Nelson Peltz Likened Disney’s Recent Announcements To “Throwing Spaghetti Against a Wall”
Activist investor Nelson Peltz and his Trian Capital publicly blasted The Walt Disney Company today, calling Disney’s series of announcements last week “spaghetti against the wall.”
“With the stock waning and Disney facing another proxy contest, Disney appears to again be trying to distract shareholders with what we see as a fanciful tale, claiming it has ‘turned the corner and entered a new era,’” Trian wrote in a letter to shareholders Wednesday. “And with that, Disney announced a slew of new promises and ideas — most still in the process of being developed — hoping that shareholders would just believe all was well and improving.”
Disney’s Slew of Announcements
Following their strong Q1 earnings last week, Disney announced a new partnership with Fox and Warner Bros. Discovery to create a new sports-centric streaming service, the production of Moana 2, and that Taylor Swift was coming to Disney+.
Commenting on Disney’s planned $1.5 billion investment in Fortnite to make Epic Games, Trian said that the initiative “lacks a product roadmap or expected return targets.”
Meanwhile, the new sports streaming venture “likely confused consumers, surprised important content partners, and competes with the company’s own services,” according to Trian.
Peltz Garuntees Victory
When asked by CNBC what he planned to do if he lost the proxy fight, Peltz guaranteed that Trian would win.
“Oh, come on. We’re not going to lose, OK? Let’s get that straight,” he responded. “The people who own this stock, they want action. They don’t want promises, OK? That’s not what they want. We’re gonna win. We never plan and state what we’re going to do if we lose because we don’t lose.”
Since Disney’s Q1 earnings report last week, the company’s stock rose by 10%. Overall, shares in Disney are up 22% since the start of the year. Still, Peltz and Trian assert that it is not enough.
“Frenetic activity, in the face of a proxy contest, is not a substitute for a well-considered corporate strategy. Nor is throwing spaghetti at the wall going to feed shareholders who have been starved of returns for so long,” Trian’s letter concluded, adding a cartoon depicting current board members actually throwing spaghetti against the wall. “Disney shareholders need the company to consistently perform under the watchful eye of a vigilant board. That is the recipe for good eating.”
Disney Steals the Spotlight
Based on last week’s earnings and the overall optimism that suddenly seems to be surrounding the company, Peltz and Trian may be on the ropes.
“Whatever chance of success these activist investors had is being buried by 100,000 tons of Disney carbonite,” TD Cowen media analyst Doug Creutz said in an interview after the earnings. “The market likes what it sees.”
Interestingly, as the Trian press release hit the wire, Disney announced the release date and cast for Marvel Studios’ Fantastic Four. Based on the buzz on social media, Bob Iger may have checked Nelson Peltz once again.