Disney is getting support from a prominent activist investor
The Walt Disney Company said Wednesday it has received the support of ValueAct Capital, a leading activist hedge fund, as it faces a governance challenge from billionaire financier Nelson Peltz.
The news underscores how many activist investors are buying Disney stock as the media giant faces numerous business challenges, including a stagnant stock price; concerns about its strategies for streaming, television networks and film productions; and questions about succession planning.
In addition to Mr. Peltz, who is seeking two board seats, and ValueAct, other hedge funds seeking change at Disney include Blackwells Capital, a hedge fund that announced Wednesday it was seeking three seats on the company’s board of directors.
In a statement, Disney said ValueAct would support the company’s nominated directors at the annual shareholder meeting. In return, the company will enter into an agreement to consult with the $16 billion hedge fund, including through meetings with the board.
“ValueAct Capital has a strong track record of working with the companies it invests in,” said Robert A. Iger, CEO of Disney. “We welcome their input as long-term shareholders.”
Mason Morfit, co-chief executive of ValueAct, added: “As older technologies transition to digital platforms, we believe Disney can lead the media industry forward. We couldn’t be more excited to partner with Bob and the board to help create long-term, sustainable shareholder value.”
The deal is the latest move by Disney to appease restive investors. In November, two new directors were added: James P. Gorman, the executive chairman of Morgan Stanley, and Jeremy Darroch, the former CEO of British broadcaster Sky.
ValueAct’s stake in Disney is believed to be significantly smaller than the 33 million shares Mr. Peltz controls. But the company is highly regarded on Wall Street for working constructively with boards of directors. Reaching a settlement with the company removes potential headaches for Disney.
It is unclear what it will take to make peace with Mr. Peltz, who has become partners with Ike Perlmutter, the irascible former chairman of Marvel Entertainment, and Jay Rasulo, a former Disney chief financial officer who left after being passed over as the Lord Iger’s heir apparent. Mr. Peltz has pushed for cost cuts, a revamped streaming strategy and a clearer succession plan.
But while some shareholders have supported Mr. Peltz’s efforts, including the hedge fund Ancora Holdings, others seem unfazed. Among them is Blackwells, which said the three nominees to the board would support Mr. Iger and called on Mr. Peltz to “end his peacock work so that Disney can focus on its bright future and not be dragged back in time.”