Activist investor Blackwells Capital is calling on Disney to prioritize artificial intelligence and spatial computing as part of their pitch to turn the company’s business around.
“Disney will never be valued as a technology company so long as it does not think as a technology company,” Blackwells chief investment officer Jason Aintabi said in a video message posted on YouTube.
In a presentation to investors, Blackwells blasted the company’s spending on research and development initiatives as “anemic” compared to its peers. The presentation notes it spends just 1-2% of its average annual revenue in this area, compared to 7 to 8% at Apple, 8 to 9% at Netflix and 14 to 15% at Amazon.
The firm believes that AI could be leveraged for navigating park visits, character meet and greets, booking travel and rides and crowd control, while spatial computing could create virtual reality experiences such as a 3D lightsaber spar with a jedi or an augmented reality overlay of Mickey Mouse Clubhouse
characters and content on an app and in-home.
It adds that such a strategy around AI has the potential to boost Disney shares by as much as 129%. Disney shares are currently trading at $108.58 apiece, up 8% in the past year and 19.7% year to date.
In addition to asking the company to increase its focus on AI and spatial computing, the firm called on Disney to create an Office of the Chief Technology Officer where all the company’s divisions would report into.
It argues that the company’s current technology department leadership is currently buried under corporate bureaucracy with multiple CTOs and that the “severe technology fragmentation between the company’s segments and sub-segments” is resulting in “untapped potential for new idea generation and overlooked synergistic potential.”
Aintabi said that reporting into one chief technology officer would allow Disney to “build out a native technology stack that underpins all efforts of the corporation.”
The latest presentation comes after Blackwells proposed Disney undergo a real estate and strategic asset review, including a potential split of the company.
Blackwells has nominated Tribeca Film Festival co-founder Craig Hatkoff, former Warner Bros. and NBCUniversal executive Jessica Schell TaskRabbit founder Leah Solivan to stand election at Disney’s annual meeting on April 3.
In the video message, Aintabi called on shareholders to disregard Trian Fund Management’s nomination of its founder Nelson Peltz and former Disney chief financial officer Jay Rasulo to avoid corruption from “flip-flopping personal vendettas and a lack of qualification.” It also called on Disney to make its information sharing agreement with ValueAct Capital public, arguing that the company “already suffers from an information vacuum discount.”
Disney’s board said in a message to shareholders on Monday that it is “laser-focused on a strategy that will drive shareholder value.”
It cited its recent efforts including restoring its cash dividend, increasing that payment by 50% and targeting $3 billion in share buybacks for fiscal year 2024. It also reiterated that its on track to meet or exceed its cost-cutting target of $7.5 billion, deliver $8 billion in free cash flow and reach profitability in its streaming business by the end of the fiscal year.
“Disney’s Board of Directors believes all of its 12 nominees are uniquely qualified to continue this important progress and create long-term shareholder value,” the company added. “The Disney Board of Directors does not endorse the Trian Group nominees, Nelson Peltz and Jay Rasulo, or the Blackwells nominees, Craig Hatkoff, Jessica Schell and Leah Solivan, and believes that they are unqualified to serve on Disney’s Board and preserve value creation for shareholders in this increasingly complex global landscape.”
