Nelson Peltz lays out his case for Disney proxy fight, slams Fox acquisition

Nelson Peltz lays out his case for Disney proxy fight, slams Fox acquisition

Disney is facing a proxy fight as Nelson Peltz’s activist firm Trian Fund Management pushes for a seat on its board.

Peltz spoke Thursday on CNBC’s “Squawk on the Street,” making his case for the fight his firm has picked with Disney. He raised issues with Disney’s $71 billion acquisition of Fox in 2019 and how the company’s shareholder value has eroded in recent years.

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“Fox hurt this company. Fox took the dividend away. Fox turned what was once a pristine balance sheet into a mess,” Peltz said.

On Thursday, the activist firm filed a preliminary proxy statement looking to put Peltz on Disney’s board.

To preempt what could be a messy proxy battle and opposing Trian, Disney on Wednesday announced that Mark Parker, the executive chairman of Nikewould become the new chairman of the board. Disney’s board will now have 11 members.

The activist firm said it owns about 9.4 million shares valued at approximately $900 million, which it first accumulated a few months ago. Trian said Wednesday it believes Disney “lost its way resulting in a rapid deterioration in its 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 they’re missing out on opportunities.

“I don’t need to overwhelm them,” Peltz told CNBC. “I don’t need more than one person on the board.”

Shares of Disney were up about 3% on Thursday.

Peltz’s grievances

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Nelson Peltz: Disney is more than a media company, it's a consumer company

In November, Bob Iger made a surprising return to Disney’s helmousting Chapek — whom Iger chose as his successor — following a poor earnings report. Trian has said it doesn’t want to replace Iger, but rather work with him to ensure a successful CEO transition within the next two years.

Parker will take over as chairman from Susan Arnold and will be tasked to lead succession planning, according to Disney’s announcement Wednesday.

In Thursday’s filing, Trian also called out Disney’s streaming strategy, saying it is “struggling with profitability, despite reaching similar revenues as Netflix and having a significant IP advantage.” The firm also criticized what it believes is Disney’s lack of cost discipline and overearning at its theme parks business to subsidize streaming losses.

Disney’s stock had a rough 2022, coming out of the early days of the pandemic, when theme parks and movie theaters were shut down. However, as subscriber growth for streaming slowed and investors raised questions about profitability, while cord cutting ramped up, most media stocks fell last year.

On Thursday, Peltz said Disney either needs to get out of the streaming business or buy Hulu. “They must buy Hulu, that unfortunately means the company will have a debt load going forward for several years,” Peltz said.

While Disney+ is the company’s main play in streaming, Disney also owns two-thirds of Hulu and has an option to buy the remaining stake from Comcast as early as January 2024.

Last year, Disney also announced it would proceed with cost-cutting measuresincluding a hiring freeze that Iger has upheld.

— CNBC’s David Faber contributed to this report.

Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC.

Watch CNBC’s full interview with Nelson Peltz on PRO:

Watch CNBC's full interview with Trian Partners' Nelson Peltz

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