Breaking news Well, it may be a victory for Disney,
but not the stock. We have more degradation in shares
of the entertainment giant.
It's heading South by about
3.3% to the downside here.
After the company announced a massive win over activist shareholders,
Disney's entire 12 member slate was elected by a solid
margin
in an expensive and very hard fought battle.
Disney did successfully block Tryon funds Nelson Peltz and former
Disney CFO Jay Rasulo from getting seats on the company's
board,
and Disney also staved off a separate push for board
seats from
Blackwell's capital. Major points of contention in this proxy battle?
The leadership of CEO Bob Iger's hand picked successor Bob
Chapek.
How Iger swept back in and returned in
2022 to steer the ship and the stock out of
Muddy Waters,
but also the direction Peltz called woke of its movie
business.
Have the white flags been waved?
Or with Iger's contract ending in
2026, is this just the beginning
of proxy wars or or some other battles that may
be brewing here?
Our Disney power panel joins us now.
CFRA Equity Research Director Ken Leon.
He has a buy rating and a
$139 price tag on the stock.
The stock right now is at a Buck
18118 and here in Los Angeles,
Wall Street Journal reporter Robbie Whalen,
who's been covering every minute of the showdown.
Robbie, I'm going to begin with you first,
including the vote which just ended a little over an
hour ago.
What are the most significant moments in this proxy fight?
And can Bob Iger lean back with all his troubles
behind him?
Thanks for having me, Liz.
Yeah, it's been a pretty wild ride.
I mean, this is a this is a battle that
got emotional.
It got personal. There were a lot of accusations flying
around of personal grudges being behind it.
We had Ike Perlmutter involved,
very colorful character who's good friends,
Nelson Peltz. But even in the home stretch,
there was drama. We had Elon Musk calling shareholders,
urging them to vote for Nelson Peltz.
Ultimately it didn't. It didn't have much of a difference.
And and and we have a big endorsement of Bob
Iger and his vision for the direction of the Walt
Disney Company.
Big win for him. Truly OK,
except that he has a lot of questions swirling around
his original pick for
taking over right succession and that was Bob Chapeck.
Bob Chapeck was a very smart executive when it came
to the parks business.
But did not resonate at all with Hollywood and who
knows,
you know, was sort of directionless
and then you've got Bob Iger.
Now do you really believe Robbie he is going to
step down when his contract is up or will he
extend it once again?
That's the billion dollar question.
But yeah, if we learn one thing from this fight,
it's that despite Disney sort of resoundingly winning today at
the annual meeting,
investors are still, you know,
they've big questions, some of the big problems with the
way the company has handled CEO succession.
So Nelson Peltz won 31%
of the vote. It was not nearly enough to get
him on the board,
but that's 31% of shareholders with voting power who voted
for a guy who,
by his own admission, doesn't know anything about the media
business,
doesn't have any experience in media,
and his experience is in holding boards to account and
changing governance.
So what that means is that a huge portion of
investors
really think that there's been,
you know that Disney has dropped the ball on succession.
The governance is not going well and they don't trust
the Bob Iger is going to sort of steer that
process quickly and efficiently towards the right,
you know the right direction.
Ken, let me bring you in.
You have a buy rating.
Does this and this vote,
does it further support I?
Basically. So does it does it add to your conviction
that this stock is just a winner coming up or
are there things you need to see Disney leadership pull
off in the near future and what are they?
Well, that's great. So you know winning takes care of
a lot of issues including succession and what this proxy
battle did was brought to light really the specific strategies
and and plans that Disney has across all of its
businesses in particular in the lagging area of entertainment including
video streaming
which they expect to be much more profitable and get
to double digit margins.
So the opportunity that Disney has today is to drive
growth and profitability.
We think they can do that.
Again, Nelson Peltz was a great foil for bringing this
all out in the open.
There was no stone unturned.
And I think when you look at the specific issue
here of succession,
Bob mentioned that he got it wrong the first time
bringing on someone who like James Gorman from Morgan Stanley
who did it right there
under a lot of pressure.
You know, I think that won't be an issue.
But again, everybody wins, you know,
the stocks up over 50%
since last October, but there's more upside here for a
stock that was once well above 200.
So I would look to really good execution across the
areas that have been troubling.
Entertainment is 45% of revenue,
8% of operating profit. The theme parks are doing great
and sports is a keeper for the long term.
Well, if you compare Disney's performance year over year with
the
S&P 500, 'cause I was looking at this,
it's underperforming. I mean the S&P over the past year
52 weeks up 26%. We've we've seen Disney stock continue
to go down today.
So I think it's give or take.
Disney has been up about 19 or
20%. This is this year.
So year to date Disney has outperformed what we'd love
to see is year over year because that's the S&P
comparison.
I think that shows over the the relatively short term,
you know people would like to see a better performance
here.
Robbie. I do have to bring up this concern that,
well, you know, Pershing Square hedge fund manager Bill Ackman
started floating because you had actually about a week ago
been part of a big article in the Wall Street
Journal questioning all these leaks about where the vote count
was progressing and which side was in.
Now. Ackman tweeted out today that in essence,
he said really only the company and its advisors have
access to how shareholders have voted before the day of
the annual meeting.
He goes on to say my understanding is that it's
illegal to release the outcome of the vote prior to
it being finalized as it has the effect of manipulating
the outcome, he said. It was really inappropriate if anybody
from the company or its advisors leak this,
and again, when you're looking at a proxy battle like
this,
it it could tilt, tilt the scales.
What did you find in your reporting?
I always have to laugh when people speculate in public
about my sources or about my colleagues sources.
I think that's what's inappropriate,
not, you know, the fact that information is out there
about how something's going.
But
look, I'm not going to weigh in on whether or
not there is anything improper going on here or anything
illegal.
It's not my place, but I would say that the
public,
in my opinion, deserves to know
how a initiative like this is progressing,
how a fight is going.
They want to see which horses ahead and that's my
job as a reporter to reveal that information.
And it doesn't really have much effect on me,
what Bill Ackman has to say about it.
Yeah, as as Charlie Gasparino and I like to say,
we think that leaks are horrible,
except when they come to us.
But I get it, Ken,
Robbie, good to have you.
And we are continuing to watch Disney stock,
which is down about two.
Let's keep talking about Evan Gerskovich.
He needs to be freed from jail in Russia right
now.
I'd like to keep that in the conversation.
OK, 100% Putin is a nightmare and a terrible,
terrible leader for taking him hostage.
That Wall Street Journal reporter.
We are praying for Evan.
Thank you so much. Thanks very much.