Disney’s Nelson Biltz Battle Marks Ike Perlmutter’s Revenge Play – The Hollywood Reporter
In 2004, Roy Disney – Walt’s nephew – summoned Disney shareholders to attend the company’s annual meeting, asking them to remove then-president and CEO Michael Eisner, who had run the place for 20 years. Roy had the face of Walt and his “Save Disney” move brought individual contributors to chilly Philadelphia for Disney fans of all ages, some dependent on canes and others with kids in strollers. After a staggering 43 percent vote against Eisner’s re-election to the board, a new chairman was promptly appointed and Eisner, despite vowing to stay on as CEO until the end of his contract in 2006, departed in 2005.
At 80, Nelson Peltz was old enough to remember one of the most successful shareholder revolts in company history. He also presumably knows that he’s not Roy Disney and CEO Bob Iger, who has only been back at his job since November 21, not the domineering, aloof Michael Eisner in 2004.
But together he and his friend Ike Perlmutter, the former CEO of Marvel Entertainment who has some Scores to settle With Iger dating back to 2015, it could present a stubborn, costly, and distracting problem for Iger and the Disney board at a time when the entertainment company faces the same daunting challenges affecting other legacy entertainment companies. The development adds pressure as the company faces a two-year time period to find a successor to Iger, an effort spearheaded by Disney’s new chairman, Nike exec Mark Parker. It may also limit Iger’s ability to maneuver as he wants.
at this point, Peltz demands Much more modest than the dramatic changing of the guard that Roy Disney sought – the guy is just asking for a seat on the board. But Disney is fighting back hard. Peltz asks some valid questions: Aside from, say, the succession issue, broadcasting costs clearly need to be reined in. But Iger also has some cards to play, aside from his reputation as one of the best executives in the business. He has already moved to respond to the feeling that Disney (under ousted CEO Bob Chapek) was price gouging in its theme parks. Avatar: Water Road It’s still in circulation – just the kind of megahit that could drive many aspects of Disney’s business and there are more sequels to come. And only China agreed To give valuable release dates for Marvel movies in general. (Not only is it extremely unlikely that we’ll see any Chinese villains but the talent would presumably be well-informed to witness their words).
Peltz hardly intended for the challenge to come at a time when Disney fans are still rejoicing at Iger’s return. He began chatting with Chapek in Paris last July and continued the conversation in the following months.
Also in July, Perlmutter began lobbying for his friend, inviting Chapek, Disney Chief Financial Officer Christine McCarthy, and Disney board member Safra Katz less than a week after Peltz had dinner with Chapeke in Paris.
At the time Peltz approached Chapek, he was dealing with a CEO who just a month earlier was fully convinced he was about to face execution by Disney’s board of directors. (Instead, the split board agreed to extend his contract, even though it was out of date, giving him less than three years. The board then presented this outcome as “unanimous”). He could use a friend or two and that seems to be on offer. “Mr. Perlmutter said he and Mr. Peltz support Mr. Chapek, and adding Mr. Peltz to the board would help Mr. Chapek weather the recent headwinds he has faced, strengthen his position as CEO, and pre-empt any other potential shareholder nominations for director candidates at the “meeting.” 2023 Annual,” Disney wrote in the proxy preliminary filing Jan. 17: “He said that without Mr. Peltz there, former executives including Mr. Iger will return to Disney.”
Peltz is known for targeting Blue Chip companies such as consumer products giant Procter & Gamble and fast food chain Wendy’s. But of course his friend Perlmutter was very familiar with Disney – he was, in fact, its largest individual shareholder. Recall that the penny-pinching Perlmutter carries the gun He seized control from Marvel in 1997 and sold it to Disney in 2009. He remained as CEO of Marvel Entertainment but in 2015 Iger decreed that Kevin Feige, who was managing Marvel films at the time, would not report to Perlmutter but to the head of the film studio. Then Alan Horn. In his memoirs, Iger writes that Perlmutter stood in the way of the first Marvel films with black and female heroines. “I called Ike and told him to tell his team to stop putting up roadblocks and he ordered us to put both Black Panther And Captain Marvel in production,” Iger wrote. Feige sealed his control of Marvel when he took charge of TV, animation, and print editorial operations in October 2019.
Peltz and Perlmutter have more in common than their age (Perlmutter is also 80) and Palm Beach addresses. They’ve dabbled in philanthropy and politics, from sending turkeys to the Salvation Army on Thanksgiving to supporting Donald Trump’s bid for the Oval Office. (Peltz publicly apologized for his support for the ex-president’s re-election after the Jan. 6 attack on the Capitol.) Peltz’s Trian Group declined to comment, as did Perlmutter.
Disney has caught the attention of another activist contributor in recent history. Chapek settled with Dan Loeb in September, striking a deal that included giving former Meta CEO Carolyn Iverson a seat on its board. What was not known then was that at the same time Loeb was publicly confronting Disney, Peltz and Perlmutter were doing the same in private. At a board meeting on August 20, the Disney Board of Directors discussed “the different approaches of Mr. Peltz, Mr. Perlmutter, and Mr. Loeb, the thesis presented by Third Point, [and the] Not having a thesis presented by Mr. Peltz.” The following month, Disney representatives met with Loeb, which led to Iverson’s hiring.
Peltz, after months of wrangling in the private sector, rebounded after Disney reported earnings that missed market expectations on November 8, 2022, taking $900 million from the company. With Disney’s stock price plummeting, Peltz called Shabek to ask for a formal meeting and seat on the board of directors. On November 12, Chapek ventured to Palm Beach, where he met with both Peltz and Perlmutter, and the two continued their discussions to encourage Mr. Peltz’s addition to the board and again expressed support for Mr. Chapek. After eight days, Chapek was separated. With the news that the Disney board of directors had re-installed Iger as CEO, Disney’s share price rose more than 6 percent. The picture changed at Disney, but Peltz and Perlmutter lived on.
The Peltz Trian Fund initially opposed Iger’s return as CEO, suggesting that Peltz may have been considering another candidate. The activist investor abandoned that argument as he continued to push for a seat on the board, telling Disney’s board earlier this month that he “didn’t want to fire Mr. Iger but he wanted to be in the board room.” But even so, the questions seemed simple: While other activists have challenged Disney to take bold steps like separating ESPN and ABC, Peltz has been calling for more financial constraints, a step the company already appears to be taking.
At this point, it appears that Iger is still consolidating his control of Disney. Conveniently, Board Chair Susan Arnold, who had supported Chapek despite the concerns of her fellow board members, is at the end of her term. Iger’s relationship with Arnold began to sour even before he left Disney in December 2021. After he left, they didn’t speak at all until Arnold had to make that November call, asking Iger to return as CEO.
Arnold’s replacement as chairman is Parker, an ally of Iger who is said to have given Iger six pairs of Nikes on demand when he retired (temporarily, it turns out) a year ago. The two fitness aficionados are close in age — Parker is 67 and Egger is 71 — and Egger is said to have respect for Parker’s creative roots (he started and still has a hand in shoe design).
Egger wasted no time in purging Tchapeke’s deputy, Kareem Daniel, who sacked him at 6:30 a.m. after the surprise announcement Sunday night that Tchapeke was out. Some sources familiar with Disney’s politics believed he had not. They believe Iger wanted to ease up on CFO Christine McCarthy – but with much more kindness than Chapek and Daniel. Press reports portrayed her as the one who raised concerns about managing a tangle with the board in September, who subsequently contacted Iger to gauge his interest in returning. But some veterans of the company’s wars disagree with this scenario. “The board didn’t know until I told them?” says one, who points out that this version of the story makes the board look very innocent and certainly not responsible for the bad things that happened while Chapek was CEO.
In the aftermath of Iger’s return, some sources believed McCarthy was at risk for supporting Tangled so enthusiastically that she did not. The reorganization that gave Daniel the power of the portfolio also increased her influence – each of the chief financial officers in the various departments reporting to her and Daniel. One Disney veteran thinks she was setting herself up to extend her influence even further. like The Wall Street Journal mentioned In December, McCarthy led a move to hire consulting firm McKinsey. Last year to explore cost-cutting measures. McCarthy’s passion for cutting costs has already led to some clashes with creative executives, whom Iger wishes to protect.
McCarthy “enjoyed the expansive power of companies,” says a Disney veteran. “She has probably enjoyed more power and influence in the company than at any other time in her career. Hiring MacKenzie was her idea and they hired MacKenzie with an absolute agenda.”
McCarthy has long-standing connections on Wall Street to her advantage, and with Peltz knocking on the door, Egger will likely find that a united front works best. It’s not yet clear when and how he might make additional adjustments to the executive deck, but he quickly ordered a group of senior executives to roll back the Chapek realignment that empowered Daniel and McCarthy. By necessity, McCarthy is part of the team working on it, which also includes Dana Walden, chairman of Disney Entertainment Content; Film studio head Alan Bergman. and ESPN President Jimmy Pitaro. (The dynamics in those meetings must be interesting.)
With Iger already beginning to make big changes, it seems likely that shareholders will give him more time to reveal his plans for dealing with the daunting challenges facing Disney. “We agree with Trian that many of Disney’s wounds are self-inflicted and need healing,” MoffettNathanson’s Michael Nathanson wrote in a Jan. 12 note, but “CEO Iger’s return will force Disney into an honest and courageous self-examination about what works.” and what needs to be fixed. While we believe Trian is correct in identifying these issues, we believe that given the change in leadership, the company will move quickly to better profitability.”
Meanwhile, Disney officially fired Peltz on January 17th with an offer on his own, using his own words on CNBC against him (that he’s “not an expert” on theme parks, and answered “Why not?” when asked by CNBC why he was so focused on Disney). In deciding not to voluntarily offer Peltz a seat on the Board, the Board of Directors came to the conclusion that “despite months of involvement, neither Mr. Peltz nor the representatives of the Trian Group at the meeting, in fact, presented a single strategic idea for Disney, that Their assessment of Disney seemed oblivious to the secular change that was going on in the media industry, as well as the impact of the pandemic on every part of the company’s business from production to exhibit to leisure travel.” Disney emphasized Iger and his experience, for leading the company through the difficult moment facing the company, and for helping to find a successor, with the board noting that Iger “assists the board in identifying, developing, and directing the next CEO, a process that has already begun.” (This last part will spark some speculation.)
The emphasis on secular change in business is likely to weigh on Wall Street. In fact, analyst Rich Greenfield made this point using some of the same language even before Disney’s latest dossier. He noted that Disney is not alone in facing strong headwinds and that Peltz completely neglected this point in his criticisms of the company. “There are major secular challenges facing this entire sector,” Greenfield said. Given that, “It feels like Peltz doesn’t understand the media in 2023.”