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Disney board exposed itself to activist intervention, but Peltz may be overreaching



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Bob Iger, chief executive officer of The Walt Disney Co.Patrick T. Fallon | Bloomberg | Getty ImagesActivist investor Nelson Peltz spent about 30 minutes Thursday morning speaking with CNBC’s Jim Cramer and David Faber in a wide-ranging interview about why he wants a Disney board seat.But his argument barely touched on what should be his strongest point — Disney’s consistent failure to plan for CEO succession.related investing news 5 hours ago 16 hours agoPeltz referred to his fund’s slide presentation on Disney’s failures under the leadership of past CEOs Bob Iger and Bob Chapek. He said if he had to distill the presentation down to its core, it would revolve around Disney’s poor share performance and Trian’s track record of value creation. Trian noted that Disney’s share price peaked in 2021 but currently trades near its eight-year low. The stock was up about 3% on Thursday.But Disney’s underperformance in 2022 mirrored an industrywide slump led by Netflix’s stalled growth. Disney’s share price spike in 2021 was caused by the same phenomenon — investors charging into streaming services with significant subscriber growth. Disney and Netflix are both down about 38% in the past 12 months. Other media stocks are down even more. Paramount Global shares have slumped 45%. Warner Bros. Discovery shares are down almost 50% since AT&T merged its WarnerMedia with Discovery on April 8.Peltz said Disney Chief Executive Bob Iger and the board overpaid for 21st Century Fox in 2019, and he blamed that deal for the company’s decision to scrap its dividend during the pandemic. But asking for a board seat based on Iger’s track record of acquisition decision-making isn’t going to win over many investors. Iger’s string of deals during his tenure as CEO — acquiring Pixar, LucasFilm and Marvel — before Fox were some of the best acquisitions in the history of the media industry. Trian also called Disney’s direct-to-consumer strategy “flawed” in a filing, “despite reaching similar revenues as Netflix and having a significant IP advantage.” Netflix launched its streaming business years before Disney debuted Disney+ in 2019. It’s natural that Netflix would be ahead of Disney and every other streaming service in terms of profitability and free cash flow generation.Peltz plans to mount a proxy fight, and his strongest argument to shareholders shouldn’t be about Iger’s performance as a CEO. Rather, it should be about the board’s consistent failure to plan for a post-Iger world. Iger developed a history during his initial, 15-year CEO tenure of chasing away potential successors, …

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