Disney CEO Bob Iger says he’s “working hard” to avoid being distracted by Trian Fund Management and Blackwells Capital’s push for board seats.
The executive told Morgan Stanley’s 2024 Technology, Media and Telecommunications conference that the public debate with the activist investors demonstrates that the House of Mouse is a “very complex company to run” that requires a “significant amount of knowledge” and “tremendous amount of time and focus.”
“We’re at this hard every day and when you go from fixing — which was significant — and heavy lifting to building, to really creating meaningful growth for our shareholders, the only way you achieve that is by focus. And this campaign is in a way designed to distract us, to take our eye off all those balls that are necessary to generate what we need to generate for the shareholders. It’s that simple,” he said. “I am working really hard to not let this distract me because when I get distracted, everybody who works for me gets distracted and that’s not a good thing. I’ll leave it at that.”
Iger’s comments come a day after Trian released a 130-page white paper, pushing for various proposals designed to “restore the magic.”
The firm’s turnaround plan includes introducing a new “streaming margin” incentive for executives to target a Netflix-like 15-20% margin by 2027, reviewing the viability of (and potentially limit) investment in Hulu + Live TV, phasing out the Hulu title in Disney+ and fully consolidating the two streaming services, scaling back its ambitions with a fully-direct-to-consumer version of ESPN or teaming up with a bundle partner like Netflix or Amazon and allocating more of its budget to lower-cost, easier-to-produce projects.
Meanwhile, Blackwells released its own 100-page presentation, with proposals including a real estate and strategic asset review, a potential split of the company, and a push to prioritize artificial intelligence and spatial computing.
Both firms have also called on Disney to develop a succession plan to ensure a smooth transition when Iger’s contract expires at the end of 2026.
During the Morgan Stanley conference, Iger reiterated that Disney is on track to reach profitability in its streaming business by the end of fiscal year 2024. “It’s not just about profitability. It’s about turning [streaming] into a real growth engine for the company,” he said.
The company is currently in the process of developing technical capabilities necessary to lower customer acquisition and retention costs, increase engagement and grow margins by reducing marketing expenses.
“Obviously, the gold standard there is Netflix,” he said. “We need to be at their level in terms of technology capability.”
He also touted the company’s plans to turn ESPN into a fully direct to consumer platform, which is targeting a launch in August 2025, and its joint sports streaming venture with Warner Bros. Discovery and Fox, which is slated to launch this fall. Subscribers to the joint venture will have the option of also subscribing to the flagship ESPN DTC platform, Iger noted.
“What we’re trying to do is be very, very pro consumer,” he added. “That basically means make ESPN available in multiple ways so the consumer can enjoy the sports they want to watch.”
Additionally, the Hulu and Disney+ combo app, which began its beta in December 2023, will officially roll out at the end of the month. Iger said that at least 50% of new Hulu subscribers are choosing to bundle with Disney+.
“Wherever we have a bundled subscriber, we have lower churn,” he continued. “So Hulu, I think, long term fits really well into our global streaming plans, even though we may not turn it into a global brand, because the Star brand is actually working in [Europe, Middle East and Africa regions] and certainly in Latin America and parts of [the Asia Pacific region]. But the content will basically mirror one another longer term, save obviously for localization.”
Trian has nominated its co-founder Nelson Peltz and former Disney chief financial officer Jay Rasulo to stand election at Disney’s annual meeting on April 3, while Blackwells has nominated Tribeca Film Festival co-founder Craig Hatkoff, former Warner Bros. and NBCUniversal executive Jessica Schell and TaskRabbit founder Leah Solivan.
Disney has rejected the nominees, arguing that they lack the “appropriate range of talent, skill, perspective and/or expertise to effectively support Disney’s building priorities in the face of continuing industry-wide challenges.” The board also slammed Peltz and Rasulo’s “track record of value destruction.”
Disney shares, which closed at around $112 apiece at the end of Tuesday’s trading session, are up 11.9% in the past year and 24% year to date.
