Nelson Peltz is in a new push for Disney board seats

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Nelson Peltz, the billionaire founder of activist firm Trian Partners, has increased his stake in Disney and is set to revive a campaign for seats on the US entertainment group’s board.

Trian, which called off its fight against Disney in February, has boosted its stake in the company in the past two months to a position worth more than $2.5 billion, making it one of its largest shareholders, according to people with direct knowledge of the matter. . The company plans to seek seats on Disney’s board, including one for Peltz, the people said.

“Trian thinks it’s time for a seat at the table,” one person said. Disney stock is “undervalued” and the board must be “more focused, aligned and accountable.”

New York-based Trian, which manages about $9 billion, declined to comment. News of Peltz’s new bid for board seats was first reported in The Wall Street Journal.

Peltz called off his fight against Disney two months after Bob Iger returned as Disney CEO and one day after the company unveiled a plan to cut 7,000 jobs and reinstate suspended dividends during the pandemic. Trian had called Disney’s succession planning process “broken,” attacked cost inefficiencies in its streaming business, and criticized the group’s 2018 acquisition of 21st Century Fox.

But since February, Disney shares have fallen 25 percent. Trian, which owned 6.4 million shares in August, now owns more than 30 million shares, the sources said.

Peltz, known for his activist campaigns against Unilever, Procter & Gamble and Wendy’s, wants Disney to get “aligned” with overhead and have a “clear strategy going forward,” said one of the people familiar with the 81-year-old businessman’s thinking. .

Disney, like all big streaming services, has been under pressure from investors to curb wasteful spending on TV and movie content amid a slowdown in new subscriber numbers. Analysts were concerned about “peak flow” in markets such as the US.

Disney’s direct-to-consumer streaming operations, which include Disney+, posted a big loss last year, and the company doesn’t expect the business to return to profit until 2024. Disney+ subscriber numbers continued to decline last quarter, more than analysts expected. The unit’s losses included one-time fees and impairments from taking content from its streaming platforms and the termination of licensing agreements.

The latest big budget films such as Little mermaid It was a disappointment, while upcoming releases were affected by the writers and actors strikes in Hollywood.

Investors and analysts are also wondering whether the company should sell some of its “crown jewel” assets, such as streaming service Hulu or sports network ESPN.

ESPN has been hit by the cancellation of cable subscriptions, while competitors such as Apple seek the rights to prominent sports broadcasts to display alongside their own entertainment content. The person familiar with Peltz’s thinking said Trian does not want Disney to sell the sports network.

Investors also questioned the future of streaming service Hulu. Disney is expected to buy a one-third stake in Comcast for at least $9 billion under the terms of a so-called “put call” arrangement, but investors are concerned that the company could end up paying more once the valuation process is completed later. this year.

Meanwhile, the company’s TV business, which remains profitable, has also suffered, with demand eroded by online and streaming competitors, as well as a sharp decline in advertising revenues.

Disney declined to comment.

Iger, 72, said he would cut costs worth $5.5 billion, which has already led to thousands of job losses. Disney has also committed to investing $60 billion over the next decade in its parks, experiences and products division, which continues to grow.

Another big question concerns Iger himself. The entertainment industry veteran has extended his contract for another two years, raising doubts about his commitment to finding a successor. “The challenges are greater than I expected,” Iger told CNBC in July.

If Disney rejects Trian’s request for board seats, the activist will have the option of presenting his nominees for shareholder approval at its annual meeting next spring.

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