Is all well in the House of Mouse following an attempted hostile takeover? 🏰 The management team and board at Disney (DIS) may have let out a collective sigh of relief last week. The blue chip entertainment company survived their second attempted hostile takeover by 81-year-old billionaire shareholder Nelson Peltz - father of Nicole Peltz, married to Brooklyn Beckham - who was handed a ‘stinging defeat’. 

In the countercampaign against Peltz, which cost an estimated US$40 million, Disney CEO Bob Iger reached out for support from big names. These included Star Wars creator George Lucas, former Disney CEO Michael Eisner, JPMorgan CEO Jamie Dimon and businesswoman Laurene Powell Jobs, the widow of Apple CEO Steve Jobs. Disney also gained backing - and much-needed shareholder votes - from large institutional investors, including Vanguard, which owns a 7.8% stake in Disney, BlackRock with 4.2%, and State Street owning 4.1%.

Why did Peltz want a seat at Disney’s table?

Trian Partners controls a US$3.98 billion stake in Disney: 1.8%. 💰 The majority stake is owned by Ike Perlmutter, however, who pledged control of his Disney shareholding to Peltz in support of his proxy battle. Trian Partners, the hedge fund firm founded by Peltz, alleged that Disney had ‘lost its way over the past decade’, adding that Disney has ‘a board that lacks focus, alignment and accountability’. 

A hostile takeover attempt occurs when ‘activist shareholders want changes in a company’. Self-confessed ‘bully billionaire’ Peltz launched his second proxy fight in late 2023, a battle that cost around US$25 million, which he had to part-fund. Peltz’s aim was to gain some control of the 12-person Disney board by unseating Maria Elena Lagomasino and Michael Froman, replacing them with former Disney CFO Jay Rasulo and Peltz himself. This required a campaign to solicit shareholder votes in the run-up to the AGM to secure the two seats - including to gain votes from the one-third Disney retail investors. 

Peltz’s proxy fight rallied camps on both sides. 🥊 Elon Musk, who’s waged his own battle with Disney following the company pulling advertising from his X/Twitter in November last year alleging Musk’s anti-semitic comments, tweeted his support of Peltz. In the Disney camp, Walt Disney’s grandchildren publicly expressed support for Iger:

‘We know that our grandfather would be especially proud of what Disney means to the world today. We also know that, like us, he would be very concerned by the threat posed by self-anointed ‘activist investors’ who are really wolves in sheep’s clothing, just waiting to tear Disney apart if they can trick shareholders into opening the door for them.’ — Disney grandchildren, The Hollywood Reporter

But Trian Partners - along with Blackwells Capital which had also pushed to gain three board seats - failed to win any board seats. 

Did Disney’s strong Q1 performance diffuse Trian’s argument?

The Disney empire strikes back. 💥 Disney’s 2024 first quarter ‘blockbuster’ earnings results quashed some board concerns about a potential crumbling empire. Announcements included: 

• Increasing operating income by 27%, cost savings tallying US$7.5 billion - which included laying off thousands of employees
• Lifting earnings per share (EPS) to 23%
• Reporting a free cash flow of US$886 million in Q4 2023 and setting a target to reach total cash flow of US$8 billion in 2024 - returning Disney to pre-Covid levels
• Investing US$60 billion into theme parks to grow their experience business
• All bookended with 27 Golden Globe nominations, and announcing a slate of high profile movie releases - including Deadpool, Alien, Moana, Avatar, Frozen 3 and Toy Story and the highly-anticipated Disney and Lucasfilm Star Wars movie, The Mandalorian & Grogu, set for release mid-2026

The Journal podcast by WSJ, Robbie Whelan added that Disney’s reporting had ‘everything you could ever want’, summarising:

‘Had Taylor Swift. They announced that she was going to do an exclusive cut of her Eras tour movie on Disney Plus. We had Fortnite, the most popular video game in the world. Disney was making a huge investment in Epic Games, the owners of Fortnite and striking a big partnership with him. We had Nick Saban, the most beloved college football coach of the last decade from Alabama. They were hiring him to be a commentator on ESPN, and they announced probably biggest of all, a big joint venture with Warner Brothers and Fox where they're going to launch a sports-focused streaming service. In addition, quarterly earnings were really good.’ - Robbie Whelan, The Journal podcast, WSJ

Following last week’s AGM vote, Disney stock dropped 4.02%. However, the US$215.255 billion market cap company’s stock has climbed 29.97% year-to-date (YTD) and is up 17.47% year-over-year (YOY) - growth that boostedTrian’s portfolio by nearly 30% - around US$1 billion.

What companies does Disney own?

Does Disney own the world? 🌏 It might be easier to ask which companies doesn’t the legacy company own; Disney’s list of assets is vast. Among them are Lucasfilm, Marvel, Touchstone Pictures, Pixar - with film franchises including Star Wars, Narnia, The Muppets and Winnie the Pooh -  ESPN (80% stake), Hulu, ABC, Hollywood Records, Core Publishing, Vice Media (10% stake), The History Channel (50% equity holding with Hearst Corporation), Lifetime (50% equity holding with Hearst Corporation) and A&E (50% equity holding with Hearst Corporation).

Along with a tonne of companies ‘we’ve never heard of’, they also own their own-name brands - their ‘cash cows’ - Disney Plus, Disney stores, Disney radio stations and Disney parks - which includes Walt Disney World Resort, Disneyland Resort, Disneyland Paris - and their global Disney Cruise Line, along with vacation-related properties. 

‘Parks are now a third of revenue and 3/4 of profitability. So parks have to continue to do well to drive earnings per share growth, and I expect that they will.’ — Laura Martin, Yahoo Finance

Who will be Disney’s next CEO?

Disney may not be out of the hundred acre woods yet. 🌲 Long term Disney investors have weathered plenty of storms - such as shareholder dividends cut to $0 between 2021 and 2023 when revenue from the Parks and Cruise Line plummeted during lockdowns - and Disney still faces a ‘checklist of concerns’. 

Among them include Peltz returning to fight another day should Disney fail in shareholder expectations, and the ongoing battle to gain subscribers on Hulu and Disney+ - numbers still well below main competitor Netflix (NFLX), with Disney+ bleeding 1.3 million subscribers in Q1, down to 149.6 million - a drop of 12 million in one year - which compares to Netflix’s 260.28 million.

‍Disney needs to magic a strong CEO. ✨ Highest on the list is the global search to find a CEO successor to Bob Igor, who had returned from an 11-month retirement from the company to fill the role, and receives a US$31.6 million pay package, but is expected to step down in 2026. Rumours swirl, with possible contenders including Disney’s potential first female CEO, Dana Walden. For now, shareholders - and Peltz - watch and wait.

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