Peltz calls truce with Disney after media giant unveils £4.5bn cost-cutting plan

Activist investor Nelson Peltz called off his battle with Walt Disney yesterday as he welcomed plans to revive the 100-year-old company.

The 80-year-old billionaire, whose daughter Nicola is married to David Beckham’s son Brooklyn, sought peace just weeks after launching a so-called ‘proxy’ fight and demanding a seat on the board.

‘The proxy fight is over,’ Peltz declared just hours after Disney chief Bob Iger addressed the changes his hedge fund Trian Investors was lobbying for – even promising to reinstate the dividend by the end of the year.

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The move will come as a relief to the Disney top brass after Iger unveiled his turnaround plan having made a shock return as chief executive last year.

Iger said he would axe 7,000 jobs, or around 3 per cent of staff, and restructure the sprawling Disney empire to save £4.5billion over the next few years, including £2.5billion from content excluding sports, and £2billion from non-content cuts.

The business will be split into three: an entertainment unit that encompasses film, television and streaming; a sports-focused ESPN unit; and Disney parks, experiences and products.

‘This was a great win for all shareholders,’ said Peltz, who owns about 9.4m Disney shares worth roughly £740million. ‘Management now plans to do everything that we wanted them to do.’

Peltz has pushed his way on to the boards of Procter & Gamble and Unilever in recent years and built major holdings in Mondelez and Heinz.

But his comments mean he and Iger will no longer go head-to-head at the annual shareholder meeting in April, putting what could have been one of the biggest corporate battles for years to bed.

Aside from cost-cutting, Iger, 71, told investors streaming was now a primary focus, despite Disney+ posting its first quarterly fall in subscribers since launching in 2019 and again failing to turn a profit.

‘We’re in a very interesting transition period, but one, I think, that is inevitably heading towards streaming,’ he said.

Susannah Streeter, Hargreaves Lansdown analyst, praised Disney’s ability to gain Peltz’s support, especially when it comes to content cuts.

‘Although this will be painful at a time when competition for eyes on screen is so high, the company does have a huge back catalogue up its large sleeves and should be able to win legions of new younger fans for its classics through cross-selling at theme parks,’ she said. 

Face off: Nelson Peltz (left) owns about 9.4m Disney shares worth roughly £740m in Disney which is run by Bob Iger (right) 

Iger took the chance to announce that sequels of popular franchises Toy Story and Frozen are in the works, cashing in on its roster of hits.

Although Disney+ shot to popularity during the pandemic, it has struggled to rally support as the world reopened and competition intensified.

It was this backdrop that sealed the fate of Bob Chapek, who succeeded Iger in the top job in 2020 but lasted only two years. 

Not only did Chapek fail to convince investors that he could steer Disney post-Covid, but he was also seen to mishandle its response to Florida’s Don’t Say Gay laws which banned discussion of sexual orientation or gender identity in primary schools. 

He was replaced by Iger, who came out of retirement in November to put Disney back on track.

Often dubbed as entertainment industry royalty, Iger’s first tenure as chief executive started in 2005, where he led Disney’s acquisitions of some of the most powerful entertainment brands, including Toy Story maker Pixar, superheroes studio Marvel and Lucasfilm, the home of Star Wars.

Paolo Pescatore, at PP Foresight, warned that despite Iger’s credentials, he still faces an uphill battle. ‘There are numerous challenges including the current economic environment and uncertainty with consumer behaviour,’ he said. A roller-coaster year awaits all streamers.’

But analysts backed the cuts as a positive move for the company, showing a clear focus on profitability. Evercore analyst Vijay Jayant said the news of cost-cutting was Disney ‘restoring the magic’.

Disney shares have jumped 26 per cent in the year to date, but fell 1.1 per cent yesterday.

This post first appeared on Dailymail.co.uk