Activist investor Nelson Peltz calls for Disney to hit ‘Netflix-like’ streaming margins

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By Dan Sears

Activist investor Nelson Peltz called for Disney to “target and achieve Netflix-like margins,” and vowed to finalize a succession plan to replace CEO Bob Iger, according to a proxy filing Thursday.   

Peltz — who has been feuding with Iger for more than a year as the company’s stock hit decade lows — formally nominated himself and ex-Disney chief financial officer Jay Rasulo to the Mouse House board, according to the filing.

The renewed proxy war comes after Disney rejected Peltz’s picks and nominated its own slate of directors Tuesday. Peltz’s Trian Fund Management is Disney’s largest active shareholder, owning $3 billion of common stock in the struggling company.

Disney shares were up more than 2% Thursday to close at $92.14 after trading as low as $79 last October.

Peltz said Netflix was Disney’s biggest competition and pushed to achieve margins of 15% to 20% by 2027, according to the filing. 

He called Disney’s current board oversight “awful,” in an interview with CNBC’s “Squawk Box” after the filing.

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“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.”

Nelson Peltz restated his case to get on Disney’s board after the Mouse House rejected his nomination. NBCU Photo Bank via Getty Images

Peltz also touched on the future of ESPN, which he called the “crown jewel” of the media giant, to create a “solidified and detailed payback period and business plan for building out the platform.”

Iger has already said he is prioritizing turning ESPN into the “preeminent” digital sports platform. He is also mulling a strategy for the network, which includes selling a stake to the NFL. 

For the theme parks, Peltz and Rasulo are targeting “high-single-digit operating income growth,” according to the filing. 

In his CNBC interview, Peltz said he paid a visit to Disney World last week.

“It was fascinating because … we didn’t have any special passes. We didn’t have any tour guides … Everybody was nice. I mean, Magic Kingdom and the Hollywood Studios — terrific,” he said. “All the employees were smiling, and that’s probably in large part because they didn’t own any Disney stock.”

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Bob Iger returned to Disney as CEO in 2022, after a brief retirement, and since then he has tried to streamline the company and return it to a position of strength. Getty Images

In the filing, Peltz and Rasulo also vowed to “finally complete a successful CEO succession,” referring to Iger’s consistent delaying of his retirement date and his return to run the company after the firing of former CEO Bob Chapek in 2022.

Iger’s current contract runs through 2026.

Trian also said it will “align management pay with performance,” calling out Iger’s hefty $31.6 million pay package last year while Disney’s stock was barely changed, underperforming the S&P 500 for 2023.

Peltz also called for a board-led review of studio creativity to “restore leadership accountability” so that Disney — which owns Marvel and Pixar — can reclaim its leading box office position after a spate of flops.

Iger is currently in the process of cutting costs across Disney while he works to put Disney+ in the black. AP

The proxy battle comes as Iger tries to cut costs at the media giant, rein in spending and make its Disney+ streaming service profitable. As part of the revamp, Iger has slashed thousands of jobs.

The activist fight at Disney is Peltz’s second push at the company in less than a year. He previously called for cost-cutting and board changes but wound up ending the battle last February after Iger announced over $5 billion in reduced costs and a head-count reduction.

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