Disney upends activist investor Nelson Peltz.It’s real work time now | Wilnesh News

disney Shareholders voted overwhelmingly to keep the company’s current board of directors in place at Wednesday’s annual meeting, signaling their confidence that current CEO Bob Iger has plans to boost the stock price and name a strong successor. By.

Now Iger must prove it or he could face another activist campaign this time next year.

Over the next 12 months, Iger will make progress in a number of areas. That starts with turning his streaming service into a profitable unit, explaining ESPN’s digital strategy, getting some box office success and picking a successor with a transition plan.

If Disney struggles to show investors that the entertainment giant has a coherent strategy, or if Iger again delays plans for a successor, activist investors could knock on the company’s door again at next year’s annual meeting, demanding changes.

“They’re still facing the same problems they’ve had before, and it’s really an industry problem,” said TD Cowen analyst Doug Creutz. “Direct-to-consumer streaming is not as economically viable as the old linear bundle model, which was It’s disappearing. They have to figure this out.”

Disney said earlier this year that it planned to make its streaming TV business profitable in the fourth fiscal quarter of this year.

This will mark a milestone for the company, which launched Disney+ on November 12, 2019.This will be the first time the company Disney has shown it can make money with Disney+, Hulu and ESPN+.

Disney needs to maintain and grow streaming profits to justify Iger’s five-year strategy Dedicate yourself to this niche.

Iger believes Disney will make streaming profitable By the end of the fiscal year, content costs have been slashed, including new movies, sports rights spending and TV production.Disney said in November Targeting a The “annual entertainment cash content expenditure reduction target” is US$4.5 billion.

“The next step for them is to address the streaming losses,” said Needham & Co. analyst Laura Martin. “They still need to cut costs on the streaming side to be profitable.”

Disney has developed a two-pronged digital strategy for ESPN. For decades, Disney has made billions of dollars in revenue by offering ESPN exclusively on cable TV bundles.

Those days are almost over.

Disney plans to launch a streamlined sports channel in the fall of 2024, which will include ESPN’s linear network and the sports channels of Warner Bros. Discovery Channel and Fox.The yet-to-be-priced digital streaming service will The monthly cost could be about $45 or $50, CNBC reported in February. Disney owns a third of them.

ESPN will then launch its own flagship streaming service in the fall of 2025. It will include new personalization features catered to sports bettors and fantasy sports players.Competitor report Last month the service might have cost $25 or $30 a month.

Disney’s multiple offers can confuse consumers, so clear messaging is needed when launching new products. Disney already offers ESPN+, a sports streaming service that includes some but not all of ESPN. It costs $10.99 per month and can be bundled with Disney+ and Hulu.

ESPN will also continue to be an important part of cable bundles. Subscribers will want to know what they paid for and what they did and didn’t get with the additional subscription fee.

disney employment David Greenbaum, former co-president of Searchlight, took over as president of Walt Disney Studios on February 26, succeeding Sean Bailey. He will report to Disney Entertainment co-chairman Alan Bergman, who is facing a hot topic that could change the division’s fortunes.

Beyond Disney’s $71 billion acquisition of a majority stake in 21st Century Fox, which includes 2022’s “Avatar: Waterfall,” the company has not had a movie since the last “Star Wars” release. It grossed more than $1 billion at the box office in 2019, according to Comscore. Produced and distributed by Sony”Spider-Man: No Way HomeAlthough Disney-Marvel Studios did serve as co-producers, the film still made $1.9 billion.

Several big-budget franchises have flopped. “Raiders of the Lost Ark: Tragedy of Destiny” has a global box office of US$378 million in 2023. “Ant-Man and the Wasp” grossed $476 million worldwide, which is unusually low for a Marvel movie (until the end of last year, Marvel grossed just over $200 million Dollar). Pixar’s “Lightyear” will have a global box office of less than US$250 million in 2022.

Trian Partners’ Nelson Peltz, who failed to join Disney’s board of directors on Wednesday after receiving just 31% of the vote, publicly questioned what he called Disney’s “woke” content strategy. The company’s creative team actively seeks to create films and TV shows that center people of color and explore narratives outside of heterosexuality.

“People go to movies or shows to be entertained,” Peltz says in the book. Interviewed by the Financial Times. “They’re not going to get information.”

Iger said Wednesday that while the company wants to inject a positive message into its content, that shouldn’t be the top priority.

“Our job is to entertain first and then tell great stories,” Iger said. explain During the company’s annual general meeting. “As we have done for more than 100 years, we continue to positively impact the world and inspire generations to come.”

The biggest existential question for Disney is who will succeed Iger as CEO. That was Trian’s strongest argument for getting Peltz a seat on the board. Iger had delayed his retirement as CEO five times, and when he left in 2020, he stayed on as chairman for 22 months, working alongside his successor Bob Chapek as the two raced to run the company together during the pandemic. (Bob Chapek) had a conflict.

At the end of 2022, the board fired Chapek and Iger returned as CEO. Iger planned to hand over Disney to new leadership, planning to name a successor around early 2025 and then stay on to teach that person the job, CNBC reported last year.

He wants to make sure the person is ready to run a massive company that includes a booming parks business, a fading traditional TV division, a still-young streaming division and a troubled but storied movie studio.Internal candidates include Bergman, ESPN Chairman Jimmy Pitaro, Parks and Resorts Chairman Josh D’Amaro and Disney Entertainment Co-Chairman Dana Walden, who may Became the first female CEO in the company’s 100-year history.