Mickey’s Boardroom Adventure

Disney faces a brawl with activist investors. What’s the endgame for the Mouse’s foes?

For nearly 40 years, the Walt Disney Co. has largely been seen as an invincible force in the business of entertainment.

Sure, the Mouse House has had its good and not-so-good years at the box office and in TV viewership rankings. But with one major exception, in 2004, the company’s status as a high-performing pillar among the world’s largest media companies has rarely been questioned. That changed last year when activist investor Nelson Peltz, chairman of Trian Fund Management, decided to take aim at Disney.

Trian and rival firm Blackwells Capital have launched dueling PR campaigns and proxy fights to prod Disney to make changes to its corporate governance and long-term strategy. Both efforts are highly unlikely to achieve their stated goals of forcing new board members on Disney through the shareholders vote at the company’s April 3 annual meeting. But they have succeeded in damaging the aura of Disney as a company that is untouchable by outsiders because of its ability to flex corporate power and creative muscle. Disney’s harshest critics will pounce on any bad news when the company reports earnings on Feb. 7.

Peltz’s on-again, off-again campaign to shake up Disney’s board of directors, which started in January 2023, unleashed a flood of Wall Street analysis of the company’s performance and prospects. It also sparked an effort from Blackwells, a New York-based investment firm. Peltz wants to appoint himself and Jay Rasulo, Disney’s former parks chief and chief financial officer, to Disney’s 13-member board. Blackwells is backing three candidates: Jessica Schell, Craig Hatkoff and Leah Solivan.

The path for Trian or Blackwells to secure enough shareholder votes at the April 3 meeting to unseat incumbent board members is slim to none. Disney has 1.8 billion shares outstanding as of Feb. 5.

Moreover, even with a two-year stock slump, there seems to be little danger of a broad shareholder revolt against CEO Bob Iger. He’s too closely associated with the cloak of invincibility. Besides, the last attempt at a CEO transition lasted 33 months, with the Bob Chapek-bob Iger tango that led to Iger returning to his perch in November 2022.

So what is the real endgame for the activists? Moving the stock price is a legitimate quest, and that has already happened. Shares have climbed 7% since the start of the year, when Peltz stepped up his efforts and Blackwells joined in.

Forty years ago, a much smaller Disney was in danger of being sold off for parts by corporate raiders, until savvy investors recruited then-paramount executive Michael Eisner to lead a storied turnaround. Twenty years ago, Comcast saw a moment of vulnerability as Eisner’s reign ended. Comcast’s unsolicited offer for Disney went nowhere, but it hastened the CEO handoff from Eisner to Iger.

In 1984 and 2004, Disney fought off outside threats in part via management changes. The road ahead this time is less clear. But unless there’s a major negative bombshell in the latest earnings report, Disney’s aura of invincibility, while dented, may only come back stronger. For all the noise they’ve made, Disney’s detractors are about to lose most of their ammunition after shareholders vote on April 3.