Sensemaker Daily
Disney’s insanely expensive proxy fight is over – for now. With help from big investors including Vanguard and BlackRock, its CEO, Bob Iger, has seen off Nelson Peltz and his hedge fund’s bid to win two seats on the company’s board. But most of the problems that Peltz identified at Disney remain.
So what? This was much more than a proxy fight. Peltz’s intervention was technically about Disney’s lacklustre share price but it became a front in the civil war for America’s soul.
- It pitched California’s socially liberal patrician capitalism against Florida’s socially conservative strong leader culture.
- It highlighted the difficulty legacy media faces balancing diversifying its audience with pleasing Wall Street in the streaming age.
- It prompted Disney to settle its feud with Governor Ron DeSantis over Florida’s Don’t Say Gay law, which attracted right-wing culture warriors to the gates of Disney World.
Peltz told the Financial Times Disney was too woke, naming The Marvels and Black Panther as examples: “Why do I have to have a Marvel that’s all women?… Why do I need an all-Black cast?”
Fighting on two fronts. In a three-way war, Trian Fund Management’s assault was counterbalanced from the left by three alternate directors proposed by Blackwells Capital – Tribeca Film Festival co-founder Craig Hatkoff, former studio executive Jessica Schell and Leah Solivan, a former tech CEO. Blackwells suggested spinning off Disney’s highly profitable theme parks and investing heavily in virtual and augmented reality.
Leaveth the man. Peltz’s official gripe, endorsed by Ike Perlmutter, the former Marvel boss sacked by Disney last year, was Iger’s messy succession strategy – or lack thereof. Iger repeatedly extended his contract during his first tenure as CEO. There’s still no appointed heir and Iger leaves in 2026. This made the fight personal and expensive. Disney spent $40m on shareholder pamphlets, phone calls and videos. Trian invested $25m and Blackwells $6m.
No smoke without ire. Iger might have seen off the challenge faster and cheaper if there weren’t real problems with company strategy.
- Disney lags its rivals in technology, with no c-suite tech leader.
- Its streaming business, Disney+, is still unprofitable after five years.
- Money-spinning cable sports station ESPN is losing ground.
- Younger viewers are heading for YouTube and TikTok.
“Moving a company still heavily dependent on linear profits to streaming is not easy for any legacy media company,” says Alan Wolk, co-founder of TVREV, a media consultancy. “It’s like the US automakers trying to move to electric vehicles while making the bulk of their profits from gas-fuelled cars. Pressure from shareholders often precludes long-term strategies that are painful in the short-term.”
Iger balm. To win over most of those shareholders the incumbent CEO offered crowd-pleasers instead – raising Disney’s target for free cash flow and promising steep cost cuts, a 50 per cent dividend increase, a $1.5 billion investment in Epic Games and a $3 billion share buyback.
No big thing. What’s lacking on all sides is the creative vision that made Disney a turn-of-the-century phenomenon. In his early years at the company Iger oversaw a creative flourish in which MCU (the Marvel Cinematic Universe), Pixar, Star Wars and Walt Disney Studios opened up storytelling – gently – to a more liberal agenda after decades of white picket fence.
Sequelitis. Instead of innovating again, Disney turned last year to longstanding banker franchises including Indiana Jones and Marvel, and they all flopped.
What’s more. Iger needed to win big yesterday to put him in sole charge of the narrative about who eventually succeeds him – and he may not have won big enough. The Disney succession drama has at least another season to run.
UK businesses’ expectations of wage growth have fallen to less than five per cent over the next 12 months, according to a survey of chief financial officers for the Bank of England. That expectation is the lowest in two years. The BoE’s policymakers are looking for evidence that wage increases – which companies pass on to consumers, fuelling inflation – are slowing, allowing the central bank to cut rates. The survey finding might not be enough for the BoE’s more hawkish rate-setters, especially given this month’s increase in the National Living Wage to an hourly rate of £11.44, which is expected to have ripple effects up the pay scale.
The EU has launched probes into two Chinese solar panel companies, blaming “distortive” state subsidies for flooding Europe with cheap PVs. Global supply is currently outpacing demand by a factor of three to one and the price-per-watt for solar panels is at an all-time low. The upshot is that some consumers in the Netherlands and Germany are choosing to use panels as garden fences rather than stomach the high costs of roof panel installation. But what works for consumers might not necessarily work for businesses: Europe has a goal of manufacturing 40 per cent of its clean tech by 2030, while homegrown producers currently account for less than 2 per cent of the supply of solar products. In January Germany’s largest panel maker, Meyer Burger, was forced to close. It’s now starting operations in the US.
Norway’s sovereign wealth fund is considering whether to drop its stake in mining giant Rio Tinto because of alleged links to deforestation in the Amazon. The ethics adviser for the $1.6 trillion Norges fund has expressed concerns to Rio Tinto about its partial ownership of an operation in northern Brazil called Mineração Rio do Norte. Removal of its 2.24 per cent stake would be a major blow to the miner, which has sought to improve its reputation since the Juukan Gorge incident in 2020. To make matters worse, the firm is also facing a legal challenge in UK courts over its activities in Madagascar, where villagers accuse Rio of contaminating their water supply with harmful levels of uranium and lead. A spokesperson for Rio refused to comment on the allegations and told the Guardian the company was committed to engaging in “constructive dialogue on how we can mitigate impacts of our operations”.
Goldman Sachs’s gender pay gap for its UK operations has reached its widest in six years following the recent departure of several women from senior roles. The bank’s yearly pay report showed the mean hourly pay difference between men and women at the firm had risen to 54 per cent in 2023, compared with rival Morgan Stanley’s slightly improved 48 per cent. David Solomon, the bank’s embattled CEO, has set a target for 40 per cent of its vice presidents to be women by 2025. But several rising stars in the business including Beth Hammack, Dina Powell McCormick and Stephanie Cohen have left in the past year. Last month a parliamentary report cited cultural resistance and unpleasant work environments as some of the key reasons more women haven’t risen to senior roles in finance.
