Bob Iger's Strategic Triumph Over a Corporate Raider in Disney's Epic Boardroom Showdown
Witness how Bob Iger strategically outmaneuvered Nelson Peltz in a high-stakes battle at Disney, showcasing his ability to strengthen Disney's vulnerabilities, thwarting the intentions of the billionaire corporate raider.
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On Wednesday, Bob Iger dealt Nelson Peltz a significant defeat. In doing so, he strengthened areas within Disney that the billionaire corporate raider had tried to target.
Peltz never clearly stated the changes he wanted Disney to make. However, the 81-year-old had raised concerns about corporate succession, "woke" entertainment, streaming strategy and profits, and the need to prepare ESPN for a direct-to-streaming future.
In recent months, Disney's CEO took actions that seemed to address Peltz's concerns. It's unclear whether these actions were meant to calm the rebellion led by Peltz, or if they would have happened regardless. The reasoning behind the CEO's decisions remains a mystery within the Magic Kingdom. Nevertheless, the steps taken by Disney's CEO seemed to silence Peltz's public complaints.
On the priority of entertaining audiences, Iger emphasized that it should be the company's main focus. He stated that the primary mission is to entertain and then use that entertainment to make a positive impact on the world. Iger made it clear that the company should not be driven by any specific agenda. Recently, Disney settled a major lawsuit and ended a long-standing feud with Florida Gov. Ron DeSantis over the state's controversial "Don't Say Gay" law, which had sparked backlash from right-wing groups.
Regarding the streaming strategy, Iger made significant moves to consolidate Disney's control over Hulu through a deal with Comcast. Last week, Disney merged Hulu into Disney+, combining both libraries into a single app, a decision that was previously considered unlikely. In the midst of these changes, Iger also oversaw the reduction of 7,000 employees last year as part of efforts to cut costs and increase profits. During the latest earnings call in February, Iger attributed a rise in profits to the cost-cutting measures and reaffirmed his goal of turning streaming into a profitable growth sector.
On ESPN’s future, Iger is focused on strengthening the network for the years to come. He revealed in February that the sports network's streaming service will launch by fall 2025, giving shareholders a clear timeline for the service. Described as a "one-stop shop" for sports fans, the service will provide direct-to-consumer streaming. Additionally, Iger mentioned that the standalone ESPN service will be integrated into Disney+ next year.
Regarding the succession question, Iger is determined to ensure a smooth transition when his contract ends in 2026, learning from past mistakes with Bob Chapek. The board has a special planning committee overseeing a diligent and thorough succession planning process. This committee now includes James Gorman, a new board member and former Morgan Stanley boss with ample experience in the field. Media outlets like CNBC and THR have already started reporting on the succession planning efforts.
CEO of Disney Bob Iger arrives for FX's "Feud: Capote vs. The Swans" premiere at the Museum of Modern Art in New York, on January 23, 2024.
CEO of Disney Bob Iger arrives for FX's "Feud: Capote vs. The Swans" premiere at the Museum of Modern Art in New York, on January 23, 2024.
Angela Weiss/AFP/Getty Images
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To make sure all its small investors were on board, Disney invested in a costly advertising campaign. They approached it like a political campaign, creating a campaign website, running Google search ads, and advertising on popular podcasts like "The Town" and "Smartless." They even got some of their famous animated characters involved.
In simpler terms, when shareholders gathered for their annual meeting on Wednesday afternoon, Peltz had little support for his campaign. Shareholders sided with Disney, choosing to elect Disney’s directors over Peltz and former exec Jay Rasulo. Peltz, through Trian Partners, expressed disappointment but also credited himself for influencing recent decisions made by Iger.
Trian stated, “We are proud of our impact on refocusing the Company on value creation and good governance.” Since late 2023, Disney has introduced new initiatives and improvement plans. Two new directors joined the Board, and Disney's stock has surged by around 50% in the last six months, making it the top performer in the Dow Jones Industrial Average this year.
Iger expressed gratitude to shareholders for their trust and confidence in his leadership and the ambitious strategy being implemented across the company. The impact of Peltz's proxy war on this strategy remains unclear.
It is likely that Iger and the board had already identified many of the issues and were planning solutions independently. The need for ESPN to have a direct-to-consumer platform and the importance of finding a successor to Iger have been evident to everyone.
It may be hard to believe that Peltz's aggressive proxy battle had no impact on Disney's recent decisions. It likely played a role in pushing for change. Sometimes, the most effective way to beat a competitor is to address their issues, limiting their power and undermining their objections.
Editor's P/S:
The article highlights the triumph of Disney CEO Bob Iger over billionaire investor Nelson Peltz in a proxy battle. Iger's strategic moves, including addressing concerns about entertainment, streaming, ESPN, and succession, effectively neutralized Peltz's campaign. While it remains unclear if these actions were solely motivated by Peltz's rebellion, they significantly strengthened Disney's position.
The article also underscores the power of corporate raiders like Peltz, who can influence corporate decisions despite not securing a board seat. Their campaigns can force companies to reassess their strategies and address shareholder concerns. Peltz's influence is evident in Disney's recent initiatives, including the settlement of the Florida lawsuit, the Hulu consolidation, and the establishment of a succession planning committee. While the full impact of Peltz's proxy war is yet to be determined, it has undoubtedly played a role in shaping Disney's current direction.
