DIS Shareholders and Stock Info ONLY

[wabbott]

https://www.msn.com/en-us/money/com...-disney/ar-AA1jZfHu?ocid=finance-verthp-feeds

Activist ValueAct Builds Stake in Disney
Investor bought shares over the summer, when Disney stock was languishing around $80
By Robbie Whelan and Lauren Thomas

Nov. 15, 2023 - 1:41 pm EST

Disney has attracted the interest of another activist investor that believes the company is undervalued, with ValueAct Capital accumulating a stake in the entertainment giant’s stock and initiating dialogue with its board.

ValueAct—an activist fund based in San Francisco with investments in information technology, energy, financials and media—has taken a “sizable” but so far undisclosed stake in Disney that makes it one of the fund’s biggest holdings, according to people familiar with the matter.

The fund built its position over the summer while Hollywood was shut down by dual writers’ and actors’ strikes and as Disney’s share price was languishing around $80, the people said. ValueAct continues to add to its stake.

Disney Chief Executive Bob Iger is trying to steer the company past a turbulent period and focus on building its businesses going forward. He said earlier this month that streaming, theme parks and cruises, studios and the ESPN sports network represent the four building blocks of the company’s future.

News of ValueAct’s stake was earlier reported by CNBC. Disney shares rose by around 3%, to $93.69 in Wednesday afternoon trading.

ValueAct believes Disney’s theme parks and consumer products businesses alone are worth at least $80 a share, people familiar with the matter said. While it is unclear if ValueAct will seek board seats or other changes at Disney, the fund manager represents at least the third activist investor to build a significant stake in Disney in under two years.


In October, the Journal reported that activist Nelson Peltz had joined with his friend Isaac “Ike” Perlmutter, former chairman of Marvel Entertainment, to take another run at Disney.

Peltz’s Trian Fund Management launched a proxy campaign in late 2022 seeking cost cuts and board changes at Disney, but ended it in February after Iger announced $5.5 billion in budget cuts and a head-count reduction of 7,000 across the company.

Trian’s stake in Disney is worth more than $2.6 billion, according to a regulatory filing.Over the summer, Peltz monitored the company’s performance. As Disney’s share price declined and analysts’ outlook dimmed, Peltz grew concerned, The Journal previously reported. He struck a deal with Perlmutter, who is one of Disney’s largest independent shareholders, allowing Peltz to add his friend’s shares to Trian’s war chest for the purposes of a new activist campaign.

Peltz is seeking multiple seats on Disney’s board. In the previous campaign, he had called for increased austerity and for the board to be more aligned with shareholder concerns. Disney hasn’t responded to the new campaign, although Iger said last week on CNBC that he had spoken to Peltz and still wasn’t sure “what Nelson is really after.”Last summer, another activist hedge fund, Dan Loeb’s Third Point, took a large stake in Disney and pushed the company to make changes to both its board and the ESPN sports network. Loeb backed off after Disney added Carolyn Everson, a longtime digital advertising executive, to the board.ValueAct, founded in 2000 by Jeffrey Ubben, is known for trying to work with management behind the scenes to avert potential proxy battles. Ubben stepped back from the company in 2017 and handed over the reins as CEO to his protégé Mason Morfit.

Last year, ValueAct took a 6.7% stake in the New York Times in an effort to push the publisher to more aggressively market subscriber-only content.ValueAct Holdings, the firm’s main investment fund, has about $4.4 billion in assets under management, including large stakes in financial-technology company Fiserv and business-software maker Salesforce, worth about $853 million and $707 million respectively, according to a regulatory filing from the end of September.Earlier this year, Morfit was named to the board of Salesforce, after the company came under pressure from other activist investors, including Elliott Investment Management.

Write to Robbie Whelan at robbie.whelan@wsj.com and Lauren Thomas at lauren.thomas@wsj.com

 

[PolymerSkywalker]

I have a high school friend that lives and works in Hollywood. He was accountant for a studio, not TWDC, and now is an accountant for a non-studio business. He told me that the quick and short ballpark estimate for the public to use is to total the reported budget, advertising (which isn't often announced but he said for tentpoles is about $100M) and multiple by 1.5.

So, the Marvels reported budget is $220M (not including reshoots and taking into account a $50M tax credit from the UK) and assume a marketing budget of $75M (which I giving TWDC the benefit of the doubt that they saw advanced ticket sales and withdrew ad dollars) and multiple that figure by 1.5 and the Marvels would need to make $440M (+/-) to break even.

Again, this is how my friend explained how to calculate a decent ball park estimate.

Not the math I have seen used most often. $220 M + $75 M = $295M. The profit back from Theatre’s is right around 50%. Domestically it is 55% or so, and $45% international, and China is 25%. So 50% is likely a little low for movies that do great overseas.

So in order for The Marvels to make money it likely needs $590 M. Or $590 M x .5 = $290M.

Not including reshoots which we know there were a good bit reported on this film. Also assumes $75M marketing which is a little lower than we have seen on Marvel movies lately. I strongly suspect The Marvels needs a $600 M + box office to break even. Not uncommon for these projects to come in over budget and remember $270 M was a budget number.

 

[Elijah Abrams]

Disney had to buy Fox as a whole to get the the other Marvel and outstanding Star Wars rights.

Disney shouldn’t have had to buy Fox just to obtain the rights to the other Marvel films/shows and the 1977-2005 Star Wars films, and instead make a trade deal, and they shouldn’t have had to buy Fox just to get closer to Hulu, and instead have Fox and Comcast give their stakes in Hulu to Disney, but they bought Fox so they could build their streaming strategy with Disney+, especially with taking it worldwide.

What positive do you see in Disney splitting up distribution rights? Seems like an unnecessary headache and money split to me.

Mmm...that's what I said. OG comment was that Paramount or Sony should distribute some Marvel movies for Disney.

I do agree that parting it out to multiple distributors would be a terrible move.

In my previous post, I was talking about Sony and/or Paramount handling theatrical distribution for just two of the four (or five, if Armor Wars gets dated) Marvel Studios films for just 2025. Disney would have the home media rights afterwards.

 

[irlandaise]

In my previous post, I was talking about Sony and/or Paramount handling theatrical distribution for just two of the four (or five, if Armor Wars gets dated) Marvel Studios films for just 2025.

What would be the benefit to Disney of farming out the distribution? I get that it would decrease internal expenses, but it would also decrease distribution revenues.

 

[Jwaire]

Disney shouldn’t have had to buy Fox just to obtain the rights to the other Marvel films/shows and the 1977-2005 Star Wars films, and instead make a trade deal, and they shouldn’t have had to buy Fox just to get closer to Hulu, and instead have Fox and Comcast give their stakes in Hulu to Disney, but they bought Fox so they could build their streaming strategy with Disney+, especially with taking it worldwide.

Why would Fox and Comcast give Disney their parts of Hulu? NBCUniversal was a founding partner in Hulu along with Fox, which they acquired. Disney came in later.

They bought Fox for the Marvel IP, Star Wars and Avatar distribution rights and overpaid dearly for it. They have did practically nothing with the rest of it.

Disney had nothing to trade with Fox to get back the Marvel rights. Fox (or Fox's new owner) would have kept making remakes of Fantastic Four and the X-Men just to keep Disney from getting them back.

What would be the benefit to Disney of farming out the distribution? I get that it would decrease internal expenses, but it would also decrease distribution revenues.

I agree. That's not the core problem. The core problem is the current state of movie theaters and the large budgets for VFX films. Unless you're Mario or Barbie, no-one wants to go to the theaters in the numbers needed to sustain a $500+ million blockbuster.

Iger's right about one thing, quality over quantity. Marvel needs a time out. They've exhausted audiences with the post-End Game films and D+ series.

 

[wabbott]

I agree. That's not the core problem. The core problem is the current state of movie theaters and the large budgets for VFX films. Unless you're Mario or Barbie, no-one wants to go to the theaters in the numbers needed to sustain a $500+ million blockbuster.

Iger's right about one thing, quality over quantity. Marvel needs a time out. They've exhausted audiences with the post-End Game films and D+ series.

Michael Eisner and Jeffrey Katzenberg figured this out pretty quick after they came to Disney in the mid 80s. They called it the "singles and doubles" strategy.

https://sriramk.com/memos/katzenberg.pdf

 

[BrianL]

Michael Eisner and Jeffrey Katzenberg figured this out pretty quick after they came to Disney in the mid 80s. They called it the "singles and doubles" strategy.

https://sriramk.com/memos/katzenberg.pdf

Right - there just isn't room for that many big-budget tentpoles. They could make some smaller movies though, not necessarily lower quality, per se, but just less expensive. They used to do this all the time with good, live-action family fare that didn't need huge SFX budgets - whatever happened to those?

 

[HokieRaven5]

Right - there jsut isn't room for that many big-budget tentpoles. They could make some smaller movies though, not necessarily lower quality, per se, but just less expensive. They used to do this all the time with good, live-action family fare that didn't need huge SFX budgets - whatever happened to those?

Disney+. The reaction to seeing trailers for those by audience members now will likely be “That’s a D+ movie”.

 

[Jwaire]

Michael Eisner and Jeffrey Katzenberg figured this out pretty quick after they came to Disney in the mid 80s. They called it the "singles and doubles" strategy.

https://sriramk.com/memos/katzenberg.pdf

It only applied to live action films though. They didn't do that with feature animation* because you couldn't, just like it's going to be tough for Disney to do that with Marvel or Star Wars because of VFX costs in particular.

You're going to make a Captain Marvel 2 film with shoddy VFX? You can't do that. Your only option is to scale back, and produce one or two per year—not attempt to do three or four.

Looking at The Marvels in particular, I'm not sure how it even had such a large budget simply because the run time is only 105 minutes. That's one of the shortest Marvel films in recent history. Apparently, the director set out to make it that short from the beginning.

* - Eisner did try this beginning around the Lilo & Stitch era. That's why we got all of those direct to video sequels with shoddy re-used animation and poor storytelling. Also, Brother Bear, Lilo & Stich and The Pooh Heffalump movie suffered greatly compared to other animated classics.

 

[BrianL]

Disney+. The reaction to seeing trailers for those by audience members now will likely be “That’s a D+ movie”.

Oh, but they haven't made one of those kinds of movies in decades - it's been a way before D+ problem. Granted, streaming exacerbates the situation, but still.

 

[BrianL]

It only applied to live action films though. They didn't do that with feature animation* because you couldn't, just like it's going to be tough for Disney to do that with Marvel or Star Wars because of VFX costs in particular.

You're going to make a Captain Marvel 2 film with shoddy VFX? You can't do that. Your only option is to scale back, and produce one or two per year—not attempt to do three or four.

Looking at The Marvels in particular, I'm not sure how it even had such a large budget simply because the run time is only 105 minutes. That's one of the shortest Marvel films in recent history. Apparently, the director set out to make it that short from the beginning.

* - Eisner did try this beginning around the Lilo & Stitch era. That's why we got all of those direct to video sequels with shoddy re-used animation and poor storytelling. Also, Brother Bear, Lilo & Stich and The Pooh Heffalump movie suffered greatly compared to other animated classics.

Yep - animation is expensive no matter how you do it. I think the trick for that will be to pull back on the number of releases. They already are for 2024 by pushing Elio.

 

[Jwaire]

It would be very unpopular, but in my opinion, the studios' best bet is to go back to the original windows for theatrical releases.

We used to have to wait 9-12 months to be able to rent a movie on VHS or DVD. The current schedule is too short.

They also need to work with their theatrical partners to stop the nonsense like 40 minutes of pre-roll ads.

 

[PolymerSkywalker]

The reason The Marvels is so expensive is partially due to the current trend of scrapbooking being used in Disney movie making. We used to have a really strong idea and outline of where a movie was going during shooting. Now, they film every scene with multiple versions and scrapbook it all together with VFX at the end.

A great example was written lately when Nick Cage filmed one short scene just standing there and then it was a huge fight scene when he saw the actual movie screening.

All of that creates massively inflated movie budgets.

 

[HokieRaven5]

Oh, but they haven't made one of those kinds of movies in decades - it's been a way before D+ problem. Granted, streaming exacerbates the situation, but still.

Live action movies under $100M in budget in the 2010s:

- Secretariat
- The Muppets
- The Odd Life of Timothy Green
- Saving Mr Banks
- Muppets Most Wanted
- Million Dollar Arm
- Alexander and the Terrible, Horrible, No Good Very Bad Day
- Into the Woods
- The Finest Hours
- Pete’s Dragon
- Queen of Katwe
- Christopher Robin

 

[BrianL]

Live action movies under $100M in budget in the 2010s:

- Secretariat
- The Muppets
- The Odd Life of Timothy Green
- Saving Mr Banks
- Muppets Most Wanted
- Million Dollar Arm
- Alexander and the Terrible, Horrible, No Good Very Bad Day
- Into the Woods
- The Finest Hours
- Pete’s Dragon
- Queen of Katwe
- Christopher Robin

Really? That's pretty shocking on some of those. That include P&A?

 

[HokieRaven5]

Really? That's pretty shocking on some of those. That include P&A?

Didn’t find those numbers but only Pete’s Dragon, The Finest Hours, and Christopher Robin were the ones over $50M in production budget.

 

[BrianL]

Didn’t find those numbers but only Pete’s Dragon, The Finest Hours, and Christopher Robin were the ones over $50M in production budget.

Interesting. A feww of those movies aren't really the kinds of movies I was talking about - Finest Hours for example (though it's a really good movie!). I think Saving Mr. Banks and Christopher Robin too skew more adult - even if there is nothing objectionable in them, I jsut mean the tone. Pete's Dragon is a great example of the kind of movie I mean, though it wasn't exactly great.

 

[Obi-J Kenobi]

Right - there jsut isn't room for that many big-budget tentpoles. They could make some smaller movies though, not necessarily lower quality, per se, but just less expensive. They used to do this all the time with good, live-action family fare that didn't need huge SFX budgets - whatever happened to those?

The culture in America has changed. Our culture is addicted to violence. That doesn't fit with family fare, except Spy Kids?

 

[BrianL]

The culture in America has changed. Our culture is addicted to violence. That doesn't fit with family fare, except Spy Kids?

Ehh, violence ahs always been popular and I don't think that it has really changed. One thing that has changed though is that everything needs to be targeted at 18 to 45 year-olds in order to be considered worthwhile or legitimate, animated fare excluded. This may sometimes come with and increased level of violence/action, but it's not just that.

 

[Obi-J Kenobi]

Ehh, violence ahs always been popular and I don't think that it has really changed. One thing that has changed though is that everything needs to be targeted at 18 to 45 year-olds in order to be considered worthwhile or legitimate, animated fare excluded. This may sometimes come with and increased level of violence/action, but it's not just that.

Agree to disagree.

Violence has become so prevalent and accepted into societal norms, that it is the means to solve problems. Violence has always existed, true, but the stigma attached to it is culturally absent. I deal it with outcomes of violence on a daily basis as a municipal attorney. If you don't have to read reports of homicide, child sex crimes and domestic violence on a weekly basis, you should count your lucky stars.