Disney says Peltz ‘lacks the skills’ to help the business as the battle for middlemen heats up

Jan 17 (Reuters) – Walt Disney Co ( DIS.N ) on Tuesday defended its decision to deny Nelson Peltz a board seat, saying the activist investor “doesn’t have the skills and experience” to help the media and entertainment giant.

The House of Mickey Mouse also highlighted the company’s successes under CEO Bob Iger, who recently returned from retirement for a second stint leading the company, in a letter to shareholders.

“Peltz does not understand Disney’s business and lacks the skills and experience to help management deliver shareholder value in a rapidly changing media ecosystem,” Disney said.

The billionaire formally launched his bid for a board seat last week to save the company from what he called a “crisis” of overspending on its streaming business, the purchase of 21st Century Fox and failed succession planning.

Peltz had an internal advocate, Marvel Entertainment chairman Isaac “Ike” Perlmutter, push to have the activist investor added to Disney’s board on several occasions, according to Disney’s shareholder letter also filed with regulators. Perlmutter has been pushing the issue since July 2022, contacting former CEO Bob Chapek, CEO Safra Catz and other senior executives on Peltz’s behalf.

The activist move is seen as a serious challenge to Iger and pits one of Hollywood’s most popular directors against an activist investor known for his work in consumer companies.

Peltz told CNBC last week that Disney should buy the remaining Hulu stake it doesn’t already own or get out of streaming. Disney has reached an agreement to acquire Comcast Corp’s ( CMCSA.O ) one-third stake in the Hulu streaming service as soon as January 2024.

Disney also needs to increase capital spending in its parks business, where it likely raised ticket prices “too much,” he said at the time.

In its statement on Tuesday, Disney said it is already working to improve profitability at the Disney+ streaming business, which Iger helped launch in 2019, and is introducing broader cost-cutting measures.

Disney also defended its $71 billion acquisition of Fox’s entertainment business, which added valuable movie properties like “Avatar” and the long-running animated series “The Simpsons,” a popular series that underpinned the launch of Disney+ in 2019. It also brought a deep bench of experienced executives to Disney , including President of General Entertainment, Dan Walden.

Peltz’s Trian Fund Management, which owns a 0.5% stake or roughly $900 million in Disney, declined to comment.

If Peltz does not settle with Disney, investors will vote this year on whether he will sit on the company’s board. Last year, the annual shareholders’ meeting was held on March 9.

Reporting by Dawn Chmielewski in Los Angeles and Eva Mathews and Aditya Soni in Bengaluru Editing by Shinjini Ganguli and Matthew Lewis

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