The proxy battle between Walt Disney (NYSE:DIS) CEO Bob Iger and Trian Partners’ Nelson Peltz is due to end today once the election for Disney directors is over.
Reuters says Iger has the votes to win, while Peltz won the late endorsement of Tesla (NASDAQ:TSLA) CEO Elon Musk.
DIS stock opened today at $122.23 per share, a market capitalization of $225 billion. Shares are up 35% in 2024 as investors look to get in on the action.
What’s at Stake
At stake is the direction of Disney’s turnaround. Shares still sell for 10% less than they did two years ago. The company’s broadcast and cable businesses are shrinking, and it has yet to make a profit in streaming.
For the December quarter, Disney brought in 12% less revenue from “linear networks” than in 2022. The streaming business lost $138 million. A loss was also reported in the ESPN sports division.
Trends are favorable, however. Streaming revenue is picking up, and losses are declining. But Peltz, the company’s largest individual shareholder, has offered himself and former Disney CEO Jay Rasulo as board candidates.
Iger now seems likely to win, having won over big institutional investors Vanguard, T. Rowe Price, and Blackrock (NYSE:BLK). Iger calls Peltz’s campaign “a distraction.”
Even if Iger wins, he still needs to execute his current turnaround plan and find a successor. Dana Walden, who runs Disney Entertainment, is considered the front-runner.
But Iger has already gotten his succession wrong. He left for Disney Parks chief Bob Chapek in early 2020, then returned in late 2022, ousting Chapek and his top lieutenants. Iger’s current contract runs through 2026.
Since his return, Iger has put ESPN’s name on the Penn National (NASDAQ:PENN) sportsbook in exchange for an equity stake. He also cut spending on content, and conducted two rounds of layoffs.
DIS Stock: What Happens Next?
Expect Disney’s stock price to fall right after the meeting as the proxy war’s losers lick their wounds.
On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
