“Restore the magic at Disney” : this is the title of the vitriolic presentation of 32 pages published this week by the activist fund of Nelson Peltz, Trian, which acquired for 900 million dollars (834 million euros) of Disney shares and claims a seat on the board of directors. At 80, Mr. Peltz, whose fortune is estimated at 1.4 billion dollars, has many arguments to make: Disney, which has not distributed dividends for two years, has everything of a disenchanted kingdom.
The company (82 billion dollars in turnover) has a calamitous stock market history, with its share price halving in two years and which has not progressed since 2015 – the SP 500 index has jumped by half on the period. Disney has multiplied, according to Mr. Peltz, the strategic errors: first, it bought in 2019 two and a half times too expensive the media activities of Fox (26 times the profitability, against 12 times in the sector) for an amount of $70 billion. She launched into streaming during the pandemic, with her Disney + channel, to compete with Netflix, but she never stops losing money (11.3 billion cumulative dollars, half of what ‘has, for example, lost Meta-Facebook in the metaverse).
It saves face with income from its cash cow, the Florida and Los Angeles amusement parks, which were closed during the pandemic but whose entrance and hotels are now charged a fortune to the American consumer. Mr. Peltz believes that this policy of increasing prices is not tenable and the margins, moreover, are falling. The company’s costs are not kept: they increase faster than its turnover. All these elements mean that earnings per share have been halved in four years, while free cash flow has been divided by ten, from 9.8 billion to 1.1 billion between 2018 and 2022, accuses Nelson Peltz .
Extravagant salaries
Added to this is a major governance crisis: the firm was unable to prepare the succession of Bob Iger (2005-2020), which was extended five times over the last decade, to make way, at the end of 2020, for Bob Chapak. He got entangled in the dispute over the Florida law prohibiting sexual and gender education in schools up to the equivalent of CE2, called “Don’t say gay”: under pressure from his employees, he finally condemned the law and the governor of Florida, in response, revoked the tax advantages of Disney in its Orlando amusement park. Unable to turn his business around, Mr. Chapek was abruptly fired in the fall of 2022, replaced by his predecessor, Mr. Iger, who returns at the age of 71.
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