time, and focus. Peltz, 81, is seeking a board seat for himself and former Disney CFO Jay Rasulo.
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They called on shareholders to hand over the seats currently occupied by Maria Elena Lagomasino and Michael Froman. Proxy wars have occurred as the shift to streaming has upended the media industry.
Hampered by cord-cutting and falling movie theater attendance, Disney has increased viewership on its streaming services, including Disney+, Hulu, and ESPN+.
However, the new platform has not yet turned a profit. Through an activist campaign website titled “Restoring the Magic,” Trian Partners is calling on Disney management to “develop and articulate” a clear, achievable streaming strategy.
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Netflix-like profits. Outlining a series of reforms, the website calls for cutting costs for the streaming industry, comprehensively overhauling the creative process, and focusing on new intellectual property acquisitions.
For his part, Iger said Disney is transforming its business to meet the streaming challenge Peltz identifies.
Disney+ has attracted 111.3 million subscribers in about five years since its launch, although the platform lost 1.3 million subscribers in the last three months of 2023, according to the company’s quarterly results.
The company said in its earnings report that it reduced streaming-related financial losses by $300 million over three months, allowing it to cut costs by $7.5 billion by the end of fiscal 2024.
Cost cuts have helped boost Disney’s stock price, which has fallen 23% since its recent low in October. However, the price is still down 30% from its peak in March 2021.
The question of succession is another key point of contention in the proxy fight. During his first term as Disney’s CEO, from 2005 to 2020, he repeatedly delayed his departure.
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He returned to the role in November 2022 as part of an agreement to step down after two years, but a few months later, the company announced a contract extension until 2026.
The activist campaign website says that Trian Partners called on the company to clarify the succession process and conduct a comprehensive search for Iger’s candidate instead.
After receiving a contract extension almost a year ago, Iger emphasized his commitment to a smooth succession in a press release.
“The importance of the succession process cannot be overstated, and as the Board continues to evaluate a pipeline of highly qualified internal and external candidates, I remain laser-focused on the transition to work,” Iger communicated.
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