Behind the Headlines

He started chatting with Chapek in Paris last July and maintained a dialogue in the ensuing months. It was also in July that Perlmutter began lobbying for his pal, calling Chapek, Disney CFO

Christine McCarthy and Disney board member Safra Catz less than a week after Peltz dined with Chapek in Paris. When

Peltz approached Chapek, he was dealing with a CEO who had been absolutely convinced just a month earlier that he was about to face execution by the Disney board. (Instead a divided board agreed to extend his contract, though it was backdated, giving him less than a three-year term. The board then presented this result as “unanimous.”) It’s understandable that, at the time, Chapek might have felt that he could use a friend, and that seemed to be on offer.

Peltz is more known for targeting blue-chip companies like consumer-product giant Procter & Gamble and the fast-food chain Wendy’s. But of course his friend Perlmutter was very familiar with Disney — he had in fact been its largest individual shareholder. Recall that the penny-pinching, gun-toting Perlmutter seized control of Marvel in 1997 and sold it to Disney in 2009. He remained as Marvel Entertainment’s CEO but in 2015, Iger decreed that

Kevin Feige, then running Marvel films, would no longer report to Perlmutter but to then-film studio chief Alan Horn. In his memoir, Iger wrote that Perlmutter had stood in the way of Marvel’s first films with Black and female leads. “I called Ike and told him to tell his team to stop putting up roadblocks and ordered that we put both Black Panther and Captain Marvel into production,” Iger wrote. Feige sealed his control over Marvel when he took on responsibility for television, animation and print editorial operations in October 2019.

Peltz, after months of haranguing in private, pounced when Disney reported earnings that dramatically missed market expectations on Nov. 8, 2022, acquiring a $900 million stake in the company. As Disney’s share price plummeted, Peltz called Chapek to ask for a formal meeting and a board seat. On Nov. 12, Chapek ventured to Palm Beach, where he met with both Peltz and Perlmutter, and the two “continued their discussions to encourage the addition of Mr. Peltz to the Board and again expressed support for Mr. Chapek,” according to a Jan. 17 proxy filing by Disney. Eight days later, Chapek was dismissed. With the news that Disney’s board had reinstalled Iger as CEO, Disney’s share price rallied more than 6 percent. The picture at Disney had changed, but Peltz and Perlmutter persisted.

Peltz’s Trian Fund initially opposed Iger’s return as CEO, suggesting that Peltz may have had another candidate in mind. The activist investor has dropped that argument while continuing to push for a board seat, telling Disney’s board earlier this month that “he did not want to fire Mr. Iger but he did want to be in the Board room.” But still, the asks seemed simple: While other activists have challenged Disney to make bold moves like spinning off ESPN and ABC, Peltz was asking for a bit more fiscal restraint, a move the company already appears to be making.

At this point, Iger still seems to be solidifying his control over Disney. Conveniently, board chair Susan Arnold, who had backed Chapek despite the misgivings of fellow board members, is at the end of her term. Iger’s relationship with Arnold had started to fray even before he left Disney in December 2021. After his departure, they didn’t speak at all until Arnold had to make that November call, asking Iger to return as CEO. Arnold’s replacement as chairman is Parker, an Iger ally who is said to have gifted Iger six pairs of bespoke Nikes when he retired (temporarily, as it turned out) a year ago. The two fitness buffs are close in age — Parker is 67 and Iger is 71 — and Iger is said to respect Parker’s creative roots (he started in and still has a hand in shoe design).

Iger lost no time in purging Chapek’s deputy, Kareem Daniel, whom he dismissed at 6:30 a.m. the morning after the surprise Sunday-evening announcement that Chapek was out. And some sources with knowledge of Disney politics believed he was not done. They believe that Iger wanted to ease out CFO McCarthy — but much more gently than Chapek and Daniel. Press reports have portrayed her as the one who raised alarms about Chapek’s management with the board in September and who subsequently called Iger to gauge his interest in returning. But some veterans of the company’s wars don’t buy that scenario. “The board didn’t know until she told them? It smells fishy to me,” says one, who notes that this version of the story makes the board look very innocent and certainly not responsible for the bad things that happened when Chapek was CEO.

McCarthy has long-standing relationships on Wall Street in her favor, and with Peltz pounding on the door, Iger is likely to find that a united front is best. When and how he may further reshuffle the executive deck remains to be seen, but he quickly ordered a group of top executives to undo the Chapek reorganization that so empowered Daniel and McCarthy. Of necessity, McCarthy is part of the team working on that, which also includes Dana Walden, chairman of Disney Entertainment Content; film studio chief Alan Bergman; and ESPN president Jimmy Pitaro.

Disney, meanwhile, officially fired back at Peltz on Jan. 17 with a presentation of its own, using his own words on CNBC against him (that he is “not an expert” in theme parks, and answering “Why not?” when asked by CNBC why he is focusing on Disney). In deciding not to voluntarily offer Peltz a board seat, the board came to the conclusion that “despite months of engagement, Mr. Peltz had not, and the Trian Group representatives at the meeting had not, actually presented a single strategic idea for Disney, that their assessment of Disney seemed oblivious to the secular change that had been ongoing in the media industry, as well as the impact of the pandemic on each part of the Company’s business from production, to exhibition, to leisure travel.” Disney stressed Iger, with his experience, as the right person to lead the company through the challenging moment and to help find a successor, with the board noting that Iger is “assisting the Board in identifying, developing and mentoring a successor CEO, a process which has already begun.”

Highlighting the secular change in the business is likely to carry weight on Wall Street. In fact, analyst Rich Greenfield had made that point using some of the same language even before the most recent Disney filing. “There are major secular challenges facing this entire sector,” Greenfield said. Given that, “it just feels like Peltz doesn’t understand media in 2023.”

Perlmutter

Peltz