ValueAct Capital praised Disney for its recent efforts leaning into its theme parks and moving beyond the streaming wars in a new white paper released on Thursday.
The activist investor, which struck an information sharing agreement with the House of Mouse in January as it looks to fend off board seat pushes from Trian Fund Management and Blackwells Capital, believes Disney’s parks provide an “extra window” for monetizing characters and story IP.
It added that the company has been pursuing “bigger bundles,” “better consumer experiences” and “better advertising technology” and has been working with other studios to “test new ideas and create win/wins.”
Specific moves the firm touted include Disney’s $60 billion parks investment over the next decade, a $1.5 billion stake in “Fortnite” creator Epic Games, appointing Jeremy Darroch and James Gorman as directors to its board, consolidating its Hulu stake and integrating the streaming platform into Disney+, and launching a joint sports streaming streaming venture with Fox and Warner Bros. Discovery.
The presentation to investors comes as Disney prepares for a showdown at its annual shareholder meeting on April 3. Shareholders of record as of the close of business on Feb. 5 will be entitled to vote at the meeting. Disney has approximately 1.8 billion outstanding shares, according to its latest proxy filing.
Trian has nominated its co-founder Nelson Peltz and former Disney chief financial officer Jay Rasulo to stand election at the meeting, while Blackwells has nominated Tribeca Film Festival co-founder Craig Hatkoff, former Warner Bros. and NBCUniversal executive Jessica Schell and TaskRabbit founder Leah Solivan.
In order to help Disney with its turnaround, Trian has proposed a number of initiatives, including 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’ proposals include 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.
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.”
ValueAct said it has committed its votes to Disney’s board and leadership because it has a “thesis, informed by our network and toolkit,” a “positive collaboration — LOTS of learning and teaching — well underway” and “tangible evidence of progress.”
“As legacy technologies transition to digital platforms, we believe Disney can lead the media industry forward,” ValueAct Capital co-CEO Mason Morfit said in a statement. “We could not be more excited to partner with Bob and the Board to help create long-term sustainable shareholder value.”
In addition to its collaboration with Disney, ValueAct has extensive experience investing in media and technology companies navigating significant business transformations, including Spotify, The New York Times, 21st Century Fox, Nintendo, Microsoft, Adobe and Salesforce.
Disney shares, which closed at $110.18 per share on Thursday, are up 10.9% in the past year, 21.4% year to date and 35% in the past six months.
