Disney faced a proxy fight when Nelson Peltz’s activist firm Trian Fund Management pushed for a seat on the board.
Peltz spoke on CNBC’s “Squawk on the Street” on Thursday, making the case for the company’s chosen war with Disney, raising issues with Disney’s $71 billion acquisition of Fox in 2019 and how the company has eroded shareholder value in recent years.
“Fox hurt this company. Fox took the dividend away. Fox turned what was once a pure balance sheet into a mess,” Peltz said Friday.
On Thursday, the activist company filed a preliminary proxy statement seeking to put Peltz on Disney’s board.
To avoid what could be a nasty proxy war and fight against Trian, Disney on Wednesday announced that Mark Parker, its executive chairman Nike, will be the new board chairman. Disney’s board will now have 11 members.
The activist company said it has about 9.4 million shares worth about $900 million, which it first raised a few months ago. Trian said on Wednesday that Disney had “lost its way which led to a rapid decline in financial performance.”
Peltz also said he wants to be on the board so he can get access to internal numbers and tell other members if he doesn’t have a chance.
“I don’t need to beat him,” Peltz told CNBC. “I don’t need more than one person on board.”
Disney shares were up about 3% on Thursday.
Peltz’s grievances
Trian cited what he considered poor corporate governance on Disney’s part, including failed succession planning, “over-the-top” compensation practices and Disney’s lack of engagement with Trian in recent months.
In Thursday’s public filing, Trian noted numerous meetings with Disney and board members, starting with CEO Bob Chapek, Peltz and his wife over lunch in July. Meetings and correspondence between Trian and Disney increased in frequency in November, according to the filing.
Peltz on Thursday said he only had a meeting with Disney’s board that lasted about 45 minutes, but he never heard back from them. Disney representatives did not immediately respond for comment.
Peltz also noted that Disney opened him up as a board observer, allowing him to sit in on meetings and advise on operations, but without voting privileges.
“I don’t need to go beyond them. I just have to say enough to these people and explain to them where they are wrong or what opportunities they lost,” Peltz said there, noting the other company where he sat in Space.
A person close to Disney told CNBC’s David Faber that they dispute Peltz’s version, but that the company has offered him the opportunity to enter into an information-sharing pact under a nondisclosure agreement, along with the opportunity to meet with management and the board on a quarterly basis. Disney did not give him the ability to sit in on board meetings, the people added.
In November, Bob Iger returned to the helm of Disney, ousting Chapek – whom Iger had chosen as his successor – after a poor earnings report. Trian said he doesn’t want to replace Iger, but work with him to ensure a successful CEO transition over the next two years.
Parker will take over as chairman from Susan Arnold, and will be tasked with leading succession planning, according to Disney’s announcement on Wednesday.
In Thursday’s filing, Trian also cited Disney’s streaming strategy, saying it “struggles with profitability, despite earning the same revenue as Netflix and having a significant IP advantage.” The company has also criticized what it believes is Disney’s lack of cost discipline and profiteering in its theme park business to subsidize streaming losses.
Disney’s stock has been rough in 2022, since the start of the pandemic, when theme parks and movie theaters were closed. However, as subscriber growth for streaming slowed and investors questioned profitability, while cord-cutting increased, most media stocks fell last year.
On Thursday, Peltz said either Disney should get out of the streaming business, or buy Hulu. “They have to buy Hulu, unfortunately that means the company will be burdened with debt for years,” Peltz said.
While Disney+ is the company’s main player in streaming, Disney also owns two-thirds of Hulu and has an option to buy the remaining shares. Comcast from January 2024.
Last year, Disney also announced it would continue its cost-cutting measures, including a hiring freeze implemented by Iger.
– CNBC’s David Faber contributed to this report.
Watch CNBC’s full interview with Nelson Peltz on PRO:
Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC.