Walt Disney (DIS) – Activist & Sentiment – January 5, 2024
Disney and activist investor ValueAct Capital have settled their disputes. Disney has agreed to more closely communicate and share info while providing more access to its board and executives for consultation. ValueAct, in exchange, will support Disney’s desired board structure. While more details weren’t shared, it’s likely a shareholder positive that Disney made concessions to ValueAct to get this done. I’m speculating, but it’s not at all a stretch and is intuitive if anything. This comes as Blackwells Capital (a third activist) just nominated 3 board members of its own in support of Iger’s turnaround. ValueAct and Blackwells are considered friendly activist allies. Disney wanted support from both to strengthen its fight against Trian and Nelson Peltz (not a friendly activist). Blackwells wrote a pretty scathing criticism of Trian and Peltz in their announcement. In it, they essentially called him and his nominees unqualified distractions.
Why does all of this matter? The obvious reason is that all 3 firms are shareholder friends and fixated on driving returns. Disney may not like Nelson Peltz, but I (as a shareholder) have no issues with what he wants. (LINK)
Secondly, it offers a clear hint of just how compelling Disney’s base of assets truly is. The firm would not be getting this much attention if that were not the case. To me, that reality offers a compelling shareholder value floor if Iger can’t turn things around. Disney can just sell off these assets at an aggregate price tag well north of the $90 its shares trade at today. ValueAct thinks the Parks and Experiences business is worth roughly that on its own. I truly don’t care who wins this fight. I view it as a positive regardless as it shines the spotlight on this team to make sure they’re executing and behaving.
A quote from Sharmeen Obaid-Chinoy (director of the 2026 Star Wars film) virally made its way around Twitter this past week. She said one of her goals for the production was to “make men uncomfortable.” This was treated as breaking news and shared as such across media outlets and large accounts. What context was missing? Maybe the fact that the quote is a decade old… that might be just a tad important. This is just another example of Twitter not being the place to gauge Disney sentiment. It is filled with Elon Musk’s army, which is an army that has been told by its leader that Disney is a woke adversary. Elon good, Disney bad… that is the mentality on that platform. This week, she also said that it’s time for a woman to shape the Star Wars storyline. Some took issue with that, but I don’t. Who cares if it’s a woman or a man or an otter shaping the story line? I care about that story telling being well received and the film being very profitable. Based on her being the only director ever to win 2 academy awards before the age of 37, she’s qualified to do just that. Finally, as I’ve said in the past, I view Disney as more of a rental than any other holding. I’ll likely (hopefully) be out of this position as it’s more fairly valued before 2026.
Disney and Reliance have commenced antitrust work to get the potential majority stake acquisition done. This is good news.
Disney inked a new 8 year deal with the NCAA for a plethora of college sports rights. It will cost the firm $115 million per year and include 40 NCAA championship events with international rights to March Madness. Broken record alert: Partner with mega-cap tech to unleash significantly more bidding power for more content. Disney can’t win these auctions forever without doing just that. I’m glad they’re selling a majority stake in the India business. Time to sell part of ESPN and hopefully ABC too. I’ll keep saying it.