starry_solo
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I got a check for a whole 30-cents (my one-share I bought to get the certificate when Disney announced they were going to stop issuing certificates)...
DIS Shareholders and Stock Info ONLY
- Thread starter hhisc16
- Start date
I got a check for a whole 30-cents (my one-share I bought to get the certificate when Disney announced they were going to stop issuing certificates)...
Elijah Abrams
DIS Veteran
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- Feb 6, 2020
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But I thought Disney was onboard with Blackwells? What happened?
wabbott
DIS Veteran
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https://www.msn.com/en-us/money/com...re-was-a-more-surprising-omission/ar-AA1n7Cqk
Disney Rejects Nelson Peltz’s Push for Board Seat. There Was a More Surprising Omission.
By Adam Clark - Jan 17, 2024, 8:18 am EST
Walt Disney has nominated its slate of directors and pushed back against attempts by activist investor Nelson Peltz to join its board. That was expected but the entertainment company didn’t take the opportunity to try and add a more friendly activist to its board.
Disney nominated a slate of 12 directors and said it didn’t endorse activist investor Peltz in a proxy filing on Tuesday.
“In deciding not to recommend Mr. Peltz, the directors considered a number of factors, including that in a two year quest for a seat on the Disney Board, Mr. Peltz had not actually presented a single strategic idea for Disney,” the company said in its filing.
Disney highlighted Peltz’s backing by former Marvel Chairman Isaac Perlmutter, who is providing most of the roughly $3 billion position that Trian has built up in the company’s stock. Perlmutter is one of Disney’s largest independent shareholders and was employed by the company until last year when his role was terminated amid a wave of layoffs implemented by CEO Bob Iger.
“The complexity of Mr. Perlmutter’s history with Disney and Mr. Iger and other senior executives, created significant concern regarding how that partnership would impact Mr. Peltz’s agenda as a director,” Disney said.
Disney also rejected Trian’s nomination of James “Jay” Rasulo, former chief financial officer at the company, who has joined Peltz’s proxy fight.
It was hardly a shock that Disney rejected Peltz. However, it was more of a surprise that it didn’t look to defuse his criticisms of an alleged lack of independence on the board by adding a more well-disposed activist. It rejected three board nominees put forward by investment firm Blackwells Capital, which had said its candidates would support Iger. Disney cited the Blackwells’ nominees lack of experience as directors of large public companies.
Disney looks to be relying on a information-sharing agreement struck recently with ValueAct Capital Management, another activist investor, to insulate it from criticism that it’s not taking on external feedback about its performance. ValueAct is known for trying to work with management behind the scenes.
It remains to be seen whether that will placate the market but it’s not likely to be the end for Peltz’s campaign.
Peltz first took aim at Disney in January last year with criticism of its costs and a demand for a board seat. That campaign came to a temporary stop after Iger outlined a $5.5 billion cost-cutting plan —subsequently raised to $7.5 billion— involving 7,000 layoffs. Peltz said at the time the company was planning to do “everything we wanted them to do.”
However, Disney stock has performed poorly since then. Disney shares were down 0.5% in premarket trading at $92.61. Its stock has fallen 6.1% over the last 12 months. By contrast, Netflix has risen 47% and Comcast is up 11% over the same period.
In its proxy filings, Disney disclosed that Iger’s total pay last year was valued at $31.6 million, down from $45.9 million in 2021, his previous full year of employment at the company.
Write to Adam Clark at adam.clark@barrons.com
wabbott
DIS Veteran
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https://www.msn.com/en-us/money/com...s-a-year-in-the-road-back-is-long/ar-AA1n9Vs8
Disney CEO Iger Is a Year in. The Road Back Is Long.
By Jack Hough
Jan 18, 2024, 1:00 am EST
Two Novembers ago, when Walt Disney announced Bob Iger’s immediate return as chief executive officer, the stock jumped from about $92 to over $97. It’s back down to $90, and Wall Street overwhelmingly says to buy. After all, shares were more than twice this price less than three years ago.
Disney owns some of history’s most lucrative entertainment franchises, including Pixar, Star Wars, and Marvel. Iger, the man who assembled those assets, secured a near sixfold shareholder return during his first run of 15 years as CEO. This time around, he has signed on through 2026. But that is unlikely to be long enough to return the stock to glory.
Disney’s present slump is owed to a structural shift in show business that Iger can weather but not change. In short, power has moved from the studios to the viewers. Whatever that means for consumer value, it’s bad for business, at least for the foreseeable future. Cost-cutting at Disney will help, but it also risks underfeeding a fickle streaming audience.
“What these companies are now trying to do, and Disney in particular, is take content back, spend less on content, and ask consumers to pay more,” says KeyBanc Capital Markets analyst Brandon Nispel. “And I think that’s a recipe for disaster.”
So far, Iger’s attempt to turn Disney around is having the reverse effect—Disney’s struggles are calling into question some of the revered executive’s past decisions, like the 2019 purchase of television and film assets from 21st Century Fox, which cost a decade’s worth of free cash flow. (More on that in a moment.) Disney declined to comment.
But mostly, Disney’s current vulnerability is a product of past successes, not missteps. Its first renaissance is credited to Iger’s predecessor, Michael Eisner, and is said to have started with the release of The Little Mermaid in 1989. More animated hits soon followed: Beauty and the Beast (1991), Aladdin (1992), The Lion King (1994), and, in a partnership with Pixar Animation Studios, Toy Story (1995). In public perception, Disney’s success has long been judged by its box office results. But the movie business has always been hit or miss, with modest operating profits over time.
Eisner’s much larger transformation was the purchase in 1995 of Capital Cities/ABC for $19 billion—the second-largest U.S. takeover ever at the time. Television was still climbing toward peak reach for cable, and the ABC deal brought majority ownership of ESPN. It’s better able than any property in television to withstand disruption, Iger told Barron’s nine years ago.
Not long ago, cable TV was an economic miracle. More than 80% of U.S. households paid monthly for channels they wanted, bundled together with ones they didn’t, and were peppered with commercials. Sports were the most lucrative part of the deal, because audiences skew young and watch live, which is good for ad sales.
Long after cable’s household penetration peaked, Disney and its rivals were able to lean on cable companies for higher fees to carry their channels. ESPN turned cash flow into ever higher bids for sports rights, becoming the most expensive channel by far in the basic cable bundle. And cable’s cash flow overall helped fund Iger’s string of studio acquisitions and an epic box office boom, along with tie-ins and expansions at the theme parks.
Disney is called an entertainment conglomerate, but going by its profit statements, it’s historically a film company that went into parks and came to be dominated by TV. A dozen years ago, for every dollar that Disney’s film studios and parks earned, its TV businesses earned three. Last year, parks were the top earner by far, and the company’s overall operating profit was down from a decade ago.
The catalyst for that change, of course, was Netflix, which lured viewers into leaving their cable bundles, forcing Disney and others to go all in on streaming. Penetration for cable and other traditional pay TV services just slipped below half of households, and declines have been accelerating. Bundlers are no longer willing or able to pay up. Last year, Charter Communications argued convincingly that it would rather leave the TV business than meet Disney’s latest terms, and Disney caved.
Disney must now spend its slipping cable cash flow to build its reach in streaming. In theory, streaming brings an advantage that cable can’t match—global rather than regional distribution for shows. In reality, growth has disappointed. Three years ago, Disney was targeting 260 million Disney+ subscribers by 2024. At the September end of its most recent fiscal year, it had 150 million, down from 164 million a year earlier. That includes 37 million for the Indian service Disney+ Hotstar, where revenue per user is running well under a dollar a month.
This year, Disney says it will spend $25 billion on content. Some $11 billion of that is for sports, and $4 billion will go toward paying for the content that runs on Hulu Live, a virtual cable bundle separate from the Hulu streaming service. That leaves $10 billion in content for Disney’s legacy television networks and its streaming services. By comparison, Netflix will spend $17 billion on content for its single streaming service.
Recent box office results aren’t always a reliable indicator. But those for Disney raise questions about whether it can match its past success. Far more pressing, however, is what to do about ESPN. There’s a cheap streaming service now called ESPN+, but it doesn’t include the live channel or the same set of sports rights.
Falling cable subscriptions mean that Disney must launch a true steaming service for ESPN in a hurry. But whereas the cable bundle masked part of the cost of ESPN by forcing nonfans to help pay the bill, now the cost will fall only to those who opt in. Instead of $9 a month buried in a cable bill, the streaming service could cost $50 or more, depending on how quickly cable subscriptions drop from here.
The good news is the parks. They have turned into powerful earners, and the high prices that have turned off some longtime visitors are a sign of a long runway for expansion and growth. Arguably, in-person experiences are an ideal complement to all of the digital entertainment that Disney supplies to homes. But park expansions are slow and capital-intensive affairs, and Disney is coming off both its 100th birthday and the 50th anniversary of Florida’s Disney World, which makes for difficult comparisons.
Perhaps the $71 billion spent on those Fox assets—like The Simpsons, the National Geographic and FX networks, and the Avatar film franchise—could have been better spent now on fresh content to rival Netflix. That price is before divestitures, but it also obligated Disney to buy out Comcast’s stake in Hulu for billions more, which gives Disney something it already had, a streaming platform, without much more of the thing it needs, content.
Disney has announced layoffs as part of a $5.5 billion cost-cutting plan. Last year, Iger reaffirmed a previous promise that Disney would be profitable in streaming this year. Success won’t be easy, given subscription fatigue and the ease with which customers can hop from service to service. But stemming streaming losses would go a long way toward boosting overall free cash flow.
Wall Street predicts $8.1 billion in free cash flow for Disney this fiscal year through September, up from $4.9 billion last year. The problem is that five years ago, Wall Street was forecasting $16.6 billion in free cash flow this year. That number would have made Disney’s current stock market value of $165 billion look like a bargain. The current trajectory, and uncertainty, make today’s stock price more fitting.
Disney has said it would pursue partnerships with sports leagues for ESPN, which could help keep rights costs down, at the possible expense of a revenue share. KeyBanc’s Nispel says the chances of such a deal are “slim to none,” because sports leagues want to remain open to deals with as many networks and platforms as possible. More likely, he says, is that Disney will form a distribution partnership like one it did with Verizon Communications to help promote its streaming bundle.
More broadly, Nispel, who lowered his rating on Disney shares to Sector Weight from Overweight last summer, says that it’s hard for him to see streaming becoming meaningfully profitable for Disney, and that television companies in general have failed to prove that they can successfully transition to direct-to-consumer businesses. Iger has said that he’ll stay on until the streaming transition is complete. Getting there by 2026 is ambitious, to say the least.
Write to Jack Hough at jack.hough@barrons.com
Disney CEO Iger Is a Year in. The Road Back Is Long.
By Jack Hough
Jan 18, 2024, 1:00 am EST
Two Novembers ago, when Walt Disney announced Bob Iger’s immediate return as chief executive officer, the stock jumped from about $92 to over $97. It’s back down to $90, and Wall Street overwhelmingly says to buy. After all, shares were more than twice this price less than three years ago.
Disney owns some of history’s most lucrative entertainment franchises, including Pixar, Star Wars, and Marvel. Iger, the man who assembled those assets, secured a near sixfold shareholder return during his first run of 15 years as CEO. This time around, he has signed on through 2026. But that is unlikely to be long enough to return the stock to glory.
Disney’s present slump is owed to a structural shift in show business that Iger can weather but not change. In short, power has moved from the studios to the viewers. Whatever that means for consumer value, it’s bad for business, at least for the foreseeable future. Cost-cutting at Disney will help, but it also risks underfeeding a fickle streaming audience.
“What these companies are now trying to do, and Disney in particular, is take content back, spend less on content, and ask consumers to pay more,” says KeyBanc Capital Markets analyst Brandon Nispel. “And I think that’s a recipe for disaster.”
So far, Iger’s attempt to turn Disney around is having the reverse effect—Disney’s struggles are calling into question some of the revered executive’s past decisions, like the 2019 purchase of television and film assets from 21st Century Fox, which cost a decade’s worth of free cash flow. (More on that in a moment.) Disney declined to comment.
But mostly, Disney’s current vulnerability is a product of past successes, not missteps. Its first renaissance is credited to Iger’s predecessor, Michael Eisner, and is said to have started with the release of The Little Mermaid in 1989. More animated hits soon followed: Beauty and the Beast (1991), Aladdin (1992), The Lion King (1994), and, in a partnership with Pixar Animation Studios, Toy Story (1995). In public perception, Disney’s success has long been judged by its box office results. But the movie business has always been hit or miss, with modest operating profits over time.
Eisner’s much larger transformation was the purchase in 1995 of Capital Cities/ABC for $19 billion—the second-largest U.S. takeover ever at the time. Television was still climbing toward peak reach for cable, and the ABC deal brought majority ownership of ESPN. It’s better able than any property in television to withstand disruption, Iger told Barron’s nine years ago.
Not long ago, cable TV was an economic miracle. More than 80% of U.S. households paid monthly for channels they wanted, bundled together with ones they didn’t, and were peppered with commercials. Sports were the most lucrative part of the deal, because audiences skew young and watch live, which is good for ad sales.
Long after cable’s household penetration peaked, Disney and its rivals were able to lean on cable companies for higher fees to carry their channels. ESPN turned cash flow into ever higher bids for sports rights, becoming the most expensive channel by far in the basic cable bundle. And cable’s cash flow overall helped fund Iger’s string of studio acquisitions and an epic box office boom, along with tie-ins and expansions at the theme parks.
Disney is called an entertainment conglomerate, but going by its profit statements, it’s historically a film company that went into parks and came to be dominated by TV. A dozen years ago, for every dollar that Disney’s film studios and parks earned, its TV businesses earned three. Last year, parks were the top earner by far, and the company’s overall operating profit was down from a decade ago.
The catalyst for that change, of course, was Netflix, which lured viewers into leaving their cable bundles, forcing Disney and others to go all in on streaming. Penetration for cable and other traditional pay TV services just slipped below half of households, and declines have been accelerating. Bundlers are no longer willing or able to pay up. Last year, Charter Communications argued convincingly that it would rather leave the TV business than meet Disney’s latest terms, and Disney caved.
Disney must now spend its slipping cable cash flow to build its reach in streaming. In theory, streaming brings an advantage that cable can’t match—global rather than regional distribution for shows. In reality, growth has disappointed. Three years ago, Disney was targeting 260 million Disney+ subscribers by 2024. At the September end of its most recent fiscal year, it had 150 million, down from 164 million a year earlier. That includes 37 million for the Indian service Disney+ Hotstar, where revenue per user is running well under a dollar a month.
This year, Disney says it will spend $25 billion on content. Some $11 billion of that is for sports, and $4 billion will go toward paying for the content that runs on Hulu Live, a virtual cable bundle separate from the Hulu streaming service. That leaves $10 billion in content for Disney’s legacy television networks and its streaming services. By comparison, Netflix will spend $17 billion on content for its single streaming service.
Recent box office results aren’t always a reliable indicator. But those for Disney raise questions about whether it can match its past success. Far more pressing, however, is what to do about ESPN. There’s a cheap streaming service now called ESPN+, but it doesn’t include the live channel or the same set of sports rights.
Falling cable subscriptions mean that Disney must launch a true steaming service for ESPN in a hurry. But whereas the cable bundle masked part of the cost of ESPN by forcing nonfans to help pay the bill, now the cost will fall only to those who opt in. Instead of $9 a month buried in a cable bill, the streaming service could cost $50 or more, depending on how quickly cable subscriptions drop from here.
The good news is the parks. They have turned into powerful earners, and the high prices that have turned off some longtime visitors are a sign of a long runway for expansion and growth. Arguably, in-person experiences are an ideal complement to all of the digital entertainment that Disney supplies to homes. But park expansions are slow and capital-intensive affairs, and Disney is coming off both its 100th birthday and the 50th anniversary of Florida’s Disney World, which makes for difficult comparisons.
Perhaps the $71 billion spent on those Fox assets—like The Simpsons, the National Geographic and FX networks, and the Avatar film franchise—could have been better spent now on fresh content to rival Netflix. That price is before divestitures, but it also obligated Disney to buy out Comcast’s stake in Hulu for billions more, which gives Disney something it already had, a streaming platform, without much more of the thing it needs, content.
Disney has announced layoffs as part of a $5.5 billion cost-cutting plan. Last year, Iger reaffirmed a previous promise that Disney would be profitable in streaming this year. Success won’t be easy, given subscription fatigue and the ease with which customers can hop from service to service. But stemming streaming losses would go a long way toward boosting overall free cash flow.
Wall Street predicts $8.1 billion in free cash flow for Disney this fiscal year through September, up from $4.9 billion last year. The problem is that five years ago, Wall Street was forecasting $16.6 billion in free cash flow this year. That number would have made Disney’s current stock market value of $165 billion look like a bargain. The current trajectory, and uncertainty, make today’s stock price more fitting.
Disney has said it would pursue partnerships with sports leagues for ESPN, which could help keep rights costs down, at the possible expense of a revenue share. KeyBanc’s Nispel says the chances of such a deal are “slim to none,” because sports leagues want to remain open to deals with as many networks and platforms as possible. More likely, he says, is that Disney will form a distribution partnership like one it did with Verizon Communications to help promote its streaming bundle.
More broadly, Nispel, who lowered his rating on Disney shares to Sector Weight from Overweight last summer, says that it’s hard for him to see streaming becoming meaningfully profitable for Disney, and that television companies in general have failed to prove that they can successfully transition to direct-to-consumer businesses. Iger has said that he’ll stay on until the streaming transition is complete. Getting there by 2026 is ambitious, to say the least.
Write to Jack Hough at jack.hough@barrons.com
The interview is behind a paywall on CNBC but here's a summery. Can't say i disagree with that headline...
https://seekingalpha.com/news/40560...n-peltz-says-disneys-board-oversight-is-awful
Activist investor Nelson Peltz says Disney's board oversight is awful
Jan. 18, 2024 9:58 AM ETThe Walt Disney Company (DIS) StockBy: Joshua Fineman, SA News Editor3 Comments
Exclusive 100-Minute Sneak Peek Of The Beatles: Get Back
Charley Gallay/Getty Images Entertainment
Famed activist investor and billionaire Nelson Peltz, who is engaged in a proxy battle with Walt Disney (NYSE
IS), said the entertainment giant's board oversight is awful.
"This company is just not being run properly," Peltz, who runs Trian Fund Management, said in an interview on CNBC on Thursday. "The board oversight is awful."
Peltz comments come as he officially launched his proxy campaign on Thursday to get himself and former Disney CFO Jay Rasulo elected to the board, in a fight with the entertainment behemoth and its CEO, Bob Iger.
The parks "need more capital invested," Peltz told the business network. "You can see it's getting a bit long in the tooth."
Earlier this month activist hedge fund Blackwells Capital said it will nominate three directors to Disney's board board in support of Iger as the Trian Fund, a critic of the CEO, seeks two board seats. A separate activist investor, Ancora, has gone on record that Disney (DIS) should add Peltz to its board.
Iger returned as CEO in 2022 amid heavy losses in its streaming unit and underperformance of its movies. Trian, which owns roughly $3B worth of Disney's common stock, has been highly critical of Iger and the company’s trajectory. Last month, Trian nominated Peltz, and Rasulo to join Disney's board
Peltz previously tried to run for a seat on Disney's (DIS) board, following the company's rejection of his request to become a director.
"I made a run at them last year," Peltz said on Thursday. "They promised they were going to improve things. I took them at their word. Things got worse, the stock went down, results got worse. So no more. I can't continue to give them more opportunities."
In November, Disney appointed former Morgan Stanley Chief Executive James Gorman to its board of directors, effective in February.
More on Disney
https://seekingalpha.com/news/40560...n-peltz-says-disneys-board-oversight-is-awful
Activist investor Nelson Peltz says Disney's board oversight is awful
Jan. 18, 2024 9:58 AM ETThe Walt Disney Company (DIS) StockBy: Joshua Fineman, SA News Editor3 Comments
Exclusive 100-Minute Sneak Peek Of The Beatles: Get Back
Charley Gallay/Getty Images Entertainment
Famed activist investor and billionaire Nelson Peltz, who is engaged in a proxy battle with Walt Disney (NYSE
IS), said the entertainment giant's board oversight is awful."This company is just not being run properly," Peltz, who runs Trian Fund Management, said in an interview on CNBC on Thursday. "The board oversight is awful."
Peltz comments come as he officially launched his proxy campaign on Thursday to get himself and former Disney CFO Jay Rasulo elected to the board, in a fight with the entertainment behemoth and its CEO, Bob Iger.
The parks "need more capital invested," Peltz told the business network. "You can see it's getting a bit long in the tooth."
Earlier this month activist hedge fund Blackwells Capital said it will nominate three directors to Disney's board board in support of Iger as the Trian Fund, a critic of the CEO, seeks two board seats. A separate activist investor, Ancora, has gone on record that Disney (DIS) should add Peltz to its board.
Iger returned as CEO in 2022 amid heavy losses in its streaming unit and underperformance of its movies. Trian, which owns roughly $3B worth of Disney's common stock, has been highly critical of Iger and the company’s trajectory. Last month, Trian nominated Peltz, and Rasulo to join Disney's board
Peltz previously tried to run for a seat on Disney's (DIS) board, following the company's rejection of his request to become a director.
"I made a run at them last year," Peltz said on Thursday. "They promised they were going to improve things. I took them at their word. Things got worse, the stock went down, results got worse. So no more. I can't continue to give them more opportunities."
In November, Disney appointed former Morgan Stanley Chief Executive James Gorman to its board of directors, effective in February.
More on Disney
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
- Messages
- 6,449
https://www.cnbc.com/2024/01/18/disney-proxy-fight-nelson-peltz-states-case-for-board-seats.html
Nelson Peltz states his case for joining the Disney board
Published Thu, Jan 18 2024 - 10:43 AM EST Updated 11 Min Ago
Alex Sherman@sherman4949
Laya Neelakandan
Key Points
Peltz’s Trian Fund Management, in formally nominating Peltz and former Disney CFO Jay Rasulo to the media giant’s board of directors Thursday, made a list of initiatives and performance targets they’d pursue if elected.
In a proxy filing, Peltz and Rasulo promised to “finally complete a successful CEO succession,” alluding to CEO Bob Iger’s consistent delaying of his retirement date and his return after the firing of former chief executive officer Bob Chapek.
Trian also said it will “align management pay with performance,” calling out Iger’s $31.6 million pay package last year while Disney stock was little changed, underperforming the S&P 500 for 2023.
Trian also aims to target and achieve “Netflix-like margins” of 15% to 20% by 2027, with Peltz adding that he thinks Netflix is Disney’s biggest competition.
The proxy battle comes as Iger tries to streamline the sprawling media company to rein in spending and make its Disney+ streaming platform profitable. Iger has instituted broad restructuring, including thousands of layoffs.
Peltz reiterated in a CNBC “Squawk Box” interview Thursday morning that he believes Disney’s current board oversight is “awful.”
“They said I have no media experience — I don’t claim to have any,” Peltz said Thursday. “But I will tell you, I don’t think they have much media experience.”
Disney has thus far rejected Peltz’s push to join the board.
In the proxy filing, Peltz also touched on the future of ESPN, which he called the “crown jewel” of the company, with the goal of creating a solidified and detailed payback period and business plan for building out the platform. Iger has previously said Disney is prioritizing turning ESPN into the “preeminent” digital sports platform.
And, Peltz called for a board-led review of studio creativity to “restore leadership accountability” and reclaim the company’s leading box office position.
Peltz and Rasulo aim to execute a clear vision for the brand’s theme parks, targeting “high-single digit operating income growth,” according to the filing.
Peltz told CNBC Thursday he paid a visit to Disney World last week.
“It was fascinating because ... we didn’t have any special passes. We didn’t have any tour guides ... Everybody was nice. I mean, Magic Kingdom and the Hollywood Studios — terrific,” he said. “All the employees were smiling, and that’s probably in large part because they didn’t own any Disney stock.”
Nelson Peltz states his case for joining the Disney board
Published Thu, Jan 18 2024 - 10:43 AM EST Updated 11 Min Ago
Alex Sherman@sherman4949
Laya Neelakandan
Key Points
- Activist investor Nelson Peltz is stating his case for joining Disney’s board.
- Peltz’s Trian Fund Management, in formally nominating Peltz and former Disney CFO Jay Rasulo to the media giant’s board of directors Thursday, made a list of initiatives and performance targets they’d pursue if elected.
- The proxy battle comes as CEO Bob Iger tries to streamline the sprawling media company to rein in spending and make its Disney+ streaming platform profitable.
Peltz’s Trian Fund Management, in formally nominating Peltz and former Disney CFO Jay Rasulo to the media giant’s board of directors Thursday, made a list of initiatives and performance targets they’d pursue if elected.
In a proxy filing, Peltz and Rasulo promised to “finally complete a successful CEO succession,” alluding to CEO Bob Iger’s consistent delaying of his retirement date and his return after the firing of former chief executive officer Bob Chapek.
Trian also said it will “align management pay with performance,” calling out Iger’s $31.6 million pay package last year while Disney stock was little changed, underperforming the S&P 500 for 2023.
Trian also aims to target and achieve “Netflix-like margins” of 15% to 20% by 2027, with Peltz adding that he thinks Netflix is Disney’s biggest competition.
The proxy battle comes as Iger tries to streamline the sprawling media company to rein in spending and make its Disney+ streaming platform profitable. Iger has instituted broad restructuring, including thousands of layoffs.
Peltz reiterated in a CNBC “Squawk Box” interview Thursday morning that he believes Disney’s current board oversight is “awful.”
“They said I have no media experience — I don’t claim to have any,” Peltz said Thursday. “But I will tell you, I don’t think they have much media experience.”
Disney has thus far rejected Peltz’s push to join the board.
In the proxy filing, Peltz also touched on the future of ESPN, which he called the “crown jewel” of the company, with the goal of creating a solidified and detailed payback period and business plan for building out the platform. Iger has previously said Disney is prioritizing turning ESPN into the “preeminent” digital sports platform.
And, Peltz called for a board-led review of studio creativity to “restore leadership accountability” and reclaim the company’s leading box office position.
Peltz and Rasulo aim to execute a clear vision for the brand’s theme parks, targeting “high-single digit operating income growth,” according to the filing.
Peltz told CNBC Thursday he paid a visit to Disney World last week.
“It was fascinating because ... we didn’t have any special passes. We didn’t have any tour guides ... Everybody was nice. I mean, Magic Kingdom and the Hollywood Studios — terrific,” he said. “All the employees were smiling, and that’s probably in large part because they didn’t own any Disney stock.”
clarker99
DIS Veteran
- Joined
- May 15, 2019
- Messages
- 1,122
Whatever anyone thinks about the media side of Disney, the facts are that the rolling 4 quarter Operating Income of Sports and Entertainment will increase by almost $1B at the next report after an increase of almost $1B last quarter.
In terms of a proxy battle, Peltz's leverage has deteriorated with profits getting better and Iger finding voting allies.
In terms of a proxy battle, Peltz's leverage has deteriorated with profits getting better and Iger finding voting allies.
clarker99
DIS Veteran
- Joined
- May 15, 2019
- Messages
- 1,122
2023 Domestic Box Office final numbers
https://www.the-numbers.com/market/
- 30.8% behind 2019 in tickets sold.
- 370m less tickets sold than any year going back to 1995 (not including Covid-19 affected years)
- 20.3% behind 2019 total box office dollars
- 150 wide releases in 2023 vs. 130 in 2019
Last edited:
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
- Messages
- 6,449
https://www.cnbc.com/2024/01/18/nelson-peltz-outlines-plans-for-disney-proxy-battle.htm
Nelson Peltz is launching a blitz on Disney — here’s what he says is next in his proxy fight
Published Thu, Jan 18 2024 - 1:21 PM EST
Alex Sherman@sherman4949
Key Points
In the coming weeks, Peltz’s Trian Fund Management plans to post on X and add content to its website RestoreTheMagic.com as a crescendo to launching a dense white paper explaining its case to add Peltz and former Disney Chief Financial Officer Jay Rasulo to Disney’s board. That paper will be released in a couple of weeks, Peltz said in a CNBC interview, after appearing on “Squawk on the Street” earlier Thursday.
In February, Trian plans to meet with proxy solicitors Glass-Lewis and ISS, after which it will begin lobbying shareholders through March and up to Disney’s planned annual shareholder meeting. Trian expects the gathering will be in April. Disney’s annual meeting last year was April 3.
Trian filed a preliminary proxy statement Thursday, which outlined some of the reasons Peltz believes Disney shareholders should elect him and Rasulo to the board as they push to boost its stock performance. Those include getting Disney streaming profit margins to 15% to 20% by 2027. Disney’s streaming business currently loses money and won’t break even until later this year, CEO Bob Iger has said.
Trian wants Disney to be more transparent with its businesses. Disney plans to launch a direct-to-consumer ESPN service either later this year or in 2025 as the sports network’s traditional cable subscription model fades. Before it debuts, Trian wants specific short-term profitability targets to ensure it’s a viable business.
“What they really need is accountability,” said Peltz, who expects to release the white paper before Disney reports quarterly earnings on Feb. 7. Later that month, Disney will release its definitive proxy materials, which include the date of the annual meeting.
Typically, both Trian and Disney will then make their arguments to proxy advisory services Glass-Lewis and ISS, followed by solicitation of shareholders and recommendations by the firms. That advice is critical because it can sway large investors and index funds. Neither side usually knows who is winning until days or hours before the annual meeting, because those massive investors often vote late in the process.
The dynamic duo
Trian has targeted the Disney board for being too connected to Iger, who has five times renewed his contract to push back his retirement. Iger has said he plans to leave Disney in 2026, and has been actively seeking a successor since he returned to Disney at the end of 2022.
Peltz has been on several boards, including Proctor & Gamble and Mondelez, that have named new CEOs. Peltz said his success in finding top executives is part of why he should join Disney’s board.
“I do a lot of executive searches,” said Peltz. “I’m like a headhunter.”
While Peltz outlined why he feels Disney’s stock performance can improve with his presence on the board, he’s still just one person. Even if Rasulo is elected, they’ll still be only two voices on a Disney board Peltz has criticized for being in Iger’s pocket.
Still, Peltz said boards sometimes simply need to be jumpstarted by individuals who aren’t afraid to question longtime CEOs such as Iger.
“We’re going to be Batman and Robin,” Peltz said. “Boards can get turned around quickly if they start to hear some good points.”
Nelson Peltz is launching a blitz on Disney — here’s what he says is next in his proxy fight
Published Thu, Jan 18 2024 - 1:21 PM EST
Alex Sherman@sherman4949
Key Points
- Trian will release a dense white paper explaining its full case for why investors should elect Nelson Peltz and former Disney CFO Jay Rasulo in the coming weeks.
- Peltz said in a CNBC interview that he and Rasulo will be like ‘Batman and Robin’ if they get elected to the Disney board.
- Earlier Thursday, Peltz spoke to CNBC’s “Squawk on the Street.”
In the coming weeks, Peltz’s Trian Fund Management plans to post on X and add content to its website RestoreTheMagic.com as a crescendo to launching a dense white paper explaining its case to add Peltz and former Disney Chief Financial Officer Jay Rasulo to Disney’s board. That paper will be released in a couple of weeks, Peltz said in a CNBC interview, after appearing on “Squawk on the Street” earlier Thursday.
In February, Trian plans to meet with proxy solicitors Glass-Lewis and ISS, after which it will begin lobbying shareholders through March and up to Disney’s planned annual shareholder meeting. Trian expects the gathering will be in April. Disney’s annual meeting last year was April 3.
Trian filed a preliminary proxy statement Thursday, which outlined some of the reasons Peltz believes Disney shareholders should elect him and Rasulo to the board as they push to boost its stock performance. Those include getting Disney streaming profit margins to 15% to 20% by 2027. Disney’s streaming business currently loses money and won’t break even until later this year, CEO Bob Iger has said.
Trian wants Disney to be more transparent with its businesses. Disney plans to launch a direct-to-consumer ESPN service either later this year or in 2025 as the sports network’s traditional cable subscription model fades. Before it debuts, Trian wants specific short-term profitability targets to ensure it’s a viable business.
“What they really need is accountability,” said Peltz, who expects to release the white paper before Disney reports quarterly earnings on Feb. 7. Later that month, Disney will release its definitive proxy materials, which include the date of the annual meeting.
Typically, both Trian and Disney will then make their arguments to proxy advisory services Glass-Lewis and ISS, followed by solicitation of shareholders and recommendations by the firms. That advice is critical because it can sway large investors and index funds. Neither side usually knows who is winning until days or hours before the annual meeting, because those massive investors often vote late in the process.
The dynamic duo
Trian has targeted the Disney board for being too connected to Iger, who has five times renewed his contract to push back his retirement. Iger has said he plans to leave Disney in 2026, and has been actively seeking a successor since he returned to Disney at the end of 2022.
Peltz has been on several boards, including Proctor & Gamble and Mondelez, that have named new CEOs. Peltz said his success in finding top executives is part of why he should join Disney’s board.
“I do a lot of executive searches,” said Peltz. “I’m like a headhunter.”
While Peltz outlined why he feels Disney’s stock performance can improve with his presence on the board, he’s still just one person. Even if Rasulo is elected, they’ll still be only two voices on a Disney board Peltz has criticized for being in Iger’s pocket.
Still, Peltz said boards sometimes simply need to be jumpstarted by individuals who aren’t afraid to question longtime CEOs such as Iger.
“We’re going to be Batman and Robin,” Peltz said. “Boards can get turned around quickly if they start to hear some good points.”
wabbott
DIS Veteran
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https://www.globenewswire.com/en/ne...atement-for-Disney-s-2024-Annual-Meeting.html
Trian Files Preliminary Proxy Statement for Disney’s 2024 Annual Meeting
January 18, 2024 - 09:17 EST | Source: Trian Fund Management, L.P.
NEW YORK, Jan. 18, 2024 (GLOBE NEWSWIRE) -- Trian Fund Management, L.P. (together with its affiliates, “Trian”, “our”, “we” or “us”), which beneficially owns $3 billion of common stock in The Walt Disney Company (NYSE: DIS) (“Disney” or the “Company”), today filed a preliminary proxy statement with the Securities and Exchange Commission (“SEC”) in connection with its nomination of Nelson Peltz and James A. (“Jay”) Rasulo for election to the Disney Board of Directors (the “Board”) at the Company’s 2024 Annual Meeting of Shareholders (the “2024 Annual Meeting”).
“It is unfortunate that a company as iconic as Disney and with so many challenges and opportunities has refused to seriously engage with us, its largest active shareowner, about board representation,” said Nelson Peltz, Trian’s CEO. “Instead of having a boardroom that would include directors with an ‘ownership mentality’ that can bring fresh perspectives to the Company’s challenges, Disney is resisting change and asking shareholders to endorse a Board comprised mainly of legacy directors (and their hand-picked successors) who have repeatedly failed to properly plan for CEO succession, misaligned the incentives of management, and failed to oversee or drive a strategy to get the streaming business to profitability or the studios to produce good content. Are Disney shareholders really to believe the current Board is able to heal these self-inflicted wounds?”
Mr. Peltz continued, “We respectfully believe the answer to that question is ‘no’ and we will seek the support of shareholders for meaningful change in the Board’s composition. It is time to ‘Restore the Magic’ at Disney.”
Despite Disney’s unrivaled scale, unparalleled customer loyalty, irreplaceable intellectual property, and an enviable commercial flywheel, Disney’s total shareholder return (“TSR”) is significantly lower than its peers and the broader market over every relevant period during the last decade, and over the tenure of each non-management director.i
Trian believes this underperformance is the result of a Board that has failed to adequately perform its primary responsibilities as stewards of shareholder capital. Trian has therefore nominated two candidates for the Disney Board, Nelson Peltz and Jay Rasulo, each of whom has significant consumer brand expertise, financial acumen and a shareholder-first mindset. Mr. Peltz is the CEO of Trian, Disney’s largest active shareholder. Mr. Rasulo is Disney’s former Chief Financial Officer and was Chairman of Disney’s Parks and Resorts Worldwide.
Messrs. Peltz and Rasulo believe the role of the Board is to set achievable but ambitious goals and challenge the executive team to develop a detailed strategy and plan of execution for achieving those goals. A major problem at Disney, in Trian’s view, is that the goals have been amorphous and the execution poor.
Put very simply, Trian intends to work with the Board to help drive Disney’s outperformance with tangible targets, goals, and true accountability:
“We will have much more to say about these goals and the initiatives necessary to achieve them when we release our full presentation to shareholders,” continued Mr. Peltz. “But to be clear, Disney needs to again be the beacon of strategic clarity and exceptional execution it once was. No Disney shareholder should be content with the current strategic muddle or have to endure failed execution without accountability.”
Jay Rasulo added, “Nelson and I are not about strategic platitudes or soft goals. As Disney Board members, we would expect to help drive Disney’s financial performance by working with other Board members to set demanding but realistic goals (to which executive compensation will be tied) and provide rigorous oversight to help ensure accountability for operational execution and capital allocation. Disney was founded and built by owners. We believe restoring the magic at Disney starts with a focused, aligned and accountable board, intensely committed to returning an ‘ownership mentality’ to the boardroom. That, and a heavy dose of best-in-class corporate governance is the medicine Disney needs to fix its ailing shareholder returns.”
Biographical information on Trian’s nominees and additional materials can be found at RestoreTheMagic.com and on LinkedIn, Facebook, X and Instagram.
Trian expects that the 2024 Annual Meeting will take place in the Spring of 2024. Shareholders do not need to take any action at this time.
Trian Files Preliminary Proxy Statement for Disney’s 2024 Annual Meeting
January 18, 2024 - 09:17 EST | Source: Trian Fund Management, L.P.
NEW YORK, Jan. 18, 2024 (GLOBE NEWSWIRE) -- Trian Fund Management, L.P. (together with its affiliates, “Trian”, “our”, “we” or “us”), which beneficially owns $3 billion of common stock in The Walt Disney Company (NYSE: DIS) (“Disney” or the “Company”), today filed a preliminary proxy statement with the Securities and Exchange Commission (“SEC”) in connection with its nomination of Nelson Peltz and James A. (“Jay”) Rasulo for election to the Disney Board of Directors (the “Board”) at the Company’s 2024 Annual Meeting of Shareholders (the “2024 Annual Meeting”).
“It is unfortunate that a company as iconic as Disney and with so many challenges and opportunities has refused to seriously engage with us, its largest active shareowner, about board representation,” said Nelson Peltz, Trian’s CEO. “Instead of having a boardroom that would include directors with an ‘ownership mentality’ that can bring fresh perspectives to the Company’s challenges, Disney is resisting change and asking shareholders to endorse a Board comprised mainly of legacy directors (and their hand-picked successors) who have repeatedly failed to properly plan for CEO succession, misaligned the incentives of management, and failed to oversee or drive a strategy to get the streaming business to profitability or the studios to produce good content. Are Disney shareholders really to believe the current Board is able to heal these self-inflicted wounds?”
Mr. Peltz continued, “We respectfully believe the answer to that question is ‘no’ and we will seek the support of shareholders for meaningful change in the Board’s composition. It is time to ‘Restore the Magic’ at Disney.”
Despite Disney’s unrivaled scale, unparalleled customer loyalty, irreplaceable intellectual property, and an enviable commercial flywheel, Disney’s total shareholder return (“TSR”) is significantly lower than its peers and the broader market over every relevant period during the last decade, and over the tenure of each non-management director.i
| Relative TSR Ending October 6, 2023i | |||||
| Disney’s TSR Relative To: | FQ1’23 Earnings | 1-Year | 3-Year | 5-Year | 10-year |
| S&P 500 | (32%) | (34%) | (66%) | (89%) | (168%) |
| Peer Companies | (40%) | (48%) | (35%) | (77%) | (401%) |
Trian believes this underperformance is the result of a Board that has failed to adequately perform its primary responsibilities as stewards of shareholder capital. Trian has therefore nominated two candidates for the Disney Board, Nelson Peltz and Jay Rasulo, each of whom has significant consumer brand expertise, financial acumen and a shareholder-first mindset. Mr. Peltz is the CEO of Trian, Disney’s largest active shareholder. Mr. Rasulo is Disney’s former Chief Financial Officer and was Chairman of Disney’s Parks and Resorts Worldwide.
Messrs. Peltz and Rasulo believe the role of the Board is to set achievable but ambitious goals and challenge the executive team to develop a detailed strategy and plan of execution for achieving those goals. A major problem at Disney, in Trian’s view, is that the goals have been amorphous and the execution poor.
Put very simply, Trian intends to work with the Board to help drive Disney’s outperformance with tangible targets, goals, and true accountability:
| Acknowledged Issue | Disney’s Current Pathii | Trian’s Goals & Initial Perspectives | ||||||
| Corporate Governance | Preserve as much of the status quo as possible by playing defense – evidenced by limited changes to compensation and succession processes | Adopt best-in-class governance; finally complete a successful CEO succession; and align management pay with performance | ||||||
| Streaming Profitability | “Focused on achieving significant and sustained profitability” – no guidance or tangible targets beyond breakeven | Target and achieve Netflix-like margins of 15-20% by FY 2027 | ||||||
| Future of ESPN | “Building ESPN into the preeminent digital sports platform” – lacking a tangible business plan or defined cost to shareholders | Commit to a reasonable, defined payback period and return profile on ESPN Flagship DTC and communicate it in detail prior to launch | ||||||
| Studio Creativity | “Improving the output and economics of our film studios” | Board-led review of creative processes and structure to restore leadership accountability and reclaim #1 box office position w/ leading economics | ||||||
| Parks and Experiences Growth | “Strategically investing in our Experiences business to turbocharge growth” | Execute on a clear vision for Parks targeting at least high-single digit operating income growth to ensure adequate returns on ~$60bn of capex |
“We will have much more to say about these goals and the initiatives necessary to achieve them when we release our full presentation to shareholders,” continued Mr. Peltz. “But to be clear, Disney needs to again be the beacon of strategic clarity and exceptional execution it once was. No Disney shareholder should be content with the current strategic muddle or have to endure failed execution without accountability.”
Jay Rasulo added, “Nelson and I are not about strategic platitudes or soft goals. As Disney Board members, we would expect to help drive Disney’s financial performance by working with other Board members to set demanding but realistic goals (to which executive compensation will be tied) and provide rigorous oversight to help ensure accountability for operational execution and capital allocation. Disney was founded and built by owners. We believe restoring the magic at Disney starts with a focused, aligned and accountable board, intensely committed to returning an ‘ownership mentality’ to the boardroom. That, and a heavy dose of best-in-class corporate governance is the medicine Disney needs to fix its ailing shareholder returns.”
Biographical information on Trian’s nominees and additional materials can be found at RestoreTheMagic.com and on LinkedIn, Facebook, X and Instagram.
Trian expects that the 2024 Annual Meeting will take place in the Spring of 2024. Shareholders do not need to take any action at this time.
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
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https://variety.com/2024/biz/features/paramount-warner-bros-discovery-potential-merger-1235875737/
Jan 18, 2024 8:00am PST
As Paramount, WB Discovery and Others Weigh M&A Options, Is More Consolidation Really the Answer to Hollywood’s Profit Problem?
By Cynthia Littleton, Todd Spangler, Jennifer Maas
It’s a fundamental business principle: When hard times hit, leaders of struggling companies feel the urge to merge with stronger rivals.
As the new year begins, Hollywood’s largest media conglomerates are hip-deep in a cycle of merger-and-acquisition mania after years of disruption in traditional TV and film, and a particularly chaotic year in 2023. But in the present climate, is getting bigger really the answer?
It’s becoming clear to many that dealmaking to bulk up on content and distribution assets is no longer the cure for the industry’s problems that it’s been since the 1990 nuptials of Time Inc. and Warner Communications; the threat to Hollywood’s old ways of making money posed by the rise of streaming platforms is too dire and too fundamental.
Yet old habits die hard. The media marketplace is once again rife with speculation about potential M&A transactions — mostly revolving around the fates of Paramount Global, Warner Bros. Discovery and Comcast’s NBCUniversal division. Shari Redstone’s Paramount Global is seen as having reached a grow-or-sell crossroads that has the potential to set other transactions in motion — the pinball effect when one sizable company puts the “For Sale” sign out. (For the record, neither Paramount Global nor Redstone’s National Amusements holding company has commented publicly on the matter.)
The wave of speculation about the future of Paramount comes as the entertainment industry is working through a massive transition when it comes to the way movies and TV shows are produced, distributed and monetized. The streaming services that represent the future for legacy media companies are still racking up billions of dollars in losses. But what’s more concerning is that even if some of the newbie streamers make it to the break-even point, there’s no sign that they’re going to deliver the kind of profits that the studios once mined from sales of hit movies and TV shows.
“No rational business can continue to lose billions and billions of dollars,” says one veteran media CEO. This executive predicts a scenario in which Paramount and NBCU eventually pull back significantly on their investments in content for streamers Paramount+ and Peacock, respectively, with or without a transformative merger transaction.
The news that leaders of Paramount Global have had at least one informal discussion with WB Discovery has so far generated a collective shrug from Wall Street and groans from insiders at both shops. The prospect that Comcast might jump into the mix as it considers options for NBCU has added intrigue but not much excitement. Paramount Global, NBCU and WB Discovery in varying degrees are suffering from the same problem: The onetime bedrocks of their businesses — cable TV channels and box office receipts — are shrinking. In this scenario, it’s hard to find the long-term rationale for bringing together loss-generating streamers and aging cable channels, as would be the case for any combination among Paramount Global, WB Discovery and NBCU.
The bigger-versus-better conundrum helps explain why Paramount Global is also the focus of stealth discussions between David Ellison’s Skydance Media and Paramount Global parent company National Amusements Inc. (NAI). Skydance, a much smaller entity formed in 2010 by a well-heeled entrepreneur with big Hollywood ambitions, isn’t saddled with the same problem of figuring out what to do with legacy assets. But it’s highly unlikely that Skydance would pay a premium for everything under the Paramount umbrella, as is typically the case when a smaller entity buys a larger one. A source close to the situation emphasizes that discussions to date have been held at the NAI level and thus a layer removed from Paramount itself. However, NAI’s financial strain has been exacerbated by Paramount’s move in May 2023 to slash its quarterly dividend (from 24 cents a share to 5 cents) for the first time in more than 10 years as it faced headwinds from losses racked up by Paramount+, a weak advertising climate, general economic uncertainty and the start of what would prove to be a five-month strike by the Writers Guild of America. It was the perfect storm that has, by multiple accounts, forced Redstone to seriously consider parting with some or all of NAI’s controlling stake in Paramount.
Long before the Skydance rumors heated up, Redstone has consistently stated that she is open to options that will put Paramount Pictures and its corporate siblings in the best position to succeed over the long term in a rapidly changing media universe. To that end, a merger between two legacy media companies won’t solve the endemic problem that industry players are facing, says John Peters, Accenture’s media and entertainment lead in North America. Such a combination could improve overall cost structure, “but it doesn’t help your ability to get into fast-growing markets,” he says, adding, “You’ve increased the size of the lifeboat, but you’re still heading toward the waterfall.”
Simply put, Hollywood is worn out from what one analyst describes as the “media M&A merry-go-round” of recent years — notably AT&T and Time Warner in 2018, Disney and 21st Century Fox in 2019, Viacom and CBS (which became Paramount Global) also in 2019, followed quickly by the WarnerMedia and Discovery transaction completed in April 2022. Meanwhile, the quickening pace of the rumor mill has tens of thousands of employees across Paramount and Warner Bros. Discovery bracing for more corporate turnover and possible layoffs barely four years after Viacom and CBS Corp. came together to form Paramount Global and just two years after AT&T’s WarnerMedia and Discovery were united in a complex transaction.
More talk of M&A is starting to feel like a shell game to the industry rank and file, who question the logic of continuing to bulk up when traditional entertainment giants are struggling against changing tides. They’re now directly competing with tech giants — Apple, Amazon, Netflix and Google — that have exponentially more resources and stronger balance sheets.
Still, Jessica Reif Ehrlich, senior media and entertainment analyst at BofA Merrill Lynch Global Research, is not as skeptical as some about the chances of another transformative deal coming to fruition between legacy Hollywood studios. The companies that are in the M&A fishbowl right now should be talking to everybody, she says. “You can make arguments about who is the best fit with whom, what the deal structure should be, but there are so many combinations you can ponder through, and some of them could be really interesting. And they may not be what people expect; there could be mergers of some or all of a company’s pieces, and there’s certain combinations that would really create industry power.”
Players across the spectrum, including Disney, Paramount, WB Discovery and NBCU, as well as Netflix and others, have been through a hard year of cuts as they realign streaming business plans to meet lowered expectations. According to an analysis from Morgan Stanley, the largest media conglomerates have written off some $8 billion in content costs over the past 18 months that will never be recouped. Call it the Peak TV hangover.
In this landscape, every media company is “on the table at some level,” says Doug Creutz, TD Cowen senior media analyst. But Creutz believes a major M&A deal is unlikely to transpire within the next 12 months. “There are not enough buyers, and there are too many risks. There’s a lot of talk. But who’s actually going to pull the trigger? It’s not really clear anybody is going to step up,” Creutz says.
Big Tech hasn’t shown much interest in snapping up a marquee Hollywood name, aside from Amazon’s relatively small $8.5 billion acquisition of MGM in 2022. Netflix doesn’t seem to need to acquire a studio or production company, especially after building out the infrastructure to commission original series and movies from producers around the globe. That said, if the House of Tudum is ever going to pounce on big-time Hollywood assets, now would be a good time to go hunting for bargains.
No media company is reaching a crossroads this year quite like Paramount Global. The company derives the vast majority of its earnings from the most pressured areas of media, namely ad-supported linear TV channels, including MTV, Nickelodeon, VH1, Comedy Central, BET and CMT. Broadcast network CBS, meanwhile, is a stronger business overall thanks in large part to its pricey NFL rights package. But the Tiffany network will be hard-pressed to be the driver of significant growth for the entire company.
On the film side, Paramount Pictures has struggled just like its bigger rivals to find the right portfolio of theatrical and made-for-streaming releases. “Top Gun: Maverick” was a runaway box office hit in 2022, but blockbusters of that scale are few and far between. More recently, Paramount Pictures took hits on such costly underperformers as “Transformers: Rise of the Beasts,” “Dungeons & Dragons: Honor Among Thieves” and “Mission: Impossible — Dead Reckoning Part One.”
Moreover, the franchise fever that has gripped filmdom for the past decade, thanks to Disney’s success with the Marvel Cinematic Universe, is cooling alongside Marvel’s box office fortunes. That’s bad news for Paramount, which in recent years has heavily mined derivatives of marquee properties ranging from “Star Trek” to “SpongeBob SquarePants” to “South Park.”
Paramount Global has poured resources into the launch of its Paramount+ streamer since early 2021. It also got ahead of the ad-supported streaming boom with its purchase of the Pluto TV platform in 2019. Much like WB Discovery’s streamer Max, Paramount has gambled that Paramount+ and Pluto can rev up as profit engines while linear assets slowly but surely run out of gas.
Redstone, who serves as its non-executive chair, is likely to face hard choices in the coming months. The company’s stock price has sunk, valuing the entirety of the company at about $9.5 billion, or roughly a third of its $30 billion valuation at the time of the Viacom-CBS merger. Meanwhile, the company’s debt load has ballooned to $15.6 billion due to increased spending on content. Even with the most optimistic projections for a turnaround, those numbers are not sustainable. Rising interest rates for long-term debt only add to the pressure Redstone and her management team, led by CEO Bob Bakish, face to right the ship. Bakish told investors last year that 2023 marked the company's "peak investment" year in Paramount+, which as of last year has been bundled with a digital iteration of the company's linear Showtime pay TV service. That's a strategy shift designed to get ahead of the cord-cutting that has dented Showtime's linear subscriber base. It also has the benefit of expanding Paramount+'s programming menu and allowing the company to raise the monthly price (from $9.99 to $11.99) of its top-tier, ad-free streaming package, now billed as Paramount+ with Showtime.
Paramount Global is not alone in enduring harsh scrutiny. For months, Disney has been in a public battle with activist investor Nelson Peltz, who is questioning and criticizing moves by CEO Bob Iger, once seen as invincible on Wall Street for his success in building Disney through expertly timed acquisitions of such sui generis properties as Pixar, Marvel and Lucasfilm. Now Iger is getting second-guessed on his bold move to make the biggest purchase of his career — Disney’s $70 billion acquisition of 21st Century Fox. Peltz, who owns about $3 billion worth of Disney stock through his Trian Partners private equity firm, is waging a classic activist-investor pressure campaign to force Disney to make strategy shifts and install new members onto its board of directors. Peltz argues that Disney has spent too much money on building up streaming businesses, that executive compensation is too high given the slump in its stock price, and that its board of directors has been too cozy with Iger.
Like Paramount, WB Discovery is also feeling the pain of a stock price that hasn’t topped $20 since the AT&T-WarnerMedia spinoff was finalized in 2022. The transaction left the newly formed entity to shoulder an enormous $55 billion in debt, which has become even more difficult to manage in a world of tighter credit and the vicious circle of lenders charging high interest rates for companies that have big debts on the books.
WB Discovery CEO David Zaslav has assured Wall Street that Max and HBO have turned the corner on losses and will operate at a break-even point this year. Even so, there are whispers among showbiz bankers that WB Discovery may wind up tangling with activist investors pushing an alternate strategic agenda and management changes, as Peltz is doing with Disney. Zaslav’s interest in Paramount Global could be driven in part by his desire to make the company even bigger — thus harder for an outside entity to swallow up at a lowball price.
Speculation has also emerged that Zaslav made a public show of courting Paramount in order to force the hand of Comcast CEO Brian Roberts. WB Discovery has been seen by analysts and industry insiders as a likely candidate to merge with NBCUniversal. The Machiavellian theory at work here is that Zaslav is trying to convince Comcast to sell NBCUniversal to WB Discovery before his company buys Paramount Global. Otherwise, the combined WB Discovery-Paramount would be too big to buy NBCU. This scenario presumes that Comcast is looking for an exit strategy on its ownership of NBCU, which it acquired in early 2011. A knowledgeable source close to WB Discovery characterizes this rumor as “nonsense.”
But any clear-eyed observer of the marketplace can see that WB Discovery is logically an attractive buyer for either Paramount Global or NBCUniversal, because at present WB Discovery doesn’t own a Big Four broadcast network or major-market TV stations. U.S. law bars a single company from owning more than one of the major broadcast networks: ABC, CBS, NBC and Fox. If Paramount and NBCUniversal were to consider a merger, it’s legally a given that either CBS or NBC would have to be divested.
If WB Discovery makes good on its promise that the days of incurring heavy financial losses on Max are over, then it’s in the prime position to wait for the right price to emerge on potential acquisitions. WB Discovery also has bragged to Wall Street that, for the near term, it can still count on healthy free cash flow from CNN, TNT, Discovery Channel, TLC, OWN and other ad-supported basic cable channels in its portfolio. Free cash flow isn’t synonymous with old-fashioned profit, but it means that a company has enough cash in the bank to fund operations without the need to take on more debt.
WB Discovery’s fortunes have also been significantly boosted by two surprise megahits last year: “Barbie,” which raked in $1.4 billion in worldwide box office, and video game “Hogwarts Legacy,” which generated $850 million in revenue in its first two weeks of release last February. Those windfalls, coupled with massive cost cutting since the merger closed, have helped the company trim its debt load to about $43 billion as of Q3.
WB Discovery’s improving financial situation gives it some flexibility, even in a tough marketplace. A deal may still take a year or so to emerge, but all eyes and ears will be on Zaslav’s moves in the coming months. So too Paramount’s Redstone.
The traditional media biz is ripe for consolidation, argues Kevin Westcott, Deloitte’s U.S. tech, media and telecom leader. He predicts deal activity will pick up if interest rates keep going down and the broader macroeconomic clouds that darkened 2023 clear up.
“There’s a ton of money sitting on the sidelines looking for investments,” Westcott says. “I think everybody’s sitting on their dry powder and saying, ‘Let’s see where the economy is going.’”
Jan 18, 2024 8:00am PST
As Paramount, WB Discovery and Others Weigh M&A Options, Is More Consolidation Really the Answer to Hollywood’s Profit Problem?
By Cynthia Littleton, Todd Spangler, Jennifer Maas
It’s a fundamental business principle: When hard times hit, leaders of struggling companies feel the urge to merge with stronger rivals.
As the new year begins, Hollywood’s largest media conglomerates are hip-deep in a cycle of merger-and-acquisition mania after years of disruption in traditional TV and film, and a particularly chaotic year in 2023. But in the present climate, is getting bigger really the answer?
It’s becoming clear to many that dealmaking to bulk up on content and distribution assets is no longer the cure for the industry’s problems that it’s been since the 1990 nuptials of Time Inc. and Warner Communications; the threat to Hollywood’s old ways of making money posed by the rise of streaming platforms is too dire and too fundamental.
Yet old habits die hard. The media marketplace is once again rife with speculation about potential M&A transactions — mostly revolving around the fates of Paramount Global, Warner Bros. Discovery and Comcast’s NBCUniversal division. Shari Redstone’s Paramount Global is seen as having reached a grow-or-sell crossroads that has the potential to set other transactions in motion — the pinball effect when one sizable company puts the “For Sale” sign out. (For the record, neither Paramount Global nor Redstone’s National Amusements holding company has commented publicly on the matter.)
The wave of speculation about the future of Paramount comes as the entertainment industry is working through a massive transition when it comes to the way movies and TV shows are produced, distributed and monetized. The streaming services that represent the future for legacy media companies are still racking up billions of dollars in losses. But what’s more concerning is that even if some of the newbie streamers make it to the break-even point, there’s no sign that they’re going to deliver the kind of profits that the studios once mined from sales of hit movies and TV shows.
“No rational business can continue to lose billions and billions of dollars,” says one veteran media CEO. This executive predicts a scenario in which Paramount and NBCU eventually pull back significantly on their investments in content for streamers Paramount+ and Peacock, respectively, with or without a transformative merger transaction.
The news that leaders of Paramount Global have had at least one informal discussion with WB Discovery has so far generated a collective shrug from Wall Street and groans from insiders at both shops. The prospect that Comcast might jump into the mix as it considers options for NBCU has added intrigue but not much excitement. Paramount Global, NBCU and WB Discovery in varying degrees are suffering from the same problem: The onetime bedrocks of their businesses — cable TV channels and box office receipts — are shrinking. In this scenario, it’s hard to find the long-term rationale for bringing together loss-generating streamers and aging cable channels, as would be the case for any combination among Paramount Global, WB Discovery and NBCU.
The bigger-versus-better conundrum helps explain why Paramount Global is also the focus of stealth discussions between David Ellison’s Skydance Media and Paramount Global parent company National Amusements Inc. (NAI). Skydance, a much smaller entity formed in 2010 by a well-heeled entrepreneur with big Hollywood ambitions, isn’t saddled with the same problem of figuring out what to do with legacy assets. But it’s highly unlikely that Skydance would pay a premium for everything under the Paramount umbrella, as is typically the case when a smaller entity buys a larger one. A source close to the situation emphasizes that discussions to date have been held at the NAI level and thus a layer removed from Paramount itself. However, NAI’s financial strain has been exacerbated by Paramount’s move in May 2023 to slash its quarterly dividend (from 24 cents a share to 5 cents) for the first time in more than 10 years as it faced headwinds from losses racked up by Paramount+, a weak advertising climate, general economic uncertainty and the start of what would prove to be a five-month strike by the Writers Guild of America. It was the perfect storm that has, by multiple accounts, forced Redstone to seriously consider parting with some or all of NAI’s controlling stake in Paramount.
Long before the Skydance rumors heated up, Redstone has consistently stated that she is open to options that will put Paramount Pictures and its corporate siblings in the best position to succeed over the long term in a rapidly changing media universe. To that end, a merger between two legacy media companies won’t solve the endemic problem that industry players are facing, says John Peters, Accenture’s media and entertainment lead in North America. Such a combination could improve overall cost structure, “but it doesn’t help your ability to get into fast-growing markets,” he says, adding, “You’ve increased the size of the lifeboat, but you’re still heading toward the waterfall.”
Simply put, Hollywood is worn out from what one analyst describes as the “media M&A merry-go-round” of recent years — notably AT&T and Time Warner in 2018, Disney and 21st Century Fox in 2019, Viacom and CBS (which became Paramount Global) also in 2019, followed quickly by the WarnerMedia and Discovery transaction completed in April 2022. Meanwhile, the quickening pace of the rumor mill has tens of thousands of employees across Paramount and Warner Bros. Discovery bracing for more corporate turnover and possible layoffs barely four years after Viacom and CBS Corp. came together to form Paramount Global and just two years after AT&T’s WarnerMedia and Discovery were united in a complex transaction.
More talk of M&A is starting to feel like a shell game to the industry rank and file, who question the logic of continuing to bulk up when traditional entertainment giants are struggling against changing tides. They’re now directly competing with tech giants — Apple, Amazon, Netflix and Google — that have exponentially more resources and stronger balance sheets.
Still, Jessica Reif Ehrlich, senior media and entertainment analyst at BofA Merrill Lynch Global Research, is not as skeptical as some about the chances of another transformative deal coming to fruition between legacy Hollywood studios. The companies that are in the M&A fishbowl right now should be talking to everybody, she says. “You can make arguments about who is the best fit with whom, what the deal structure should be, but there are so many combinations you can ponder through, and some of them could be really interesting. And they may not be what people expect; there could be mergers of some or all of a company’s pieces, and there’s certain combinations that would really create industry power.”
Players across the spectrum, including Disney, Paramount, WB Discovery and NBCU, as well as Netflix and others, have been through a hard year of cuts as they realign streaming business plans to meet lowered expectations. According to an analysis from Morgan Stanley, the largest media conglomerates have written off some $8 billion in content costs over the past 18 months that will never be recouped. Call it the Peak TV hangover.
In this landscape, every media company is “on the table at some level,” says Doug Creutz, TD Cowen senior media analyst. But Creutz believes a major M&A deal is unlikely to transpire within the next 12 months. “There are not enough buyers, and there are too many risks. There’s a lot of talk. But who’s actually going to pull the trigger? It’s not really clear anybody is going to step up,” Creutz says.
Big Tech hasn’t shown much interest in snapping up a marquee Hollywood name, aside from Amazon’s relatively small $8.5 billion acquisition of MGM in 2022. Netflix doesn’t seem to need to acquire a studio or production company, especially after building out the infrastructure to commission original series and movies from producers around the globe. That said, if the House of Tudum is ever going to pounce on big-time Hollywood assets, now would be a good time to go hunting for bargains.
No media company is reaching a crossroads this year quite like Paramount Global. The company derives the vast majority of its earnings from the most pressured areas of media, namely ad-supported linear TV channels, including MTV, Nickelodeon, VH1, Comedy Central, BET and CMT. Broadcast network CBS, meanwhile, is a stronger business overall thanks in large part to its pricey NFL rights package. But the Tiffany network will be hard-pressed to be the driver of significant growth for the entire company.
On the film side, Paramount Pictures has struggled just like its bigger rivals to find the right portfolio of theatrical and made-for-streaming releases. “Top Gun: Maverick” was a runaway box office hit in 2022, but blockbusters of that scale are few and far between. More recently, Paramount Pictures took hits on such costly underperformers as “Transformers: Rise of the Beasts,” “Dungeons & Dragons: Honor Among Thieves” and “Mission: Impossible — Dead Reckoning Part One.”
Moreover, the franchise fever that has gripped filmdom for the past decade, thanks to Disney’s success with the Marvel Cinematic Universe, is cooling alongside Marvel’s box office fortunes. That’s bad news for Paramount, which in recent years has heavily mined derivatives of marquee properties ranging from “Star Trek” to “SpongeBob SquarePants” to “South Park.”
Paramount Global has poured resources into the launch of its Paramount+ streamer since early 2021. It also got ahead of the ad-supported streaming boom with its purchase of the Pluto TV platform in 2019. Much like WB Discovery’s streamer Max, Paramount has gambled that Paramount+ and Pluto can rev up as profit engines while linear assets slowly but surely run out of gas.
Redstone, who serves as its non-executive chair, is likely to face hard choices in the coming months. The company’s stock price has sunk, valuing the entirety of the company at about $9.5 billion, or roughly a third of its $30 billion valuation at the time of the Viacom-CBS merger. Meanwhile, the company’s debt load has ballooned to $15.6 billion due to increased spending on content. Even with the most optimistic projections for a turnaround, those numbers are not sustainable. Rising interest rates for long-term debt only add to the pressure Redstone and her management team, led by CEO Bob Bakish, face to right the ship. Bakish told investors last year that 2023 marked the company's "peak investment" year in Paramount+, which as of last year has been bundled with a digital iteration of the company's linear Showtime pay TV service. That's a strategy shift designed to get ahead of the cord-cutting that has dented Showtime's linear subscriber base. It also has the benefit of expanding Paramount+'s programming menu and allowing the company to raise the monthly price (from $9.99 to $11.99) of its top-tier, ad-free streaming package, now billed as Paramount+ with Showtime.
Paramount Global is not alone in enduring harsh scrutiny. For months, Disney has been in a public battle with activist investor Nelson Peltz, who is questioning and criticizing moves by CEO Bob Iger, once seen as invincible on Wall Street for his success in building Disney through expertly timed acquisitions of such sui generis properties as Pixar, Marvel and Lucasfilm. Now Iger is getting second-guessed on his bold move to make the biggest purchase of his career — Disney’s $70 billion acquisition of 21st Century Fox. Peltz, who owns about $3 billion worth of Disney stock through his Trian Partners private equity firm, is waging a classic activist-investor pressure campaign to force Disney to make strategy shifts and install new members onto its board of directors. Peltz argues that Disney has spent too much money on building up streaming businesses, that executive compensation is too high given the slump in its stock price, and that its board of directors has been too cozy with Iger.
Like Paramount, WB Discovery is also feeling the pain of a stock price that hasn’t topped $20 since the AT&T-WarnerMedia spinoff was finalized in 2022. The transaction left the newly formed entity to shoulder an enormous $55 billion in debt, which has become even more difficult to manage in a world of tighter credit and the vicious circle of lenders charging high interest rates for companies that have big debts on the books.
WB Discovery CEO David Zaslav has assured Wall Street that Max and HBO have turned the corner on losses and will operate at a break-even point this year. Even so, there are whispers among showbiz bankers that WB Discovery may wind up tangling with activist investors pushing an alternate strategic agenda and management changes, as Peltz is doing with Disney. Zaslav’s interest in Paramount Global could be driven in part by his desire to make the company even bigger — thus harder for an outside entity to swallow up at a lowball price.
Speculation has also emerged that Zaslav made a public show of courting Paramount in order to force the hand of Comcast CEO Brian Roberts. WB Discovery has been seen by analysts and industry insiders as a likely candidate to merge with NBCUniversal. The Machiavellian theory at work here is that Zaslav is trying to convince Comcast to sell NBCUniversal to WB Discovery before his company buys Paramount Global. Otherwise, the combined WB Discovery-Paramount would be too big to buy NBCU. This scenario presumes that Comcast is looking for an exit strategy on its ownership of NBCU, which it acquired in early 2011. A knowledgeable source close to WB Discovery characterizes this rumor as “nonsense.”
But any clear-eyed observer of the marketplace can see that WB Discovery is logically an attractive buyer for either Paramount Global or NBCUniversal, because at present WB Discovery doesn’t own a Big Four broadcast network or major-market TV stations. U.S. law bars a single company from owning more than one of the major broadcast networks: ABC, CBS, NBC and Fox. If Paramount and NBCUniversal were to consider a merger, it’s legally a given that either CBS or NBC would have to be divested.
If WB Discovery makes good on its promise that the days of incurring heavy financial losses on Max are over, then it’s in the prime position to wait for the right price to emerge on potential acquisitions. WB Discovery also has bragged to Wall Street that, for the near term, it can still count on healthy free cash flow from CNN, TNT, Discovery Channel, TLC, OWN and other ad-supported basic cable channels in its portfolio. Free cash flow isn’t synonymous with old-fashioned profit, but it means that a company has enough cash in the bank to fund operations without the need to take on more debt.
WB Discovery’s fortunes have also been significantly boosted by two surprise megahits last year: “Barbie,” which raked in $1.4 billion in worldwide box office, and video game “Hogwarts Legacy,” which generated $850 million in revenue in its first two weeks of release last February. Those windfalls, coupled with massive cost cutting since the merger closed, have helped the company trim its debt load to about $43 billion as of Q3.
WB Discovery’s improving financial situation gives it some flexibility, even in a tough marketplace. A deal may still take a year or so to emerge, but all eyes and ears will be on Zaslav’s moves in the coming months. So too Paramount’s Redstone.
The traditional media biz is ripe for consolidation, argues Kevin Westcott, Deloitte’s U.S. tech, media and telecom leader. He predicts deal activity will pick up if interest rates keep going down and the broader macroeconomic clouds that darkened 2023 clear up.
“There’s a ton of money sitting on the sidelines looking for investments,” Westcott says. “I think everybody’s sitting on their dry powder and saying, ‘Let’s see where the economy is going.’”
Elijah Abrams
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I agree with the replies to this on X, and I have to say that consolidation is not the answer. What I think Paramount Global, Warner Bros. Discovery, and NBCUniversal should do instead is merge their streaming services with each other to form a joint venture in order to compete with Netflix.
wabbott
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Of the three, only CMCSA has any money. The other two are so broke they can't pay attention.
Was curious what peers Trian was using because all of old media has been sucking wind for years. From the footnotes:
“Peer Companies” represents the simple average of “Media Industry Peers” as defined in Disney’s 2024 Preliminary Proxy Statement and consists of Alphabet, Amazon, Apple, Comcast, Meta, Netflix, Paramount, and Warner Bros. Discovery;
So 5 of them are high flying tech stocks...that explains the under performance. To be fair to Trian, they just used the same companies Disney uses.
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irlandaise
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FYI:
https://www.hollywoodreporter.com/b...bundle-netflix-disney-prime-video-1235792306/
Canada’s Telus has reworked its Stream+ bundle to now package Netflix, Disney+ and Prime Video in one offering for its mobile phone customers.
The trio of U.S.-based online platforms represents the most popular streaming services for Canadian TV viewers.
The revamped premium streaming TV bundle will have two tiers, including Stream+ Basic with the ad-supported plans for Netflix and Disney+ packaged with Prime Video for CAN $20 per month (US $14.89) — or a 17 percent cost saving on buying the stand-alone services.
Elijah Abrams
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That’s only for Canada, though. I was talking about the USA and (most) other countries.
irlandaise
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Umm, yes, I realize that. And it's a provider bundle, not an agreement among the streaming companies. But I still thought it was interesting. I'm happy to delete the posting if you disagree.
Good analysis of why the stock is where it is and where Peltz should focus his argument...
https://www.cnbc.com/video/2024/01/...s-disney-argument-says-michael-nathanson.html
https://www.cnbc.com/video/2024/01/...s-disney-argument-says-michael-nathanson.html
Streaming profitability is ‘the crux’ of Peltz’s Disney argument, says Michael Nathanson
clarker99
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I have been saying this for almost a year on this website. Streaming going black is the key to the $DIS stock price. Also, from the moment Iger came back that has been the main focus of the company. That is why we have seen $7B in cuts. I am not sure what Peltz is on about here? The things he is talking about are happening or have been noted by Disney? I am pretty confused by all this noise.
Don't have a problem with him being a thorn in Disney's side but are we pretending Disney has not talked about streaming profitability by end of FY24?
wabbott
DIS Veteran
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No doubt that has been a big focus of management - streaming, ESPN, ABC, etc. So much so that the more reliable profit centers (Parks and Experiences) have been and are being neglected.
In my opinion.
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