Nelson Peltz lays out his case for Disney proxy fight, denounces TBEN takeover

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disney faces a proxy battle as Nelson Peltz’s activist firm Trian Fund Management pushes for a seat on its board of directors.

Peltz spoke on TBEN’s “Squawk on the Street” on Thursday, arguing for the battle his company has taken on with Disney, addressing issues with Disney’s $71 billion acquisition of TBEN in 2019 and how the company is destroying shareholder value. eroded in recent years.

“TBEN hurt this company. TBEN took the dividend. TBEN has turned what was once a pristine balance sheet into a mess,” Peltz said Thursday.

On Thursday, the activist company filed a preliminary proxy statement to place Peltz on Disney’s board.

To avoid what could be a messy proxy battle and against Trian, Disney announced Wednesday that Mark Parker, the executive chairman of Nike, would become the new chairman of the board of directors. Disney’s board will now have 11 members.

The activist company said it owns about 9.4 million shares worth about $900 million, which it first collected a few months ago. Trian said Wednesday it believes Disney has “lost its way, leading to a rapid deterioration in its financial performance.”

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Peltz also said he wants to be on the board so he can access internal numbers and tell other members if they’re missing out on opportunities.

“I don’t need to overwhelm them,” Peltz told TBEN. “I don’t need more than one person on the board.”

Shares of Disney were up about 2% on Thursday.

Trian called out what it viewed as poor corporate governance on Disney’s part, including failed succession planning, “over-the-top” compensation practices and Disney’s lack of involvement with Trian in recent months.

In public filings on Thursday, Trian mentioned his numerous meetings with Disney and its board members, starting with then-CEO Bob Chapek, Peltz and their wives over lunch in July. According to the filing, meetings and correspondence between Trian and Disney increased in November.

Peltz said Thursday he only had a meeting with Disney’s board that lasted about 45 minutes, but he never heard a response from them. A Disney representative did not immediately respond to comment.

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Peltz also noted that Disney was open to making him an observer of the board, allowing him to attend meetings and advise on operations, but without voting rights.

“I don’t have to overwhelm them. I just have to talk reasonably to these people and explain to them where they went wrong or what opportunities they missed,” Peltz said Thursday, pointing to other companies where he served on the board .

In November, Bob Iger made a surprise return to Disney’s helm, ousting Chapek – who selected Iger as his successor – after a poor earnings report. Trian has said it does not want to replace Iger, but will work with him to ensure a successful CEO transition within the next two years.

Parker will take over as chairman from Susan Arnold and will be tasked with leading succession planning, according to Disney’s announcement on Wednesday.

In Thursday’s filing, Trian also mentioned Disney’s streaming strategy, saying it is “struggling with profitability despite earning similar revenues to Netflix and having a significant IP advantage.” The company also criticized what it believes is Disney’s lack of cost discipline and over-earning at its theme parks to subsidize streaming losses.

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Disney’s stock had a rough 2022, coming from the early days of the pandemic, as theme parks and movie theaters closed. As streaming subscriber growth slowed and investors questioned profitability, while cable-cutting increased, most media stocks fell last year.

On Thursday, Peltz said Disney should either get out of the streaming business or buy Hulu. “They have to buy Hulu, which unfortunately means the company will be indebted for years to come,” Peltz said.

While Disney+ is the most important part of the company in terms of streaming, Disney also owns two-thirds of Hulu and has an option to sell the remaining stake of Comcast as early as January 2024.

Last year, Disney also announced it would continue with cost-cutting measures, including a staff freeze that Iger has enforced.

Disclosure: Comcast is the parent company of NBCUniversal, which owns TBEN.