1/17/2023: Activist Investor is Eyeing a Board Seat at Disney
Nelson Peltz wants to fix Disney
Activist Investor Nelson Peltz is launching an activist campaign named Restore the Magic, saying Disney has been poorly run and needs changes. His asks seem reasonable but there’s no indication that Disney is not currently working on them such as having a sound CEO succession plan, improving efficiency and profitability, etc. It has been a few tough years for Disney: COVID lockdowns that severely hurt their theme park business, heated video streaming wars that cost the company a lot of money, and CEO transition dramas. As a result, Disney’s profitability is severely diminished and the company stopped paying dividends a few years ago. It’s understandable that many shareholders are frustrated. (I am a Disney shareholder.) But I do think the problems at present are temporary and it will take time to get back the strong balance sheet and solid cash flows Disney used to have. Mr. Peltz was a savvy investor but he was mostly involved in food and retail brands like Wendy’s or Snapple. It seems odd that he wants to get involved with Disney.
As a shareholder, I prefer to give the company a couple of years to work things out. At the same time, I appreciate Mr. Peltz’s enthusiasm to keep the company accountable. If companies like Meta or Alphabet can be challenged by activist investors, I believe we will see better corporate governance. At the very least, a dialogue can be started regarding the company’s strategy and operational performance. It’s not necessarily that the activist investors are right but it’s more about what people expect the company to do for its users, its employees, its customers and its investors and what the management team will do to clarify and meet these expectations. The pendulum has swung and people no longer believe that mega corporations should be run by dictatorial CEOs.