Business Wars: Disney Under Siege | The ‘Bob’ of It All – Episode 3 Summary
Release Date: December 25, 2024
Introduction
In the latest episode of Business Wars, hosted by David Brown from Wondery, the spotlight shifts to one of the most tumultuous periods in Disney's history. Titled "Disney Under Siege | The ‘Bob’ of It All," this episode delves deep into the intense boardroom battles that have challenged the House of Mouse, the strategic maneuvers of billionaire investor Nelson Peltz, and the future leadership of Disney as CEO Bob Iger plans his eventual retreat in 2026.
Background: Disney’s Volatile Landscape
Disney, a titan in the media industry, has been navigating through a series of strategic upheavals that have left its stock volatile and its future uncertain. In 2023, the company announced a significant cost-cutting initiative, pledging to eliminate 8,000 jobs as part of a $7.5 billion effort. This move was intensified by Nelson Peltz and his investment firm, Trion, as Peltz made aggressive attempts to gain control of Disney's board.
Nelson Peltz’s Strategic Moves
Sean McNulty, a reporter at the Ankler and co-host of the Angler podcast, provides insightful commentary on Nelson Peltz's involvement with Disney. Peltz, known for his influence on companies like Cisco, Procter & Gamble, and Wendy’s, branded himself as a "constructivist" rather than an activist, aiming to enhance company efficiencies primarily to elevate stock value and augment his own wealth. When Peltz set his sights on Disney, it was a strategic move into the beleaguered stock of a company grappling with the pressures of the streaming war.
“He comes in to help these companies probably become more efficient... for the good of the stock.” – Sean McNulty [04:06]
Firing of Ike Perlmutter: A Pivotal Moment
In March 2023, Disney’s board made a significant decision to fire Ike Perlmutter, the head of Marvel Entertainment and a close ally of Peltz. Although Bob Iger, who had recently returned as CEO, publicly framed Perlmutter’s departure as unrelated to Peltz’s proxy battle, McNulty suggests that longstanding friction between Iger and Perlmutter likely played a crucial role.
“The friction between Bob Iger and Ike Perlmutter goes back years... I think this was just another log on the fire.” – Sean McNulty [07:26]
The Proxy Battle Intensifies
Nelson Peltz made a second bid for a seat on Disney's board in late 2023, this time amassing a $2.5 billion stake in Disney stock. Despite his considerable investment, Disney's board remained resistant, questioning the added value Peltz would bring given his lack of entertainment industry expertise. Peltz's campaign, branded "Restore the Magic," involved substantial spending on social media ads and media blitzes, collectively exceeding $65 million by early 2024.
“If you have a board member at that point... they didn't need anybody from a business that was not involved in entertainment at that point.” – Sean McNulty [11:38]
Outcome of the Proxy Battle
Ultimately, Peltz’s efforts to secure a board seat were thwarted. Disney’s board reaffirmed their confidence in Bob Iger, citing Peltz’s lack of fresh ideas and potential as a distraction. Iger himself expressed optimism about Disney’s trajectory without Peltz’s involvement.
“I remain confident and very optimistic about what we're doing... we have deemed was going to be positive.” – Bob Iger [14:26]
McNulty concurs, highlighting that Peltz’s personality and lack of industry-specific insights made his inclusion more of a liability than an asset for Disney.
“There’s nothing going to happen here that he’s going to affect, be able to give you any leg up in any of this kind of thing.” – Sean McNulty [15:04]
Bob Iger's Leadership and Succession Plans
The episode further explores the complex succession narrative involving Bob Iger and his successor, Bob Chapek. Iger’s abrupt decision to step down in 2020, transitioning Chapek into the CEO role during the onset of the COVID-19 pandemic, led to significant instability. The strained relationship between Iger and Chapek, compounded by the pandemic-induced challenges, set the stage for the current boardroom conflicts.
“Bob Chapek was there for over 20 years... Iger wanted Chapek to report into him still. And reporting into two people is always tenuous at best and often a disaster.” – Sean McNulty [21:08]
Disney’s Financial Health and Strategic Shifts
Despite the turmoil, Disney has shown signs of financial recovery. In the latest fiscal quarter, Disney reported a streaming profit of $253 million, reversing previous losses. This turnaround is attributed to strategic price hikes and successful movie releases, although it is offset by declines in Disney’s linear (cable) business and ongoing layoffs affecting employee morale.
“Streaming was never going to be that model where you had over 100 million people in America paying you a monthly fee for things they did not want to watch.” – Sean McNulty [38:32]
Industry Comparison and Future Outlook
When compared to rivals like Netflix, which remains a strong contender in the streaming space, Disney's expansive global reach with Disney Plus positions it as a significant player. However, challenges such as transitioning ESPN to a direct-to-consumer model and integrating acquired assets like Fox continue to pose strategic questions for Disney’s leadership.
“Disney is amongst those brands that are in 150 countries with Disney Plus. So it's very large scale there. Netflix of course, is the bigger one.” – Sean McNulty [35:02]
Conclusion
"Disney Under Siege | The ‘Bob’ of It All" provides a comprehensive exploration of Disney's internal battles, the strategic influence of Nelson Peltz, and the intricate dynamics of leadership succession. As Bob Iger plans his departure, the episode underscores the delicate balance Disney must maintain to preserve its legacy while navigating the competitive landscape of modern media.
“If Disney comes back down, there's a quote from Nelson Peltz just this month here in November, he said, if the stock goes back to the 80s, you guys, I'll be back. I promise.” – Sean McNulty [41:04]
For those interested in the intricate power plays within Disney and the broader implications for the media industry, this episode of Business Wars offers a compelling narrative filled with strategic insights and industry expertise.
Notable Quotes:
- “He comes in to help these companies probably become more efficient... for the good of the stock.” – Sean McNulty [04:06]
- “I remain confident and very optimistic about what we're doing... we have deemed was going to be positive.” – Bob Iger [14:26]
- “There's nothing going to happen here that he’s going to affect, be able to give you any leg up in any of this kind of thing.” – Sean McNulty [15:04]
- “Streaming was never going to be that model where you had over 100 million people in America paying you a monthly fee for things they did not want to watch.” – Sean McNulty [38:32]
Recommended For:
- Business professionals interested in corporate governance and proxy battles.
- Media industry enthusiasts tracking the evolution of major studios.
- Investors and analysts monitoring Disney’s strategic maneuvers and financial health.
Listen to the full episode of Business Wars on the Wondery App or wherever you get your podcasts to gain a deeper understanding of Disney’s ongoing saga.