Boardwalk Times: Stories from the Seashore — Disney’s 2023 Starts With A Fight
Bob Iger's honeymoon return period ended abruptly when Nelson Peltz and his Trian Partners started a proxy fight with The Walt Disney Company.
Welcome back to Boardwalk Times: Stories from the Seashore! This month we will be discussing The Walt Disney Company’s fight with activist investor Nelson Peltz. We will also be diving into the exciting announcements from Universal Parks & Resorts. Along with a quick section on what’s new at Walt Disney World and Disneyland. Plus we have some podcast plugs and LINKS OF THE MONTH.
But before all that here is our monthly poll question… New year. New newsletter segment.
Disney’s 2023 Starts With A Fight
Activist investor Nelson Peltz has been on a crusade to get a seat on the Disney board. Peltz and his investment firm Trian Partners have started a proxy fight against The Walt Disney Company.
Peltz’s key points for asking for a seat on the Disney Board are:
That the Fox deal was a overpay and it overleveraged the company’s balance sheet.
Disney has a “flawed DTC strategy.”
Disney is over-relying on the parks.
Disney’s executive compensation is outrageous.
Disney hasn’t planned for succession well.
Funny enough, on the surface those all sound like great points. We could debate the DTC strategy as all streamers are struggling. Peltz nailed the Fox deal, the parks, executive compensation, and succession. All four of those things are problems. The Parks have been an underlying issue for a bit that was bound to come to the surface.
“Disney may believe that price increases and “nickel-and-diming” of Cast Members and other costs is good for the bottom line… however, we suspect it is short-term thinking that puts the brand value and long-term health of the business at risk” — Trian Partners
Yet within all these points did Peltz forget about the worldwide pandemic? The reason for no dividend and other issues is directly correlated to the pandemic. It’s baffling how people forget how badly the pandemic affected Disney.
Peltz also has every right — as an investor — to be upset about how Disney handled the Bob Iger to Bob Chapek to Bob Iger transition. Disney passed on capable successors for years just to end up with Bob Chapek who never got a fair shake at being “the guy.” Yet this was a decision that was made by Iger and the board. As we look back to February 2020, it’s easy to say that Iger and the board may have not been serving in Bob Chapek’s best interests.
Now for a little conspiracy theory. Was Bob Chapek going to suggest adding Nelson Peltz to the Disney board as an ally? Chapek did meet with Peltz at Disneyland Paris. Was that one of the underlying reasons Disney CFO Christine McCarthy went rogue on Chapek? As I’ve written in the past, Chapek needed a few more allies in the executive ranks, the creative ranks, and the Disney board itself. I’m still shocked Chapek didn’t kick out more Iger loyalists or rock the boat with the board and executive team to make it more in his favor.
Peltz’s presentation about Disney was met with a scathing rebuttal from the Mouse House.
Disney defends itself quite well but there are some key points I want to expand upon.
Disney touts that it’s “providing more value and flexibility at the parks.” Are we so sure about that one? Prices have skyrocketed, way fewer perks, and Disney’s overcomplicated procedures have made it harder to do trips to the parks.
Disney touts Iger’s M&A (merger and acquisition) strategy of Pixar, Marvel, Lucasfilm, and 21st Century Fox. All of the deals have paid off so far besides 21st Century Fox but it’s too early to tell on that one.
Disney defends the Fox deal: It helped Disney with IP (X-Men, The Simpsons, Avatar, Fantastic Four, Deadpool, Family Guy, etc.) The deal gave Disney new execs including Dana Walden, John Landgraf, and others. It helped Disney crack into new international regions with Hotstar and Star. The “Would Trian have liked if a competitor owned 21st Century Fox?” line from Disney really sums it up.
Disney shreds Peltz’s talking points from his appearance on CNBC. Peltz couldn’t articulate why he wanted to be on Disney’s board. Peltz also claimed that Disney has to buy Hulu or get out of the streaming business altogether — which is just woefully inaccurate. Especially when you consider Disney+ itself has more subscribers than Hulu. Peltz then goes on to say the parks need more CAPEX and even says Disney should build more parks. His whole stance is just all over the place.
One of Disney’s biggest rebuttals was that Nelson Peltz lacks media experience and that’s why he’s unqualified to join the Disney board.
This isn’t the gotcha Disney thinks.
Nearly every current member of the Disney board came from industries that aren’t associated with media and entertainment (CNBC). Disney rejecting Peltz due to lack of media experience is one thing but in reality, you have a board that also lacks that same media experience. Either way shouldn’t you be addressing that problem?
And yes most of Disney’s board has members with wide-ranging experiences but it’s a tough argument to make. Sure, the new Chairman of the Board Mark Parker comes from Nike and is heralded as a creative. But last time I checked Nike makes shoes, not movies. Only Bob Iger, Amy Chang, and Carolyn Everson have media experience. The rest of the board comes from different industries. Although you could make the argument that technology and consumer products fall under Disney’s purview.
Fun Fact: Carolyn Everson, a Disney board member, worked at Walt Disney Imagineering for a bit before going on to be an exec at Meta (formerly Facebook) and the President of Instacart.
Remember this is the same board that extended Chapek’s contract despite having legit issues with him. The same board that also approved an outrageous compensation for Disney’s short-lived communications chief Geoff Morrell. In the end, Chapek will make at least $20 million from his severance. Morrell made $8 million from Disney in 4 months on top of Disney paying all of his moving expenses (over $1 million). Morrell was hired at a base salary of $489,500 and was given a bonus of $2.75 million upon joining to replace the compensation he was leaving behind at BP.
Peltz’s point on executive compensation makes a lot of sense especially when you look at the Geoff Morrell case. But the reality is that Peltz isn’t offering solutions to all the problems he has with Disney.
Nelson Peltz’s battle also could be a revenge play for Marvel Entertainment Chairman Ike Perlmutter, who doesn’t like Bob Iger due to the fact Iger removed Marvel Studios from Ike Perlmutter’s purview at Marvel Entertainment. “I called Ike and told him to tell his team to stop putting up roadblocks and ordered that we put both Black Panther and Captain Marvel into production,” Iger wrote in his memoir. There is no love lost there.
Can Perlmutter pull off grand revenge on Iger with this Peltz drama? That remains to be seen.
Once Iger gets done with this proxy fight drama, it will be fascinating to track his next moves. It’s becoming clear that Iger waited out the pandemic storm and decided he’d rather run Disney than be an investor himself. When Iger took back the reins of Disney he made quick work to change a lot of things, and that change has taken a stop due to this proxy fight.
Iger got rid of Kareem Daniel at 6:30 a.m. on his first day back. According to The Hollywood Reporter’s sources, some Disney insiders believed that Iger wanted to ease out Disney CFO Christine McCarthy but not as brutal as the Chapek/Daniel firings. The Disney insiders believe McCarthy was/is a target of Iger for backing Chapek too enthusiastically until she turned on him. McCarthy was also responsible for the McKinsey consulting firm hire that was going to be used for cost-cutting. At the time, many believed Chapek was making the move to have McKinsey consult and cut costs. Allegedly before Iger’s return, Disney was mulling moving marketing budgets under Kareem Daniel’s Disney Media and Entertainment Distribution division.
The year just started, and Bob Iger’s second run is still fresh but boy does he have some work cut out for him this year. Despite proxy fights, looming succession questions, and executive turmoil it seems Iger is right at home, and who better to help Disney usher in its 100th year than the CEO who transformed the Mouse House into an entertainment juggernaut?
Universal Parks & Resorts Are On A Roll
Universal Parks & Resorts are on a roll. Universal Orlando Resort announced plans to finance, construct, and operate a SunRail station at the Orange County Convention Center, which will be near its future Epic Universe theme park. This is huge as SunRail expands across the state of Florida, and gives Universal the advantage of having guests go straight from Orlando International Airport to the Orange County Convention Center which is then minutes away from its new theme park.
Universal then dropped major news as they announced they had plans to build a family-focused theme park in Frisco, Texas, and a year-round horror attraction in Las Vegas. Universal is broadening its reach beyond its resort destinations with moves into new markets like Texas and Las Vegas. Both feature unique concepts and have a distinct target audience in mind.
I for one could see Universal’s escape room concept, Universal’s Great Movie Escape, in more locations outside of Orlando. Especially if it’s Universal’s goal to broaden its reach and hit new markets while using its library of stories and characters.
Then off the heels of Universal’s Texas and Las Vegas announcements. Rumors began to swirl once again that Universal could end up purchasing PortAventura Park in Spain.
Comcast is taking its theme park business seriously.
All of this expansion is happening amidst the building of Epic Universe. A game-changing, state-of-the-art theme park coming to Orlando. Epic Universe will feature Nintendo which has already proven to be a gigantic win for Universal. With Universal’s lofty parks goals, they are going to need more IP. Could Warner Bros. help them out even more? Where else could Universal expand too as well? Sounds like those are newsletter topics for another time!
Walt Disney World announces TRON, Happily Ever After, Disneyland Kicks off Disney100
On January 10, Disney made sweeping changes to its parks business. Walt Disney World would drop reservation requirements for annual passholders in some scenarios, and overnight parking would no longer be charged. Disneyland would also bring back its cheapest ticket.
Disney also announced that Happily Ever After and EPCOT Forever would return on April 3. Where TRON: Lightcycle/Run would open on April 4.
Disneyland kicked off Disney100 on January 27 with Wondrous Journeys, World of Color—One, and the superior version of Mickey and Minnie’s Runaway Railway.
Disney Parks Chairman Josh D’Amaro Makes Some Promises
“If you've got crazy ideas, if you've got ideas that are reflective of the past, or reflective of the future, or reflective of one of our newest properties like an Avatar, like an Encanto, bring them to me.” — Disney Parks Chairman Josh D’Amaro to Theme Park Insider
Josh D’Amaro is looking forward to revealing more about the projects they are developing and that they have a lot more planned than what was revealed or teased at D23 Expo. He also reiterated that the Beyond Big Thunder and Dinoland Reimagining projects are real but may undergo changes in development.
“Our capital spending is higher than it’s ever been before. People are looking for reasons why we shouldn’t be investing, but we’re investing more. That’s not gonna stop as long as I’m in charge. If anybody’s worried that we’re pulling back, we’re not.”— Josh D’Amaro. My reaction to this quote… LET’S GO!
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Podcast Plugs 🎙
Boardwalk Times: Multiverse of Marvel is back with our Phase 4 Disney+ Series Rankings! (Apple) (Spotify)
This is the Waycast is back with The Bad Batch! Hosts Sara Edwards & Giovanni Delgadillo are diving into the show weekly. (Apple) (Spotify)
The Zach Perilstein Show is returning real soon with episodes with Giovanni Delgadillo, Muska Olumi, and Sara Edwards as part of the Staff Series. (Apple) (Spotify)
LINKS OF THE MONTH
— Splash Mountain has officially closed at Walt Disney World. Tiana’s Bayou Adventure will open in late 2024. (CNET)
— My friend Ayla over at the Cosmic Circus has a nice scoop on the Daredevil: Born Again writers’ room. The room will feature veteran writers who have written on Arrow, The Flash, and more. (Cosmic Circus)
— Meow Wolf’s fourth permanent location in Grapevine, Texas is opening this summer. (Blooloop)
— Ant-Man and the Wasp: Quantumania is tracking to make $96 million to $131 million over its domestic opening weekend. Will be interesting to see where it lands. (Box Office Pro)
— Read these pieces from Boardwalk Times: Disney’s 2022 Box Office Breakdown, Disney’s 2023 Theatrical Preview, The 2023 Disney+ Preview, and Disney Parks 2023 Preview.
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